CH 1: Actuarial advice Flashcards
Identify stakeholders in private and public sector that actuary can advise
Private:
Employers and employees
Insurance company:
- policyholders (current and prospective)
- shareholders
- creditors
- auditors
- board of directors
Benefit scheme:
- sponsors
- members and dependants
- trustees
Auditors
- of insurance companies
- of sponsors of benefit schemes
Investment fund managers
Investment scheme members
Sponsors of capital projects
Banks
PUBLIC:
Governments
Related organisations (central banks, regulatory bodies)
Give types of advice to policyholders (prospective and current)
Personal protection against death and illness
Protection of property
Investment ‘
Retirement planning
Protection if requiring long term/housing care
Protection against personal liability claims
Types of advice to benefit scheme members
Paying promised benefits under scheme when fall due (death, retirement, illness, withdrawal)
Types of advice to sponsors of benefit schemes
Provision of retirement and protection mechanisms meeting members needs
Managing cost of liabilities, able to pay them
Meeting legislative requirements
Auditors of sponsors of benefit schemes
How to assess/price future liabilities of benefit schemes
Government
Setting legislation that impacts provision of financial products
Monitoring adherence to the regulations
State benefit funding, monitoring this funding
Employers
Protection against financial loss from employee death/illness
Asset protection
Work related benefits to attract quality staff
Meeting legislative requirements
Managing business running costs
Quantifying surplus capital in business
Investment of surplus capital
Employees
Provision of protection benefits on death/sickness, pension on retirement
Investment of personal funds
Insurance company
Board of directors:
- meeting legislative requirements
- asset management and investment
- liability management
- level of provisions to hold for future liabilities
- setting premiums
- meeting policyholders reasonable expectations
- good corporate governance
- reinsuarance
Shareholders
- getting good return for level of risk undertaken
Creditors
- money owed to be paid
Auditors
- assessment of provisions
Investment fund managers
Investment strategy to meet liabilities and objectives
Members of investment schemes
- understand how to invest to meet objectives and specific liabilities
Sponsors of capital projects
- assessment of risks underlying project
- risk mitigation techniques
- evaluating future CFS
Banks
- provision of investment savings products
- use of investment/surplus funds
- central bank on monetary policy
- account holders: disclosure of products
Regulators
Ensuring regulaltory requirements met
Give types of advice actuaries can provide
Indicative - gives opinion without fully investigating issues (eg oral)
Factual - based on research/facts
Recommendations - researched and modelled forecasts, alternatives weighted, recommendations made consistent with requirements. Work normally peer reviewed
What responsibilities does the actuary have in giving advice/recommendations
- actuary gives advice but client decides on solution to adopt
- actuary must explain assumptions made when reaching advice and recomendation
- explain to client implications of alternative assumptions and solutions considered but not recommended
- implication of other solutions on client and other stakeholders affected
What responsibilities does the actuary have in making decisions
- actuary makes final decision
- well documented rational behind making decision, and alternatives
- if actuary is one taking and advice and giving it ( eg executive role), must seek further advice or peer review of decision made. Must not only go on own judgement
Discuss the professional and technical standards that might apply to actuarial advice
Professional conduct standards:
Principals : Integrity, competence and care, impartiality, compliance, speaking up, communication
UK: Actuaries Code
SA: Code of Professional Conduct ASSA
Technical and ethical standards:
Standards of best practise, apply to all members of a profession
Disciplinary procedure in event of not following
Most actuarial organisations have their own frameworks and codes
Actuarial quality framework:
Supports effective communication between actuaries and other stakeholders in actuarial work
Aims to promote drivers of actuarial quality:
- Methods: reliability and usefulness
- Communication of info and results
- Actuaries: technical skills, ethics, professionallisim
- Environment: working environment for actuaries and other factors outside their control
Give potential conflicts of interest (in questions)
