CH 1: Actuarial advice Flashcards
Possible clients whom actuaries can advise (private sector
INSURANCE COMPANY:
- prospective policyholders
- policyholders
- board of directors
- shareholders
- creditors
- auditors
BENEFIT SCHEMES:
- members and their dependents
- employers
- trustees
- sponsors
- auditors of the sponsors
OTHER:
- employees
- investment fund managers
- members of investment schemes
- sponsors of capital projects
- banks
All Stakeholder interests should be considered from their POV
Issues on which actuaries can advise:
* policyholders
* prospectrive policy holders
* members of benefit schemes.
- Protection against death
- Protection against Illness
- Protection against personal liabilities
- Protection of property
- Investments
- Retirement Planning
Issues on which actuaries can advise employers
PROTECTION
- against financial loss arising from the death or ill-health of employees
- assets
PROVISION
- provision of work-related benefits that will attract and retain good quality staff
BUSINESS
- meeting legislative requirements
- managing the costs of running their business
- quantification of the amount of surplus capital in the business
- investment of surplus capital
Issues on which actuaries can advise insurance company creditor
- The certainty that the monies owed to them will be paid
Issues on which actuaries can advise Board of directors
- Legislative requirements
- Asset/Liability Management
- Reserving
- Pricing
- Reinsurance
Main actuarial functions
Issues on which actuaries can advise trustees of benefit schemes
- managing the assets of the scheme
- paying the benefits promised under the scheme as they fall due
- maintaining solvency
Issues on which actuaries can advise sponsors of benefits schemes
- providing protection benefits that meet the needs of the members and their dependents
- providing retirement benefits that meet the needs of the members
- managing the cost of providing the benefits
- meeting legislative requirements
Issues on which actuaries can advise employees
PPPPRI
Issues on which actuaries can advise auditors of insurance companies
- assessment of long-term liabilities for life insurance companies
- assessment of long-tail claims reserves for general insurers.
Issues on which actuaries can advise the government
LEGISLATION
- 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
BENEFIT PROVISION
- Funding benefit provision by the State
- Monitoring the funding of benefits provided by the State.
Issues on which actuaries can advise the regulator
- Ensuring that regulatory requirements are met.
Knowing the client
Sufficient INFO gathered about the client:
* Subjective and factual info
* Background, Ethical position,culture, risk appetite
Know FOR WHOM in the firm the work is being performed
Aware of any CONFLICTS within the firm
Aware of COMPLAINTS procedures in place
Giving Advice
- Should be given in a comprehensible, timely manner
Consider impact of advice on all stakeholders:
* Vulnerable stakeholder special care, exposed to risk of harm .
* Optimal solution balance impact on vulnerable with cost efficiency
Advice and Decisions
3 types of Advice
Advice
* Factual- Based on research and facts
* Indicative- Opinion without research
* Recommendations- Research, Model, Alternatives, Peer reviewed
Decisions
* No decision taken on solution to adopt, done by client.
* Assumptions made explained and relevant.
* Peer review when taking decisions
FIR
6 principles of the Actuaries’ code
Professional conduct standards
- integrity
- competence and care
- impartiality
- compliance
- communication
- speaking up
