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 .
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