IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies
Arjun, an appointed actuary, is pressured by the CEO of an Indian insurer to sign off a valuation that he considers materially understates liabilities. The CEO says that refusing will cost jobs and that the regulator will not notice. Arjun considers a rules-based approach (follow the Code and law) against a consequence-based approach (minimise harm). Which conclusion is most defensible?
Arjun should decline to sign the misleading valuation and consider any required reporting. His professional and statutory duties are not overridden by claimed job losses, and a proper consequence analysis also shows serious harm to policyholders and trust. Private notes or delegation merely enable the misstatement.
- ASign, because job losses are a greater harm than a technical misstatement
- BSign now and disclose the weakness only if the regulator asks later
- CDecline to sign the misleading valuation, since the Code and statutory duties are not displaced by the consequences claimed, and consider reporting as requiredCorrect
- DSign with a private note to himself so that he is personally protected
- Delegate the signature to a junior actuary who is less aware of the issue
Explanation
Both approaches point the same way when properly applied: misleading regulators harms policyholders and public trust, and professional and statutory duties cannot be traded away for commercial convenience. Signing under protest privately or delegating still enables the misstatement.
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