Actuary Group Suggests Standards for European
Insurance Directive
October 16, 2009 (PLANSPONSOR.com) - Responding to a
directive requiring an insurance undertaking to establish an
actuarial function. a group representing 36 European
actuarial associations, Groupe Consultatif Actuariel
Européen, suggested standards for persons filling that
function.
The Solvency II Directive dictates that "The actuarial
function shall be carried out 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." In a
consultation paper, the Groupe recommends that both public
interest standards and technical standards should be
formulated, "in order to ensure high quality protection of
policyholders and to facilitate convergence of professional
practice throughout the European Union."
The Groupe says public interest standards should
include:
-
Qualification standards - requirements for a
specified minimum level of education, relevant
practical experience and mandatory continuing
education. (A preliminary draft of a minimum education
syllabus for those carrying out the actuarial function
is provided in the paper.);
-
Ethical standards - covering matters such as
competence, integrity, objectivity, confidentiality and
avoidance of conflicts;
-
Governance standards - including the relationship
with senior management and with the Board of the
undertaking, cooperation in dealings with other
internal functions and with external parties, checking
and quality control of work, speaking up in case of
serious concerns and protection for those who do speak
up; and
-
Communication standards - which the Groupe says
might cover matters such as explanation of the purpose
and scope of any report, comprehensibility,
completeness, transparency, independence and
accountability. (A draft communication standard is
provided in the paper).
The Groupe also proposes that a similar set of
standards, with a considerable amount of common material,
should be developed for the persons carrying out the risk
management function under the Directive.
According to the paper, technical standards could
include interpretative standards and technical
implementation standards providing broad principles on
different aspects of carrying out the actuarial function.
The aim should be to increase consistency of professional
practice and contribute towards harmonization and
convergence of practice for all types and sizes of
insurance and reinsurance undertakings in the EU. "They
should ensure a high level of protection for policyholders,
whilst not inhibiting development and innovation in the
market," the paper says.
The paper, which discusses the process of setting,
implementing, and enforcing standards, is
here
.
Rebecca Moore
editors@plansponsor.com