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IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code

Arjun, a consulting actuary, is advising an insurer's board on a reinsurance treaty. He then discovers his spouse holds a substantial stake in the reinsurer being recommended. He believes his advice remains objective. Which action best satisfies the Code's principles on integrity and conflicts of interest?

He should promptly disclose the interest to the client and manage the conflict, letting the client decide how to proceed. The Code requires integrity and openness about conflicts even when the member believes he is objective. Silence, late disclosure, or secret transfers fail that standard.

  1. ASay nothing, as his advice is objective and unaffected
  2. BDisclose the interest to the client promptly and let the client decide on how to proceed, taking steps to manage the conflictCorrect
  3. CDisclose it only if the reinsurer is later selected
  4. DTransfer the spouse's shares to a relative secretly
  5. Withdraw the recommendation of that reinsurer without explanation

Explanation

A perceived or actual conflict must be disclosed and managed, regardless of the member's belief in their own objectivity. Delayed disclosure, concealment, or unexplained changes undermine transparency and trust.

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