IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies
Meera, an appointed actuary, discovers that her firm's pricing model for a health product contains an error that has underpriced policies already sold. Fixing it publicly may embarrass her manager, who is a friend. Which principle of the Actuaries' Code most directly requires her to act?
Competence and care, along with integrity, require Meera to correct the pricing error and communicate it appropriately, even if it embarrasses a friend. Personal loyalty, confidentiality or a manager's approval do not excuse leaving a material error affecting policyholders uncorrected.
- ALoyalty to colleagues takes priority over disclosure
- BCompetence and care, together with integrity, require her to correct and communicate the error appropriatelyCorrect
- CConfidentiality forbids any disclosure to anyone, including regulators
- DMarketing considerations should decide the timing of disclosure
- Only the manager is responsible, since he approved the model
Explanation
Actuaries must act with integrity and competence and not let personal relationships compromise work. Confidentiality does not protect concealment of material errors affecting policyholders. Responsibility is not removed by a manager's approval.
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