IAI CB3 flashcards
IAI CB3 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- CB3 exam level
- CB3 is a Certificate-level IAI subject assessed by written examination, sitting below the Associate-level technical subjects and required for progress toward Fellowship.
- Authoritative CB3 syllabus source
- The Institute of Actuaries of India publishes the definitive CB3 syllabus and reading list; candidates should treat that document, not secondary summaries, as the content boundary.
- Applied communication focus
- CB3 tests the ability to convey actuarial results clearly to a defined audience, so marks reward structure, relevance, and professional tone as much as computation.
- Language of assessment
- CB3 is examined in English, and standard actuarial and financial terminology is expected in English even where a candidate's working language is different.
- Mark allocation logic
- Marks are distributed across structure, accuracy, relevance, and professional presentation, so a numerically correct answer with poor layout can still lose substantial credit.
- Report structure order
- A professional actuarial report runs: purpose and scope, data and assumptions, analysis, conclusions and recommendations, then limitations and appendices.
- Audience-first summary
- For a board or client, the executive summary states the decision and the headline number first, pushing derivation and caveats into later sections or appendices.
- Assumption disclosure rule
- Every material assumption must be stated with its source and its sensitivity; an undisclosed assumption is treated as a communication failure rather than a simplification.
- Uncertainty expression
- Where a model is uncertain, results are given as a range or with an explicit confidence qualifier instead of a single point estimate implying false precision.
- Actionable recommendation test
- A recommendation is actionable only when it names the decision, the responsible owner, and the consequence of not acting on it.
- Jargon definition rule
- Each technical term is defined at first use; for non-technical readers it is replaced by a plain-language equivalent with a short parenthetical definition.
- Data quality dimensions
- Data are checked for completeness, accuracy, consistency over time, relevance to the stated purpose, and reasonableness against external benchmarks before modelling begins.
- Control total reconciliation
- Before modelling, the data set is reconciled to a control total such as audited accounts or the prior valuation, and any residual difference is explained in the report.
- Assumption categories
- Assumptions are grouped into demographic (mortality, morbidity, lapse, retirement), economic (interest, inflation, salary growth), and expense, so each can be tested separately.
- Sensitivity ranking requirement
- The report ranks key assumptions by their impact on the headline result, so the reader can see which single assumption drives the answer most.
- Model limitation disclosure
- The report states what the model does not capture, such as new business strain or stochastic tail risk, rather than implying the model is complete.
- Back-testing disclosure
- Model output is compared with actual past experience, and the size and direction of any divergence are reported to the reader.
- Reproducibility record
- A reproducible result records data source and date, assumption set and version, model version, and the person who signed off on it.
- IAI Code of Conduct
- The IAI Code of Conduct requires integrity, competence, objectivity, confidentiality, and legal compliance; conflicts of interest are disclosed rather than silently managed.
- Independence disclosure rule
- Where the actuary holds a financial or personal interest in the outcome, that interest is disclosed and, if material, the engagement is declined or independently reviewed.
- Client confidentiality limit
- Client data may be used only for the agreed purpose; sharing with third parties requires consent or a recognised legal obligation to disclose.
- Indian regulatory bodies
- Relevant Indian regulators to name in context include IRDAI for insurance, PFRDA for pensions, and Companies Act provisions governing statutory valuations.
- Standards compliance statement
- Actuarial advice states that the work complies with the applicable IAI Actuarial Standards of Practice, naming the standards relied upon where relevant.
- Whistleblowing override
- A legal or regulatory duty to report overrides client confidentiality, and the actuary documents exactly what was disclosed and to whom.
- Time allocation rule
- Exam minutes are allocated roughly in proportion to marks, with a few minutes reserved at the end to check arithmetic, units, and completeness.
- Answer planning skeleton
- Before writing, draft a three-to-five point skeleton of the answer; this secures structure marks even if the candidate later runs short of time.
- Command word meanings
- State needs a fact only, explain needs the mechanism, discuss needs both sides plus a conclusion, and calculate needs the working shown.
- Show-working principle
- Writing the formula, substituted values, and units before the final figure preserves method marks when an arithmetic slip occurs.
- Units and basis rule
- Every rate is stated with its currency and time basis, such as per annum or per month; a correct number on the wrong basis is marked wrong.
- Stated-assumption fallback
- When a question omits a required input, the candidate states a reasonable assumption explicitly and continues rather than leaving the answer blank.
- Present value formula
- Present value equals the sum over periods of each cash flow divided by one plus the interest rate raised to that period count, with compounding frequency stated.
- Reserve definition
- A reserve is the present value of expected future outgo minus expected future income on a stated basis, and any change of basis is always disclosed.