IAI Actuarial Core Principles · Business Management · Issues and challenges in each main practice area
An IAI Fellow joins a fintech start-up in Bengaluru as head of risk and is asked to certify the adequacy of the pricing basis for a new micro-insurance product sold through mobile wallets. Little data exists, and the founders want a launch within two weeks. The Fellow believes the available data supports only a provisional basis. Which action best fits the Actuaries' Code and good practice?
The Fellow should give advice that clearly states the data limitations and provisional nature of the basis, recommend monitoring and review, and refuse to certify more than the data supports. This respects integrity and competence while still allowing a prudent launch.
- AGive advice with the limitations of the data and the provisional nature of the basis clearly stated, recommend monitoring and review, and decline to certify beyond what the data supportsCorrect
- BCertify the basis as fully adequate, since the founders are the client and set the timetable
- CResign immediately without informing anyone of the concerns
- DCopy the pricing basis of a large life insurer without adjustment and certify it
- Delay the product indefinitely until a hundred years of data is available
Explanation
Integrity and competence require advice that is honest about data limits; provisional bases with monitoring are common for new products. Certifying beyond the evidence would be misleading, and copying an unrelated basis lacks competence. Indefinite delay and silent resignation are not proportionate responses.
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