IAI Actuarial Core Principles · Business Management · Professional negligence

An actuary in Mumbai valued a pension fund using a method that a responsible body of actuaries would accept, though other actuaries would have chosen differently. The trustees sue for negligence. Which outcome is most likely?

She is unlikely to be liable. Where an actuary follows a method accepted by a responsible body of the profession, a difference of professional opinion or a disappointing outcome does not by itself establish a breach of the duty of care.

1. AThe actuary is liable because some peers would have used a different method
2. BThe actuary is liable because the fund's outcome was worse than expected
3. CThe actuary is not liable merely because the trustees prefer another methodCorrect
4. DThe actuary is liable because the trustees were not told of alternative methods in writing
5. The actuary is liable unless she obtained court approval of the method