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IAI Actuarial Core Principles · Business Management · Skills and knowledge for working as an actuary in financial services

Rahul, an actuary, is asked to take on a pricing assignment for a general insurer in a specialised area where he has no experience. The insurer needs the work in two weeks. Which response best satisfies the requirement of competence?

He should accept only if he secures adequate training, supervision or peer review, or else decline. Competence means having the skills and knowledge needed for the work. A discount, vague labelling or reliance on the client's checks does not fix a lack of expertise.

  1. AAccept the work and learn on the job, since the client will rely on the insurer's own checks
  2. BAccept and bill at a reduced rate to reflect his inexperience
  3. CAccept only if he obtains adequate training, supervision or peer review, or otherwise declineCorrect
  4. DAccept and describe the work as indicative without any other safeguards
  5. Accept, since holding an actuarial qualification is enough to establish competence in any area

Explanation

Competence requires the actuary to have the skills and knowledge for the work or to secure appropriate support. A reduced fee or a vague label does not cure lack of competence, and a qualification alone does not cover every specialty.

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