IAI Actuarial Core Principles · Business Management · Professional negligence
Meera, an actuary in Pune, advises a client on a reserving method. The client later suffers loss and sues her for negligence. Which statement best reflects the standard of care Indian courts apply to her conduct?
The standard is that of a reasonably competent actuary practising in the same field, exercising ordinary skill and care. It does not demand perfection, a guaranteed outcome, or the skill of the most eminent practitioner, and dishonesty is not required for liability.
- AShe must guarantee that her advice produces the result the client wanted
- BShe must show the skill and care of a reasonably competent actuary in her field, not the highest possible skillCorrect
- CShe is judged by the standard of an ordinary person with no professional training
- DShe is liable only if she acted dishonestly
- She is judged by the standard of the most senior actuary in India
Explanation
Professional negligence is tested against a reasonably competent member of the same profession exercising ordinary skill. Perfection or guaranteed results are not required, so the first option is wrong. Dishonesty is not needed, as negligence concerns lack of care, which rules out the fourth option.
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