IAI Actuarial Core Principles · Business Management · Professional negligence
An appointed actuary at a Bengaluru insurer signs a solvency report without checking the data supplied by the finance team. Data checks are routine in the profession and the Actuaries' Code requires reasonable care. The data later prove materially wrong, and the insurer claims against the actuary. Which analysis is most accurate?
Breach is likely, because a reasonably competent actuary would have done reasonableness checks on the data or disclosed limitations. Good faith and lack of intent do not defend negligence, and supply by the client does not remove the duty to take reasonable care.
- ANo breach, because the data were supplied by the insurer, so responsibility lies wholly with the finance team
- BBreach is likely, because a reasonably competent actuary would have performed reasonableness checks on the data or stated limitations, and failure to do either falls short of the standardCorrect
- CBreach is established only if the actuary intended to mislead
- DNo breach, because the report was signed in good faith
- Breach cannot arise because actuarial opinions are matters of judgment
Explanation
Reliance on supplied data is acceptable only with reasonable checks or clear disclosure of limitations. Negligence does not require intent, and good faith is no defence. Judgment matters still must meet the competent-practitioner standard.
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