IAI Actuarial Core Principles · Business Management · Professional negligence

Which of the following is the best example of a failure that would indicate breach of the standard of care by an actuary, as opposed to a mere bad outcome?

Ignoring a known regulatory requirement in the calculation is the clearest breach, because a competent actuary would comply. The other scenarios involve unforeseeable events, accepted practice, later data or disagreement, which show bad outcomes rather than a failure of conduct judged at the time.

1. AA projection of claims proved lower than actual experience because of an unforeseeable pandemic
2. BA pricing model used assumptions accepted by the profession, yet profits were below plan due to market falls
3. CA reserve estimate was later revised after new data became available that were not available at the time
4. DAn actuary ignored a known regulatory requirement for the calculation and produced figures not meeting itCorrect
5. A client disagreed with the actuary's reasonable conclusion and chose another adviser