CH 1: Actuarial Advice Flashcards

1
Q

Clients (consumers/beneficiaries) (6)

A
  • Policyholders
  • Prospective policyholders
  • Members of benefit schemes and their dependants
  • Employers
  • Members of investment schemes
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2
Q

Clients (providers) (2)

A
  • Employers
  • Insurance companies
  • Trustees of benefit schemes
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3
Q

Clients (owners/managers of providers) (3)

A
  • Board of directors
  • Shareholders
  • Investment fund managers
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4
Q

Clients (providers of capital) (4)

A
  • Creditors
  • Sponsors of capital projects
  • Sponsors of benefit schemes
  • Banks
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5
Q

Clients (Regulatory position) (2)

A
  • Auditors
  • Government
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6
Q

Important things to consider when giving advice (4)

A
  • Identify all stakeholders involved
  • Retain a sense of proportion of the interests of certain stakeholders
  • Omitting certain stakeholders may distort the context of the advice
  • Not all stakeholders directly involved in remunerating the actuary for advice
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7
Q

Interest of current/prospective policyholders (3)

A
  • Personal protection against death and illness
  • Protection of property
  • Investment
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8
Q

Interests of current/prospective policyholders (3)

A
  • Personal protection against death or illness
  • Protection of property
  • Investment
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9
Q

Interests of members of benefit schemes and their dependants (1)

A
  • Provision of benefits on future events such as death, retirement, illness and withdrawal
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10
Q

Interests of employers (7)

A
  • Protection against financial loss arising from the death or ill health of employees
  • Protection of assets
  • Provision of work related benefits that will attract and retain good quality employees
  • Meeting legislative requirements
  • Managing the costs of running the business
  • Quantification of the amount of surplus capital in the business
  • Investment of surplus capital
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11
Q

Interests of insurance company board of directors (8)

A
  • Meeting legislative requirements for the management of the business
  • Investing and managing the assets of the company
  • Managing the liabilities of the company
  • Determining the level of provisions to hold to meet future liabilities
  • Setting premium rates
  • Meeting policyholders’ reasonable expectations
  • Good corporate governance
  • Obtaining appropriate and adequate reinsurance to protect the business
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12
Q

Interests of insurance company shareholders (1)

A
  • Obtaining a good return on their investment and the return reflects the risk taken
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13
Q

Interests of creditors (1)

A
  • Certainty that monies owed to them will be paid
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14
Q

Interests of trustees of benefit schemes (3)

A
  • Managing the assets of the scheme
  • Paying benefits promised under the scheme as they fall due
  • Maintaining solvency
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15
Q

Interest of sponsors of benefit schemes (4)

A
  • Providing protection benefits that meet the needs of their members and their dependants
  • Providing retirement benefits that meet the needs of their members
  • Managing the cost of providing the benefits
  • Meeting legislative requirements
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16
Q

Interests of employees (3)

A
  • Provision of protection benefits on death or sickness
  • Provision of pension benefits on retirement
  • Investment of surplus personal funds
17
Q

Interests of auditors (1)

A
  • May require advice on assessment of provisions
18
Q

Interests of sponsors of benefit schemes (1)

A
  • May require advice on the assessment of future liability to pay benefits
19
Q

Interests of investment fund managers (1)

A
  • May require advice on investment strategy taking into consideration the need to meet future liabilities
20
Q

Interests of members of investment schemes (1)

A
  • How to invest in order to meet specific liabilities or objectives
21
Q

Interests of Sponsors of capital projects (3)

A
  • Assessment of the risks underlying the project
  • Consideration of potential risk mitigation techniques
  • Evaluation of future cashflows
22
Q

Interests of banks (3)

A
  • Provision of investment and savings products and investment of surplus funds
  • Advice to central banks on monetary strategy
  • Providing account holders with disclosure info on products
23
Q

Interests of government (4)

A
  • Setting legislation that impacts on the provision of financial products, schemes, contracts and transactions that provide benefits on future financial events
  • Monitoring the adherence to this legislation
  • Funding benefit provision by the state
  • Monitoring the funding of benefit provision by the state
24
Q

Interests of regulators (1)

A
  • Ensuring regulatory requirements are met
25
Q

Types of advice (3)

A
  • Factual
  • Giving an opinion without fully investigating the issues
  • Indicative
  • Based on research of facts
  • Recommendations
  • Researched and modelled forecasts, alternatives weighted, recommendation consistent with requirements, work normally peer-reviewed