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IAI Actuarial Core Principles · Business Management · Activities of the Institute of Actuaries of India

An IAI Fellow, employed by a Chennai insurer, is asked by the regulator to advise on a new valuation standard. The Fellow's employer would gain commercially from a lenient standard. The Fellow's professional view is that a stricter standard better protects policyholders. Which statement is most accurate?

The Fellow should give honest advice reflecting the professional view and disclose the employer conflict. The public interest outranks employer advantage, and employer consent cannot justify a misleading opinion, while concealing the link would breach transparency and independence.

  1. AThe Fellow should favour the employer, because a duty to an employer outranks the duty to the public
  2. BThe Fellow should give the advice honestly in line with the professional view and disclose the conflict of interest, as public interest takes precedence over personal or employer advantageCorrect
  3. CThe Fellow should decline to give any view and remain silent, since conflicts always bar all advice
  4. DThe Fellow may give the lenient view if the employer supplies written approval
  5. The Fellow should give the stricter view but conceal the employer link to keep the advice independent

Explanation

Professional ethics require integrity, objectivity and transparency. A conflict is managed by disclosure while giving an honest view, with the public interest ranking above employer advantage. Silence is not always required, employer approval does not cure a misleading view, and concealing the link breaches transparency.

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