CH:1 Actuarial advice

Question 1

List 9 areas in which actuaries can provide advice to employers

Answer 1

• protection against financial loss arising from sickness or death, e.g., key person insurance.
• protection of assets, e.g., buildings or machinery.
• provision of work-related benefits that will attract and retain good quality staff
• meeting legislative requirements, tax
• managing running costs
• quantification of surplus capital, and ways of raising additional capital
• Investment: setting and monitoring
• Risk: identification, analysing, mitigating and quantification thereof
• Project: project management and appraisal

Question 2

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

Answer 2

• External environment: meeting legislative requirements, tax
• Investment: setting and monitoring
• Managing liabilities
• Determining provisions
• Premium rating
• Meeting policyholders’ reasonable expectations (PRE)
• Good corporate governance
• Reinsurance requirements

Question 3

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

Answer 3

• 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
• Investment: setting and monitoring
• Valuation of and advising appropriateness of assets and liabiltiies

Question 4

List 4 areas in which actuaries can provide advice to the government

Answer 4

• 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

Question 5

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

Answer 5

• 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

Question 6

List the 3 types of advice an actuary will give trustees of a benefit scheme

Answer 6

• Ensuring scheme pays benefits as they fall due
• Maintaining solvency
• Managing and monitoring scheme investments

Question 7

List the clients that a actuary can advise
(16 possible clients)

Answer 7

• policyholders
• prospective policyholders
• members of a benefit scheme and their dependants
• employers
• insurance companies - board of directors
• insurance companies - shareholders
• insurance companies - creditors
• trustees of benefit schemes
• sponsors of benefit schemes
• employees
• auditors of insurance companies
• auditors of sponsors of benefit schemes
• investment fund managers
• members of investment schemes
• sponsors of capital projects
• banks

Question 8

What are the 6 principles of the Actuaries Code

Answer 8

• integrity
• competence and care
• impartiality
• compliance
• speaking up
• communication