CS Professional · Banking and Insurance - Laws and Practice · Professional Opportunities
Anita is an actuary at a life insurer. The board of the insurer asks her to wear two hats: certify the adequacy of policy liabilities and also serve as the head of sales for the next year to boost premium targets. As a company secretary advising the board, which observation is most appropriate?
The combination is not appropriate. An appointed actuary must give an independent, objective view on policy liabilities, and holding sales targets creates a conflict of interest that compromises that independence. Growth benefits or a lower budget do not remove the conflict, and actuaries can certainly work in life insurance.
- AAcceptable, since both roles benefit the insurer's growth
- BAcceptable only if the sales target is below the premium budget
- CNot appropriate, since combining valuation certification with sales targets creates a conflict of interest that weakens independence of the actuarial functionCorrect
- DNot appropriate only because actuaries cannot work in life insurance
Explanation
The actuarial role requires an independent, objective view of liabilities and solvency. Taking on sales targets creates incentives to understate liabilities, hence a conflict of interest. The premium budget is irrelevant to independence, and actuaries do work in life insurance, so the last option is wrong.
Did you get it right without looking?
One question tells you little. A timed set on Professional Opportunities shows your real accuracy, how long you take and where you lose marks.
More Professional Opportunities questions
- Anita Verma, a company secretary, advises a client to place a group health policy through an insurance broker. The broker quotes premium of …
- Bharat General Insurance Ltd is preparing for its Board meeting where the Policyholder Protection Committee will review grievance data. The …
- Arjun, a Company Secretary, joins a listed insurer and is asked to serve as a point of contact for IRDAI, handle board meeting procedures an…
- Meera, a Company Secretary, wants to work in an insurance company's compliance function ensuring adherence to IRDAI regulations, filing retu…
- Rohan wants a career valuing life insurance liabilities, setting premium rates using mortality data and certifying the insurer's solvency po…
- Anita Rao, a Company Secretary, is asked by a bank's management to review whether its internal policies, board-approved procedures and RBI d…