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IAI Actuarial Core Principles · Business Management · Professional negligence

Meera, an actuary, advised a pension fund trustee on contribution rates. The trustee later suffered a loss and sued her for professional negligence. Which of the following must the trustee establish for the claim to succeed?

The claimant must show a duty of care, a breach of the standard of a reasonably competent professional, and a resulting loss that is not too remote. Intention to harm is not required, and fee level or membership status is not an element of negligence.

  1. AThat Meera intended to cause the loss
  2. BThat Meera owed a duty of care, breached the required standard, and the breach caused a loss that is not too remoteCorrect
  3. CThat Meera was paid a fee exceeding the market rate for similar advice
  4. DThat Meera was a member of the Institute of Actuaries of India at the time of advice
  5. That the trustee received no benefit whatsoever from the advice

Explanation

Negligence requires a duty of care, breach of the standard expected of a reasonably competent professional, and causation of loss that is not too remote. Intention is not needed, so option one is wrong. Membership and fee levels are not elements of the tort.

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