Business Awareness and Ethics
Business Awareness and Ethics
This domain tests commercial context and professional conduct: how insurers create value, who is affected, and how actuaries handle conflicts. Business awareness includes capital, distribution, competition and regulatory constraints.
Core rules and concepts
- Stakeholders include policyholders, shareholders, regulators, employees, distributors and the public.
- Governance separates board oversight, executive management and control functions.
- Ethical conduct requires integrity, objectivity, confidentiality, competence and compliance with professional standards.
- Conflicts of interest must be identified, disclosed and managed; client pressure never justifies misleading assumptions.
- Whistleblowing and escalation protect policyholders and the profession.
Worked example
A product manager asks an actuary to reduce the mortality margin to hit a sales target. The actuary documents the requested change, tests its effect on solvency and policyholder fairness, and explains that the original margin is needed for risk. If pressure continues, the actuary escalates to the chief actuary or compliance. The decision is recorded, not hidden in a revised spreadsheet.
Traps
Treating shareholder and policyholder interests as always aligned, accepting pressure to soften assumptions, breaching confidentiality, and confusing legal compliance with ethical conduct. Also failing to document oral advice.