Chapter 1: Actuarial advice Flashcards
(18 cards)
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
List public sector stakeholders than 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 and 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 the death or ill health of employees
- 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 for the management of the business
- Inveseting 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
- 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 dependents
- 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 risks underlying the project
- Consideration of potential risk mitigation techniques
- Evaluation of the future cashflows
List 4 areas in which actuaries can provide advise 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’ 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 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 - researched 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 TASs?
To ensure that “users for whom actuarial information is created should be able to place a high degree of reliance on 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 the departure (or the combined effect if there is more than one departure) could influence the decisions to be taken by the users of the resulting actuarial information.
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
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)
