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IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies

An actuary who is the head of pricing at an Indian insurer notices that the company's sales-driven culture pressures staff to understate risk loadings to win business. Under the Actuaries' Code, what is the most appropriate action?

The actuary should keep to professional integrity and judgement, raise the concern with senior management and record the advice, even if it conflicts with the sales culture. The Actuaries' Code places professional duties above cultural or commercial pressure, so silence or compliance would be improper.

  1. AMaintain professional judgement and integrity, raise the concern with senior management and document the advice, even if it is unpopularCorrect
  2. BFollow the prevailing culture, since employer loyalty outweighs professional duties
  3. CQuietly adjust the loadings without informing anyone
  4. DResign immediately without raising the issue
  5. Leave the pricing to the sales team to avoid conflict

Explanation

The Actuaries' Code requires integrity and professional judgement, and members must not let commercial culture compromise advice. Raising and documenting concerns is the proper step. Following culture, secret changes or silence breach professional duties.

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