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IAI Actuarial Core Principles · Business Management · Professional negligence

Meera Nair, an independent actuary, is engaged by Sahyadri Life Ltd to value its liabilities. A policyholder of Sahyadri, with whom Meera has had no contact, later claims that Meera was negligent. Which statement best describes the starting point for deciding whether Meera owed the policyholder a duty of care?

The court looks at whether harm to the policyholder was reasonably foreseeable, whether there was sufficient proximity, and whether imposing a duty is fair and reasonable. A duty is not automatic to the public, nor limited to fee-paying clients.

  1. AA duty exists automatically because every professional owes a duty to the whole public
  2. BNo duty can ever exist because only the contracting client may sue a professional
  3. CA duty exists only if the policyholder paid Meera's fee directly
  4. DA duty arises only where the policyholder is also a director of Sahyadri Life
  5. The court asks whether harm to the policyholder was reasonably foreseeable and whether the relationship was close enough to make imposing a duty fair and reasonableCorrect

Explanation

Under the general approach to negligence, a duty of care depends on foreseeability of harm, proximity between the parties and whether it is fair, just and reasonable to impose a duty. It is neither automatic towards everyone nor confined to the contracting client. Payment of a fee by the claimant is not a precondition.

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