Professional Ethics and Actuarial Practice Standards
This domain tests how an actuary behaves when technical work meets commercial pressure: integrity, objectivity, competence, confidentiality, clear reporting, and the discipline of documenting assumptions so that another actuary could reproduce the result.
Core rules
- Actuarial advice must be objective and independent of the interests of the employer or client; advocacy for a predetermined number is a breach.
- Competence: work outside the actuary's expertise requires qualification, peer review or disclosure of limitations.
- Confidentiality is owed to the client but yields to legal and regulatory disclosure, including reserve certifications submitted to the Central Insurance of Iran.
- Data quality: state the source, completeness and any material limitations; do not silently adjust unaudited data.
- Documentation must let a reviewing actuary replicate every assumption, model and judgement, with sensitivity results.
- Conflicts of interest must be disclosed and managed, not merely noted after the fact.
Worked example
A chief executive asks the valuation actuary to cut IBNR by 20 billion rials to lift reported profit. The actuary checks the evidence, finds no basis, and refuses; the refusal, the evidence and the sensitivity of the solvency ratio to the changed reserve are recorded, and the matter is escalated to the audit committee and the appointed actuary's report. If reserves are 800 billion, a 20 billion understatement reduces liabilities by 2.5% and correspondingly overstates the reported solvency ratio.
Traps
- Signing an opinion you cannot support because someone senior requested it.
- Omitting caveats about data you know to be incomplete.
- Disclosing client information outside regulatory or legal channels.
- Accepting a scope so narrow the result is misleading without saying so.
- Failing to document judgement-based assumptions, making the work unreproducible.