IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies
Rohit Nair, a member of the Institute of Actuaries of India, is asked to review a reserving model for a general insurer in an area where he has little experience. His manager says he can learn as he goes and sign off the report. Which response is most consistent with the professional value of competence?
He should decline to sign off beyond his competence, or first obtain suitable training, supervision or peer review. Competence requires work to be done with adequate skill and knowledge, and neither shifting blame to the manager, lowering the fee nor the lack of complaints cures the gap.
- ASign off, because the employer accepts responsibility for the report's conclusions
- BSign off but state in the report that the work is the manager's responsibility
- CDecline to sign off beyond his competence, or obtain suitable training, supervision or peer review before doing soCorrect
- DSign off if the fee for the work is reduced to reflect his inexperience
- Sign off, relying on the fact that no client has complained about the model before
Explanation
Competence means acting only within one's knowledge and skill, or securing appropriate help or review. Transferring responsibility to the manager, reducing the fee or relying on absent complaints does not make the work competent. Only declining or obtaining proper support addresses the shortfall.
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