1. Actuarial advice Flashcards
Public stakeholders that actuary may advise
GCR
* Central and local Government departments
* Central banks
* Regulatory bodies
List twelve stakeholders involved in a pension scheme
- Members
- Members’ dependents
- Trustees
- Shareholders of the sponsor
- Directors of the sponsor
- Employees of the sponsor
- Auditors/accountants
- Regulatory bodies
- Governemnt
- Adminstraitors
- Investment fund managers
- Creditors of the sponsor
Advice to Employers
PPPMMQI
- Protection against financial loss from sickness or death of employee
- Protection of assets
- Provision of work-related benefits
- Meeting legislative requirements
- Managing the costs of running the business
- Quantification of surplus capital
- Investment of surplus capital
Advice to Board of directors of Insurance company
MMMIDGRP
- Meeting legislative requirements
- Meeting policyholders’ reasonable expectations
- Managing liabilities
- Investing and management of assets
- Determining provision
- Good corporate governance
- Reinsurance requirements
- Premium rating
Advice to Sponsors of Benefit schemes
MMPP
- Managing the cost of providing the benefits
- Meeting legislative requirements
- Providing protection benefits that meet the needs of the members and their dependants
- Providing retirement benefits that meet the needs of the members
Advice to Government
SMFM
- Setting legislation
- Monitoring the adherence to this legislation
- Funding benefit provision by the state
- Monitoring the funding of benefit provision by the state
Advice to Policyholders
RIPPP
- Retirement planning
- Investment
- Personal protection against death and illness
- Protection on property
- Protection against personal liability claims
Shareholders
- Appropriate investment return for the risk taken
Creditors
- Certainty that the money owed to them will be paid in full and on time
Auditors of insurance company(benefit scheme)
- Assessment of provisions (schemes’ ability to pay benefits)
- Ensure company accounts are true and fair
Trustees
- Managing the assets of the scheme
- Paying financial benefits when they are due
- Maintaining solvency
Advice to Banks
SUMP
- Saving products
- Investment of surplus funds
- Monetary strategy (Central banks)
- Provision of investment
Types of Advice
RIF
- Recommendation=> researched + model forecasts + alternatives weighted + recommendations consistent with requirements + work peer reviewed
- Indicative => opinion without researching fully
- Factual => research + facts => legislation
Sources of information
5
Company accounts
Other published information
Clients’ website
Additional information requested directly from the client
Meeting and less formal discussions with clients
When an actuary is giving advice to a client who must make a decision on that advice, what factors should be considered?
- Set out alternative solutions and their implications on the client and other stakeholders
- Set out and explain the implications of each alternative solution => recommended or not
- Set out assumptions made and reasons
- Be aware of who the client is
- Avoid conflicts of interest
- Consider whether other professionals should be involved in giving advice
What should an actuary do if they both give advice and making the final decision
- Peer review
- Seek opinion form other professionals
- Rational behind any decision => properly documented
- Including documentations for alternatives
Technical Actuarial Standards (TASs): Issued by FRC
Reliability Objective
TAS 100: Principles for Technical Actuarial work
Specifics TASs
TAS 200: Insurance
TAS 300: Pensions
TAS 400: Funeral plan trusts
International Actuarial Association (IAA)
Worldwide association of professional actuarial bodies
Aims to represent the actuarial profession and promote its role, reputation and recognition
Issues International Standards of Actuarial Practice (ISAPs)
The Actuarial Quality framework: Developed by FRC
Designed to support effective communication between actuaries and stakeholders
-aims to promote MACE
Methods – reliability and usefulness of actuarial methods
Actuaries – technical skills of actuaries and ethics and professionalism of actuaries
Communication – communication of actuarial information and advice
Environment – working environment for actuaries and other factors outside the control of actuaries.
