CHP 2 Flashcards
- The clients actuaries advise
1. 1. Possible clients
- Policyholders
- Prospective policyholders
- Members of benefit schemes and their dependents
- Employers
- Insurance company – board of directors
- Insurance company – shareholders
- Insurance company creditors
- Trustees of benefit schemes
- Sponsors of benefit schemes
- Employees
- Auditors of insurance companies
- Auditors of the sponsors of benefit schemes
- Investment fund managers
- Members of investment schemes
- Sponsors of capital projects
- Banks
- Other stakeholders affected by actuarial advice given to clients
In most cases different stakeholders have different interests, thus it is important to identify all stakeholders. The advice given will impact other stakeholders also and these need to be considered.
Omitting one stakeholder will distort the context, e.g. one stakeholder’s risk can be source of gain for another.
- The interest and functions of the clients
3. 1. Policyholders
- Personal protection against death and illness
- Protection of property
- Investment
3.2. Members of benefit schemes and their dependants interests
• Provision of benefits on future events such as death, retirement, illness, withdrawal
3.3. Employers interests
- Protection against financial loss arising from death or ill-health of employees
- Protection of tangible assets
- Protection of intangible assets
- Provision of work-related benefits that will attract and retain quality staff
- Meeting legislative requirements
- Managing the costs of running their business
- Quantification of the amount of surplus capital in the business
- Investment of surplus capital
- Raising additional capital
3.4. Insurance companies – board of directors interests
- Meeting legislative requirements for management of the business
- Investing and managing the assets of the company
- Managing the liabilities of the company
- Determining the levels of provisions to hold to meet future liabilities
- Setting premium rates
- Ensuring that policy proceeds are paid
- Meeting policyholders’ reasonable expectations
- Meeting the demands of shareholders
- Good corporate governance
- Obtaining appropriate and adequate reinsurance to protect the business
3.5. Insurance company – shareholders interests
• Obtaining a good return on investment for the level of risk
3.6. Insurance company – creditors interests
• Certainty about being paid
3.7. Trustees of a benefit scheme interests
- Managing the assets of the scheme
- Paying the benefit promised under the scheme as they fall due
- Maintaining solvency
3.8. Sponsors of benefit schemes interests
- 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
3.9. Employees interests
- Provision of protection benefits on death
- Provision of pension benefits on retirement
- Investment of surplus personal funds
3.10. Auditors of insurance companies interests
- Assessment of long-term liabilities for life insurance companies
- Assessment of long-tail claims reserves for general insurers
3.11. Auditors of the sponsors of benefit schemes interests
• Assessment of the future liability to pay benefits
3.12. Government interests
- Setting legislation
- Monitoring the adherence to this legislation
- Funding benefit provision by the State
- Monitoring the funding of benefit provision by the State
3.13. Regulator interests
• Ensuring that regulatory requirements are met
