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

During an audit-related review, an actuary discovers that her employer, a general insurer, has used a claims-inflation assumption the actuary believes is clearly too low, understating liabilities materially. Her manager asks her to leave it alone. She has raised it internally twice without result. What should she do next?

She should seek guidance from the IAI or professional advice, escalate to those responsible for oversight, consider any duty to report to the regulator, and keep records. Stopping after internal attempts, leaking to the press or secretly altering the model would not meet professional standards.

  1. ADrop the matter, because she has done her duty by raising it twice
  2. BLeak the figures to the press immediately
  3. CSeek guidance from the IAI or professional advice, consider escalation to those with oversight and any regulatory reporting duty, and keep recordsCorrect
  4. DAlter the assumption in the model without telling anyone
  5. Resign and take no further action

Explanation

Having failed internally, the actuary should escalate properly, seek confidential guidance and document her actions, considering any duty to report to the regulator. Silence or resignation alone leaves the issue unresolved, and secretly changing the model or leaking to the press breaches proper conduct.

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