The role of an appointed actuary
Within the insurance industry, appointed actuaries have a critical legislated role as they measure and report on material risks, which can threaten an insurer's financial condition and solvency.
An appointed actuary also provides impartial advice to an insurer’s board of directors and senior management to help them make sound decisions. This support can greatly strengthen an insurer’s risk and capital management and lead to the increased security of policyholders.
What the review found
Appointed actuaries all had good practices in place to keep their knowledge up to date, and their financial condition reports were highly valued by insurers. Many of the appointed actuaries also had their most important work peer reviewed regularly.
Our two main findings were the need for clarity and guidance around what we expect of the appointed actuary role, and the risk that the role's impartiality could be affected adversely by factors such as the influence of senior management and reporting lines.
Some key areas for improvement we identified included:
- processes for appointments, absences and reviews to continue with or replace the appointed actuary
- how prepared the appointed actuary is to manage a crisis
- identifying and managing conflicts of interest
- clarity of delegations
- processes for following up recommendations in the financial condition reports
- engagement between the insurer's board and the appointed actuary
- engagement between us and appointed actuaries
- guidance around our expectations of the appointed actuary role, including explicit expectations regarding their independence and impartiality.
Report link and policy note
You can read our report of the review and the policy note we published at the same time, which set out our expectations of insurers and appointed actuaries.