1. Actuarial advice Flashcards
Public stakeholders
GCR
Central and local Government departments
Central banks
Regulatory bodies
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
4
Company accounts
Other published information
Clients’ website
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.
