Chapter 1: Actuarial Advice Flashcards
List public sector stakeholders that an actuary can advise
- Central and local government departments
- Central banks
- Regulatory bodies
List 12 stakeholders involved in a pension scheme
- Members
- Members’ dependents
- Trustees
- Shareholders of the sponsor
- Directors of the sponsor
- Employees of the sponsor (Who are not scheme members)
- Auditors / accountants
- Regulatory bodies
- Government
- Administrators
- Investment fund managers
- Creditors of the sponsor
List 7 areas in which actuaries can provide advice to employers
- Protection against financial loss arising from sickness or death.
- Protection of assets
- Provision of work related benefits that will attract and retain good quality staff
- Meeting legislative requirements
- Managing the costs of running the business
- Quantification of surplus capital
- Investment of surplus capital
List 8 areas in which actuaries can provide advise to the board of directors of an insurance company
- Meeting legislative requirements
- Investment and management of assets
- Managing liabilities
- Determining provisions
- Premium rating
- Meeting policyholders’s reasonable expectations (PRE)
- Good corporate governance
- Reinsurance requirements
List 4 areas in which actuaries can provide advice to the sponsor of a benefit scheme
- 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
List 4 areas in which actuaries can provide advise to the government
- Setting legislation that impacts on the provision of financial products
- Monitoring the adherence to the legislation
- Funding benefit provision by the state
- Monitoring the funding of benefit provision by the state
List four sources an actuary can use to get information about a client
- Company accounts
- Other published information
- Client’s website
- Meetings and less formal discussions with the client, to help understand the client’s culture
Need to understand:
- their circumstances and objectives
- potential conflicts of interest
- attitude of client, in particular, appetite and culture
What are the 3 different types of advice an actuary can give?
- Factual - based on research of facts
- Indicative - giving an opinion without fully investigating the issue, such as in response to a direct question
- Recommendations - researched and modeled forecasts, alternative weighted, recommendations made consistent with requirements, work normally peer reviewed
What are the aims of the TASs (Technical Actuarial Standard’s)
To ensure that the users of actuarial information can have confidence in that information’s relevance, transparency of assumptions, completeness and comprehensibility, including the communication of any uncertainty inherent in the information.
What is the definition of ‘materiality’ in the TASs
Something is material, if at the time the work is performed, the effect of a departure from the TAS requirement could INFLUENCE the DECISION to be taken by the users of the resulting actuarial information.
This means that a principal can be ignored if it is felt that its inclusion would not have a material effect on the decision
What are the 4 drivers of Actuarial Quality
- Reliability and usefulness of actuarial methods
- Communication of actuarial information and advise
- Technical skills of actuaries and ethics and professionalism of actuaries
- Working environment of actuaries and other factors outside their control
6 principles of the Actuaries’ code
- integrity
- competence and care
- impartiality
- compliance`
- communication
- speaking up (whistleblowing)
Requirements to operate as a professional actuary
- recognises VIEWS of others
- detachment from own circumstances
- acts with INTEGRITY
- good COMMUNICATOR
- gives sound ACTUARIAL ADVICE (due to competence and skills)
- develops a direct, personal and trusting RELATIONSHIP with the client (to suitable solutions)
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
SAP vs APN
- Standard Actuarial Practice is compulsory to follow and failure to do so may result in a disciplinary process
- Actuarial Practice Notes are guidelines and any departures from it must be outlined
