The draft directive emphasises the importance of having a strong actuarial function in the business. It states that the key roles of the actuarial function are not only to ensure a robust calculation of technical provisions, but also to give an opinion on the overall underwriting policy and adequacy of reinsurance arrangements. Actuarial involvement should also encompass the risk modelling underlying the calculation of the capital requirements and the ORSA and a contribution more generally to the implementation of the firm’s risk management system.
In our view this presents an opportunity for actuaries to spread beyond their traditional role. However, it is also a challenge as they may be moving into less familiar areas.
In some firms these additional responsibilities could present a problem where it is not seen as cost-effective to maintain an internal actuarial function, or where existing resources are already stretched. One solution may be to outsource some of these responsibilities, which would bring the added benefit of an independent view. Any such outsourcing will, however, be subject to scrutiny.
