IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies
An actuary at an Indian life insurer prepares a pricing report for the product committee, whose members are senior executives without actuarial training. The report is full of technical terms and has no summary of the key assumptions. Which action best meets the Actuaries' Code expectation on communication?
The actuary should add a plain-language summary covering results, key assumptions and uncertainties, with the technical detail in an appendix. Communication must be clear and fit for the audience so decision makers can understand the advice and its limitations, and leaving out the assumptions would defeat that purpose.
- AKeep the technical report unchanged, since the committee can ask for clarification if needed
- BAdd a clear plain-language summary of the results, the key assumptions and the main uncertainties, with the technical detail in an appendixCorrect
- CRemove the assumptions and give only the final premium rates so the report stays short
- DPass the report to the marketing team to rewrite in a promotional style
- Send the report only to the chief executive and leave it to them to decide who sees it
Explanation
Communication should be clear and suited to the audience, so that the users can understand the results and the limits on them. A plain summary with the assumptions and uncertainty, backed by technical detail, achieves this. Giving only rates hides the assumptions, and a promotional rewrite risks misleading the reader.
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