The Australian Prudential Regulation Authority (APRA) has released for consultation a discussion paper with proposals to streamline and sharpen the role of the Appointed Actuary within general and life insurers.
The Appointed Actuary plays an important role by providing independent, expert advice to boards and senior management on the key financial risks facing an insurer.
In the discussion paper released today, APRA has identified a set of proposals to improve the functioning of the Appointed Actuary role and ensure that it remains fit-for-purpose. The proposals are intended to improve outcomes for the industry, the actuarial profession and APRA, by strengthening the ability of the Appointed Actuary to act as a key strategic advisor to insurers and their boards.
The proposals have been informed by feedback from actuaries, industry bodies and other interested parties. This feedback suggested the increasing number of tasks required of Appointed Actuaries has led to the role being more focused on compliance rather than strategic advice.
The main proposals in the discussion paper cover the following areas:
- introducing a purpose statement for Appointed Actuaries;
- implementing a clear actuarial advice framework;
- managing potential conflicts of interest;
- improving reporting requirements; and
- simplifying prudential standards.
APRA Member, Geoff Summerhayes said ‘these proposals provide the necessary flexibility for the Appointed Actuary to reduce the heavy compliance focus of the role and increase the capacity for Appointed Actuaries to be a strategic advisor to the board.’
Given the significant contribution that an effective Appointed Actuary can make to an insurer and to prudential safety more broadly, there are strongly aligned interests between APRA, insurers and the actuarial profession in implementing change. APRA welcomes the engagement of stakeholders so far in this review, and looks forward to working closely with industry and the actuarial profession to realise the benefits of APRA’s proposed changes.
Some of the proposals in the discussion paper are likely to be relevant to private health insurers and APRA will consider applying them to private health insurers in due course.
APRA invites written submissions on the proposals in the discussion paper by 21 September 2016. APRA also intends to release draft prudential standards for consultation in late 2016. The discussion paper can be found on APRA’s website.