IAI Actuarial Core Principles · Business Management · Professional negligence

Meera Iyer, a consulting actuary in Pune, advises a small pension trust to use an outdated mortality table, which breaches the standard of care expected of an actuary. The trust's funding position later deteriorates, but an independent audit shows the same deterioration would have occurred even with the correct table, because the cause was a market crash. Which statement best describes the trust's claim in negligence against Meera?

The claim fails on causation. Negligence needs the breach to have caused the loss, tested by asking whether the loss would have occurred but for the breach. Since the market crash would have produced the same deterioration regardless, the outdated table did not cause the damage.

1. AIt fails on causation, because the loss would have occurred even without her breachCorrect
2. BIt succeeds, because a breach of the standard of care is enough to establish liability
3. CIt succeeds, because the market crash was foreseeable in general
4. DIt fails only if Meera can show she acted in good faith
5. It succeeds for nominal damages only, because the breach was technical