The Regulatory Environment and Challenges for the Actuarial Profession

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The regulatory environment at both international and local level are increasingly based on actuarial expertise to support the lines of defence for financial institutions and the use of quantitative analytical methods.

The Regulatory Environment and Challenges for the Actuarial Profession

ns and the use of quantitative analytical methods. These roles require well-defined technical competences and fit & proper conditions for those who take on these roles. The challenge for the actuarial profession is to create the appropriate framework so that the individual actuaries meet the expectations of all stakeholders.

Recent evolution in the regulatory environment

The Solvency II Directive 2009/38/EC introduced the Actuarial Function, focusing in particular on the coordination of technical provisions as part of the Solvency II balance sheet and a contribution to the risk management system. It also stipulates that the actuarial function must be performed by persons who have knowledge of actuarial and financial mathematics, commensurate with the nature, scale and complexity of the risks inherent in the business of the insurance or reinsurance undertaking, and who are able to demonstrate their relevant experience with applicable professional and other standards.

A survey amongst the members of the AAE Member Associations shows
that almost 100% of the Actuarial Function Holders are qualified actuaries who meet the fit and proper conditions.

The same Directive also defines a Risk Management Function that is responsible for the risk management system. More than half of the Function Holders or CROs are qualified actuaries. The CRO Round Table organized by the AAE in November 2018, concluded that the challenge for the actuarial profession to prepare for the role of CRO/Actuary is to find out how we can bring the actuary as close as possible to the most perfect person knowing that the professional conditions (technical know-how) are met, but not necessarily the behaviourial ones (business context, communication, understanding and open mind). As reported in The European Actuary (March 2019), it is the intention to involve the CRO/Actuaries, so that the right environment is created that offers comfort and support to the large group of actuaries active in the
field of risk management.

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Over de auteur

Ad Kok AAG Hon FIA

Actuaris AG, eigenaar en Directeur Akureyri BV en Vinoloog Wijnacademie.