IAI Actuarial Core Principles · Business Management · Skills and knowledge for working as an actuary in financial services
Priya, an actuary at a Pune general insurer, has produced reserving results with wide uncertainty. The claims director wants a single figure for a press statement. Which response best reflects good communication and professional practice?
Priya should give the best estimate with a plain statement of the range and main assumptions. This gives the director a usable figure while ensuring the uncertainty is understood, avoiding misleading precision, unexplained caution or refusal to help.
- AGive the best estimate only, since uncertainty confuses non-technical readers
- BGive the highest possible figure to be safe, without explanation
- CProvide the best estimate together with a clear statement of the range and key assumptions, in language the director can useCorrect
- DDecline to give any figure until the uncertainty is eliminated
- Give the figure verbally only so that no written record of the limitations exists
Explanation
Users need a usable figure but also must understand its limits. Stating the estimate with range and assumptions is clear and not misleading. Hiding uncertainty or refusing to help fails the user, and avoiding a written record is poor practice.
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