IAI Actuarial Core Principles · Business Management · Professional negligence
An actuary in Pune followed a valuation method used by a respectable body of actuaries in India, though another body of actuaries considers it outdated. A client sues for negligence. Which statement best reflects the Bolam-type approach used in Indian courts?
The actuary is generally not negligent if the method is supported by a responsible body of professional opinion, even though another body of actuaries would have chosen differently. Unanimity among the profession is not required, and the existence of a differing view does not alone establish breach.
- AThe actuary is automatically liable because a different body of opinion exists
- BThe actuary is not negligent merely because others would have chosen a different method, provided the practice is supported by a responsible body of the professionCorrect
- CThe court must always adopt the newer method as the standard
- DThe actuary is not liable only if all actuaries in India use the method
- Liability depends only on whether the client suffered loss
Explanation
Following a practice accepted by a responsible body of professional opinion is generally not negligent, even if others differ. The court may still scrutinise whether the practice is logically defensible. Unanimity is not required.
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