IAI Actuarial Core Principles · Business Management · Professional negligence

An actuary employed by a pension consultancy in Pune gives a trustee board negligent advice on the contribution rate. The trustees, however, never acted on the advice and made no change to contributions. The trust later sues the actuary for the shortfall in the fund. Which element of the claim most clearly fails?

Causation fails. The negligent advice was never acted upon, so the loss would have occurred regardless of it. Without a causal link between the breach and the shortfall, the claim cannot succeed, even if duty and breach are established.

1. ADuty of care, because trustees are not clients
2. BBreach of the standard of a reasonably competent actuary
3. CCausation, because the advice did not lead to the lossCorrect
4. DRemoteness, because pension losses are always too distant
5. Contributory negligence, because trustees must verify every calculation