Skip to content

IAI Actuarial Core Principles · Business Management · Professional negligence

Arjun, a consulting actuary, valued a gratuity liability using a mortality table that was widely accepted by many competent actuaries at the time, though a minority preferred another table. The client alleges negligence because a later study favoured the minority view. Which statement best reflects the likely legal position?

Arjun is unlikely to be liable, because professional conduct is judged by the standard of a reasonably competent practitioner at the time, without hindsight. Following a method supported by a responsible body of the profession is generally a good defence, even if another view existed.

  1. AArjun is liable because hindsight shows the other table was more accurate
  2. BArjun is liable unless he obtained the client's written consent to the table
  3. CArjun is not liable merely because he followed a table that a responsible body of the profession supportedCorrect
  4. DArjun is liable because any difference of professional opinion proves breach
  5. Arjun is not liable only if the valuation produced a lower liability than the alternative

Explanation

The standard is that of a reasonably competent actuary judged at the time of the advice, not with hindsight. Following an approach supported by a responsible body of professional opinion is generally a defence. Differing opinions do not by themselves establish breach.

Did you get it right without looking?

One question tells you little. A timed set on Professional negligence shows your real accuracy, how long you take and where you lose marks.

Practise Professional negligenceFree diagnostic mock

More Professional negligence questions