1. Actuarial Advice

Question 1

Types of advice

Answer 1

1. Indicative
2. Factual
3. Recommendations

Question 2

Indicative advice

Answer 2

Opinion without full investigation of the issues

E.g.

1. Answering a direct oral question
2. review member communication docs.

Question 3

Factual advice

Answer 3

Based on research of facts

E.g.

1. Legislation
2. Calculating the actual lapse rate
3. Finding min/ave sum assured in a book of policies.

Question 4

Recommendations

Answer 4

Researched + modelled forecasts, alternatives weighed, recommendations made that are consistent with the environment and the work is normally peer reviewed.

E.g.

1. Profit testing
2. Recommending a DB contribution rate

Question 5

Technical Actuarial Standards (UK)

Answer 5

o Reliability objective (people must be reliant that info is relevant, assumptions are transparent, info is comprehensive + complete and any uncertainty is communicated)
o Work may deviate from TAS if the effect is immaterial.
o Breach = disclose + justify.

Question 6

Actuarial Quality Framework

Answer 6

• Designed by FRC[financial reporting council]
• Aims to support effective communication between actuaries and stakeholders.
• Areas of concern:
  1. Use of reliable and useful methods
  2. Communication
  3. Actuarial technical skills, ethics and professionalism
  4. Working environment of actuaries and other factors outside of actuaries’ control

Question 7

Giving advice

Answer 7

• Make assumptions in reaching advice.
• State the reasons for making assumptions, their implications and alt solutions.
• E.g. Recommending bonus rates to BOD in with profits insurance co.
• May make implicit decisions while formulating advice (e.g. grouping policyholders for bonus allocation).
• Must disclose such decisions.

Question 8

Making decisions

Answer 8

• E.g. Determining surrender values under life insurance policies
• Must document rationale behind decisions + alternatives.