Ch 1: Actuarial advice

Question 1

Possible clients of an insurance company (19)

Answer 1

~ Board of directors
~ Employers and Employees
~ Accountant
~ Lawyer
~ Actuary
~ HR
~ Administration
~ Policyholder + their dependents
~ Shareholders
~ Competitors
~ Reinsurers
~ Banks
~ Investment managers
~ Consultants
~ Creditors
~ Government
~ Regulator
~ Auditor
~ Tax payers

Question 2

Possible clients for benefit schemes (14)

Answer 2

~ Sponsoring company’s boars of directors
~ Sponsor
~ Member + their dependents
~ Sponsoring company’s shareholders
~ Competitors
~ Insurance (cover in death service)
~ Banks
~ Investment managers
~ Advisors
~ Creditors
~ Government
~ Regulator
~ Auditor
~ Taxpayers

Question 3

Possible clients for a bank (18)

Answer 3

~ Board of directors
~ Employers and employees
~ Accountant
~ Lawyer
~ Actuary
~ HR
~ Administration
~ Account holders + their dependents
~ Shareholders
~ Competitors
~ Other banks
~ Investment managers
~ Consultants
~ Creditors
~ Government
~ Regulator
~ Auditor
~ Tax payer

Question 4

List 9 areas in which actuaries can provide advice to employers

Answer 4

1) Life and health insurance: protection against financial loss arising from sickness or death, e.g., key person insurance.
2) General insurance: protection of assets, e.g., buildings or machinery.
3) Benefit schemes: provision of work-related benefits that will attract and retain good quality staff.
4) External environment: meeting legislative requirements, tax
5) Expenses: managing running costs
6) Capital: quantification of surplus capital, and ways of raising additional capital
7) Investment: setting and monitoring
8) Risk: identification, analyzing, mitigating and quantification thereof
9) Project: project management and appraisal

Question 5

List 8 areas in which actuaries can provide advice to the board of directors of an insurance company

Answer 5

1) External environment: meeting legislative requirements, tax
2) Investment: setting and monitoring
3) Managing liabilities
4) Determining provisions
5) Premium rating
6) Meeting policyholder’s reasonable expectations (PRE)
7) Good corporate governance
8) Reinsurance requirements

Question 6

List 6 areas in which actuaries can provide advice to the sponsor of a benefit scheme

Answer 6

1) Providing protection benefits that meet the needs of the members and their dependents
2) Providing retirement benefits that meet the needs of members
3) Managing the cost of providing benefits
4) Meeting legislative requirements
5) Investment: setting and monitoring
6) Valuation of and advising appropriateness of assets and liabilities

Question 7

List 4 areas in which actuaries can provide advice to governments

Answer 7

1) Setting legislation that impacts on the provision of financial products
2) Monitoring the adherence to the legislation
3) Funding benefit provision by the state
4) Monitoring the funding of benefit provision by the state

Question 8

List 4 sources an actuary can use to get information about a client

Answer 8

1) Company accounts
2) Other published information
3) Client’s website
4) Meetings and less formal discussions with the client, to help understand the client’s culture

Question 9

What are the 3 different types of advice an actuary can give?

Answer 9

1) Factual - based on research of facts
2) Indicative _ giving an opinion without fully investigating the issue, such as in response to a direct question
3) Recommendations - researched and modeled forecasts, alternatives weighed, recommendations made consistent with requirements, work normally peer-reviewed

Question 10

List the 3 types of advice an actuary will give policyholders

Answer 10

Factual
Indicative
Recommendations

1) Life and health insurance: Protection on ill health, injury, or death (dependents)
2) General insurance: Protection of property against damages or theft
3) Investments: Saving for a future known or unknown event