Skip to content

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

Rohan is the Appointed Actuary of a general insurer. The board proposes a product launch with premium rates he considers inadequate under the regulator's requirements. Which course of action best reflects his professional and regulatory duties?

He should give clear written advice that the rates are inadequate, explain the risks, and escalate to the regulator if unresolved and legally required. Deferring to the board or manipulating assumptions breaches integrity, and going to the press breaches confidentiality.

  1. AAccept the board's decision because the directors bear final responsibility for pricing
  2. BResign at once without telling anyone, to avoid being associated with the product
  3. CAdvise in writing that the rates are inadequate, explain the risks clearly and escalate to the regulator if the matter is not resolved and the law requires itCorrect
  4. DAlter the actuarial assumptions so the rates appear adequate and avoid conflict
  5. Inform the press so that policyholders are warned before the launch

Explanation

An actuary must give clear, honest, independent advice and fulfil statutory duties. Recording the concern and escalating through proper channels, including the regulator where required, meets this. Simply deferring or manipulating assumptions breaches integrity, and going to the press breaches confidentiality.

Did you get it right without looking?

One question tells you little. A timed set on Skills and knowledge for working as an actuary in financial services shows your real accuracy, how long you take and where you lose marks.

Practise Skills and knowledge for working as an actuary in financial servicesFree diagnostic mock

More Skills and knowledge for working as an actuary in financial services questions