IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies
An actuary employed by a general insurer is asked by her employer to sign a report to the regulator. She believes the stated claims reserve is within a defensible range, but the chief financial officer wants the narrative to say the reserve is 'the best estimate, with no material uncertainty', although she regards uncertainty as significant. She has discussed her concerns with the CFO without success. Which step is most appropriate?
She should refuse to sign wording she considers misleading, make sure the report conveys the significant uncertainty, and escalate internally, seeking Institute guidance if required. The Actuaries' Code requires honesty and not allowing reports to mislead, and quiet compliance or unilateral secret changes would both fall short.
- ASign as drafted, since the employer is responsible for the wording
- BSign, and mention her concerns only in a private email to the CFO
- CRefuse to sign wording she believes is misleading, and ensure the report conveys the significant uncertainty, escalating within the company and seeking guidance from the Institute if neededCorrect
- DResign immediately and publicly criticise the company in the press
- Change the reserve figure to the top of the range without telling anyone
Explanation
Under the Actuaries' Code an actuary must not allow a report to mislead, and must be honest about uncertainty. Refusal of misleading wording, escalation and seeking guidance are proportionate. Signing despite concerns breaches integrity, a press attack is disproportionate, and secretly changing the figure is itself a lack of transparency.
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