IAI Actuarial Core Principles · Business Management · Using data, company functions, people skills, influence and clear communication
An actuary at a Mumbai life insurer must present the results of a lapse-experience investigation to the board, whose members are mostly non-actuaries. Which approach best reflects clear communication?
The best approach is to lead with the main conclusion and its financial implication, explain assumptions and uncertainty in plain language, and place technical detail in an appendix. This suits a non-actuarial board, keeps the message clear, and does not hide limitations.
- ALead with the key conclusion and its financial implication, explain the main assumptions and uncertainties in plain language, and put technical detail in an appendixCorrect
- BPresent the full derivation of the statistical model first so the board can verify every step before hearing the result
- CUse actuarial terminology throughout to demonstrate rigour, and offer explanations only if the board asks
- DGive only the final lapse rate so as to avoid confusing the board with uncertainty
- Send a long technical report without a summary, so that no detail is omitted
Explanation
Effective communication to a lay audience puts the conclusion and implications first, explains assumptions and uncertainty in accessible terms, and keeps technical detail for reference. The other options either bury the message, hide uncertainty, or use jargon that the audience cannot follow.
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