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IAI Actuarial Core Principles · Business Management · Business and consumer needs, the industry value chain and competitive forces

A newly qualified actuary at an Indian life insurer is asked to support a product aimed at first-time investors in small towns. Which approach to understanding consumer needs best reflects the actuary's professional responsibility under the Actuaries' Code?

The actuary should use data and research to check the product is understandable and suitable for the target customers, and raise concerns with management. This reflects integrity, competence and regard for the public interest, unlike relying on profit targets, competitors or leaving suitability to sales.

  1. ADesign the product only from the insurer's profit targets
  2. BUse available data and research to check the product is understandable and suitable for the target customers, and flag concerns to managementCorrect
  3. CRely entirely on competitor products without analysis
  4. DLeave customer suitability to the sales team
  5. Avoid advising on the product because actuaries do not consider customers

Explanation

The Actuaries' Code expects actuaries to act with integrity, competence and regard to the public interest, including raising concerns where customers may be poorly served. Ignoring suitability, copying competitors or disclaiming involvement does not meet that duty.

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