Chapter 1: Actuarial advice Flashcards
List the possible clients whom actuaries can advise in the private sector
Insurance Company:
* policyholders
* prospective policyholders
* board of directors
* shareholders
* creditors
* auditors
Benefit Schemes:
* members and their dependants
* employers
* trustees
* sponsors
* auditors of the sponsors
Other:
* employees
* investment fund managers
* members of investment schemes
* sponsors of capital projects
* banks
List the public sector stakeholders that an actuary can advise
- Central and local government departments
- Regulatory bodies
- Central banks
List 6 areas in which actuaries can provide advice to prospective policyholders
- Personal protection against death or illness
- Protection of property
- Investment
- Retirement planning
- Protection against requiring long-term home or nursing care
- Protection against personal liability claims.
List 7 areas in which actuaries can provide advice to employers
- Protection against financial loss arising from sickness or death
- Potection 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 advice to the board of directors of an insurance company
- Meeting legislative requirements
- Investment and management of assets
- Managing liabilities
- Determining provisions
- Setting premium rates
- Meeting policyholders’ reasonable expectations
- Good corporate governance
- Obtaining appropriate and adequate reinsurance to protect the business.
List 3 areas 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
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 dependants
- Providing retirement benefits that meet the needs of the members
- Managing the cost of providing the benefits
- Meeting legislative requirements
List 3 areas actuaries can advise employees
- Provision of protection benefits on death or sickness
- Provision of pension benefits on retirement
- Investment of surplus personal funds
List 3 areas actuaries can advise sponsors of capital projects
- Assessment of the risk underlying the project
- Consideration of potential risk mitigation techniques
- Evaluation of the future cashflows
List 4 areas in which actuaries can provide advice to the government
- 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.
List 12 stakeholders involved in a pension scheme
- Members
- Members’ dependants
- Trustees
- Shareholders of the sponsor
- Directors of the sponsor
- Employees of the sponsor
- Auditors / accountants
- Regulatory bodies
- Government
- Administrators
- Investment fund managers
- Creditors of the sponsor
List 4 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.
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 - research and modelled forecasts, alternative weighted, recommendations made consistent with requirements, work normally peer reviewed.
List the 6 principles of the Actuaries’ Code
- Integrity
- Competence and care
- Impartiality
- Compliance
- Speaking up
- Communication
What are the aims of the Technical Actuarial Standards (TASs)
To ensure that the users of acturial 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 principle 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
- Methods - Reliability and usefulness of actuarial methods
- Communication - Communication of actuarial information and advice
- Actuaries - Technical skills of actuaries and ethics and professionalism of actuaries
- Environment - Working environment for actuaries and other factors outside the control of actuaries.
List the requirements to operate as a professional actuary
- Recognise the views of others
- Detachment from own circumstances
- Acts with integrity
- Good communicators
- Gives sound actuarial advice (due to competence and skills)
- Develops a direct, personal and trusting relationship with the client (to suitable solutions)
