1 - Actuarial advice

Question 1

Who are the stakeholders that actuaries give advice to?

Answer 1

Private sector:
Insurance companies and its stakeholders
Benefit schemes and its stakeholders
Employers
Employees
Investment fund managers
Members of investment schemes
Sponsors of capital projects
Banks

Public sector:
Government departments
Regulatory bodies

Question 2

What information about a client should and actuary collect before giving advice?

Answer 2

Public information (accounts, websites)
Pre-project meeting with client
Attitude of client w.r.t. risk appetite and culture
Potential conflicts of interest
Circumstances and objectives

Question 3

Give the different types of advice given by actuaries

Answer 3

Indicative advice - an opinion
Factual advice - based on research
Recommendations - involves research, modelling, consideration of alternatives.

Question 4

What should be included in Actuarial advice?

Answer 4

Alternative solutions
Implications of each solution on all stakeholders
Outline assumptions
Reason for assumptions

Question 5

What are the principles outlined in the Institute and Faculty of Actuaries’ (IFoA) Code?

Answer 5

Integrity 
Competence and Care
Impartiality
Compliance
Speaking up
Communication

Question 6

What is meant by a ‘vulnerable stakeholder’?

Answer 6

Stakeholders most exposed to risk

Those stakeholders who do not have resources to mitigate or avoid risk.

Question 7

Give the most important consideration for actuarial advice after considering the individual client’s needs.

Answer 7

How the advice may impact other stakeholders, especially vulnerable stakeholders.

Question 8

How might an actuary advise policyholders?

Answer 8

Personal protection against death and illness
Protection of property
Investment

Question 9

How might an actuary advise trustees of a benefit scheme?

Answer 9

Managing the assets of the scheme

Paying the benefits promised under the scheme as they fall due

Question 10

How might an actuary advise sponsors of a benefit scheme

Answer 10

Providing protection and retirement benefits that meet the needs of the members and their dependants
Managing the cost of providing the benefits
Meeting legislative requirements

Question 11

How might an actuary advise the government

Answer 11

Setting and monitoring adherence to legislation

Funding benefit provision by the state and monitoring this funding