IAI Actuarial Core Principles · Business Management · Professional negligence
Which statement about the standard that follows once a professional actuary is found to owe a duty of care is correct?
The actuary must show the skill and care of a reasonably competent member of the profession. This is neither a guarantee of perfect results nor the standard of the most eminent expert or an ordinary layperson.
- AThe actuary must guarantee a correct result in every assignment
- BThe actuary must exercise the skill and care of a reasonably competent member of the professionCorrect
- CThe standard is that of an ordinary layperson with general knowledge
- DThe standard is the highest skill of the most eminent actuary in India
- The standard is lower for the actuary if the client is unsophisticated
Explanation
Once a duty is established, the test of breach is whether the actuary acted with the skill and care of a reasonably competent professional in that field. It does not require infallibility or the best expert's standard, and a layperson's standard is inappropriate for specialist work.
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