IAI Actuarial Core Principles · Business Management · Professional negligence
Meera, a qualified actuary employed by a Mumbai life insurer, prepares a reserving report. A client later alleges negligence. In deciding whether Meera breached her duty of care, which standard would an Indian court ordinarily apply?
The court applies the standard of a reasonably competent actuary exercising ordinary skill in the relevant field. It is an objective test: it is neither a layperson's standard nor that of the best expert, and it does not depend on the individual's own limitations.
- AThe standard of the reasonable person on the street with no special knowledge
- BThe standard of a reasonably competent actuary exercising ordinary skill in that fieldCorrect
- CThe standard of the most senior and experienced actuary in India
- DThe standard of Meera's own personal ability on the day, however limited
- The standard that guarantees a correct result for the client
Explanation
A professional is judged against the ordinary skill of a reasonably competent member of that profession, not the layperson or the most eminent practitioner. Personal inexperience is no defence, and the duty is to take reasonable care, not to guarantee results.
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