The prudential regulator APRA has proposed requiring insurers to establish a framework for the provision of actuarial advice within the company. The proposal is for the Appointed Actuary to play an active role in the development of the framework and in any future amendments to it. The framework would require approval by the board, having taken into account advice from the Appointed Actuary.
The proposal is among several in a consultation package released yesterday by APRA on the role of the Appointed Actuary within general, life and private health insurers.
This follows a discussion paper released in June 2016 in which APRA proposed a set of changes to the role of the Appointed Actuary and actuarial advice within insurers. The consultation package responds to the submissions on the discussion paper, which were broadly supportive of APRA’s proposed approach.
The package also proposes replacing three industry-specific actuarial prudential standards with a streamlined, cross-industry standard and an accompanying prudential practice guide.
APRA Member Geoff Summerhayes said that APRA values the Appointed Actuary's role and the important part it plays in protecting policyholder interests, but that the effectiveness of the role had been diminished in parts of the industry.
“These proposals are a significant step forward in putting the role on a sustainable footing and ensuring that that Appointed Actuaries are able to make their important prudential contribution. There is more that can and should be done by insurers and the actuarial profession to fully address the underlying causes of the issues observed by APRA,” Mr Summerhayes said.
“The proposals simplify the prudential framework and give insurers more flexibility to determine how and by whom actuarial advice is provided.”
APRA is inviting written submissions on the proposals by 15 December 2017.