IAI Actuarial Core Principles · Business Management · Issues and challenges in each main practice area
A general insurer's appointed actuary believes that the management's proposed reserve for a long-tail class is materially below her best estimate plus prudent margin, and the CFO asks her to sign off on the lower figure to protect the quarter's reported profit. Which course of action is most consistent with the Actuaries' Code and good professional practice?
She should give independent advice, explain her basis and risks clearly, and refuse to endorse a figure she thinks inadequate, escalating through governance if needed. The Actuaries' Code requires integrity and non-misleading communication, so yielding to profit pressure or staying silent would be a breach.
- ASign the lower figure, since management is responsible for the financial statements
- BGive her independent professional advice, explain the basis and risks clearly, and decline to endorse a figure she considers inadequate, escalating through proper governance channels if neededCorrect
- CResign immediately without informing anyone
- DAlter her best estimate quietly so that the figures agree
- Sign the figure but add no commentary to avoid conflict
Explanation
The Code requires integrity, competence and communication of advice that is clear and not misleading, and independence from commercial pressure. She should explain her basis and not endorse an inadequate figure, escalating within governance if needed. Silent compliance or quiet alteration breaches professional duties.
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