Skip to content

IAI Actuarial Core Principles · Business Management · Using data, company functions, people skills, influence and clear communication

Bharat Mutual General plans to launch a new health product with a rich benefit design that the sales team believes will win market share. The pricing actuary finds that the proposed premium is inadequate for the expected claims. What is the most appropriate way for the actuary to act within the company's functional interactions?

The actuary should communicate the shortfall clearly to sales, product and finance, offer quantified alternatives like revised benefits or premium, and escalate if disagreement continues. This respects the interdependence of functions and professional duties, unlike acting alone, ignoring the issue or waiting for post-launch data.

  1. AQuietly raise the premium without telling sales, since pricing is purely an actuarial matter
  2. BAccept the sales target and rely on future reserves to absorb the shortfall
  3. CExplain the shortfall clearly to sales, product and finance, quantify options such as benefit changes or higher premium, and escalate if disagreement persistsCorrect
  4. DDelay the analysis until after launch so that real claims data can settle the question
  5. Ask the claims team to approve the premium rates

Explanation

Pricing depends on input from and has consequences for sales, product and finance. The actuary should communicate clearly, offer quantified alternatives and escalate if needed. Silently changing rates ignores the other functions, and launching an inadequate price is poor professional practice.

Did you get it right without looking?

One question tells you little. A timed set on Using data, company functions, people skills, influence and clear communication shows your real accuracy, how long you take and where you lose marks.

Practise Using data, company functions, people skills, influence and clear communicationFree diagnostic mock

More Using data, company functions, people skills, influence and clear communication questions