Ipec enforces new actuarial rules

HARARE - The Insurance and Pensions Commission has issued a stern warning saying all insurance companies should engage actuaries for key validation on their activities or face serious consequences.

The development comes at a time when some insurance companies and pension funds are said to be snubbing actuarial services due to high fees.

It is understood that actuarial charges range from $20 per hour for a junior analyst coming straight from university to more than $300 per hour for a consultant with more than 15 years work experience and appointed or statutory or actuarial function holders.

Ipec spokesperson Lloyd Gumbo told The Financial Gazette last week that it was now a mandatory requirement for all insurance companies to engage actuaries. He said the regulator was enforcing this requirement.

“It is a mandatory requirement for all insurance companies to engage actuaries when pricing their products, reserving, conducting own risk and solvency assessments, among other things, “Gumbo said.

“This requirement is also enshrined in the risk management and corporate governance recently issued by the Commission, as well as Statutory Instrument 95 of 2017. The Commission has been enforcing this requirement, therefore barring a few bad apples in the market.”

Players in the insurance and pensions industry rely heavily on actuarial expertise to solve complex financial situations.

These include setting pricing of their financial products, capital management, risk management, business planning and support, mortality investigations, health and sickness investigations, asset-liability matching, financial reserve calculations, software development and legislative consultancy.

Actuaries also give advice on setting prices for securities, pensions and stress testing of future financial conditions of financial institutions.

To evaluate, manage and advise on financial risks, actuaries use mathematical modelling techniques and statistical concepts to determine the possible outcome of events that could potentially cause policy holders to make claims against their insurance policies.

They also evaluate the potential risks each event posses in terms of the costs associated with the event, should it actually occur.

To price commercial insurance, this requires strong numerate subjects such as mathematics, statistics or economics.

Importantly, the analysis actuaries do ensures that the money the insurance companies are charging and collecting from policy holders is adequate to cover the costs of settling the claims that might potentially be made by policyholders as well as other expenses

— The Financial Gazette

Comments (1)

these actuaries should also be checked and investigated they give false reports to please the board /?

christopher stoddart - 25 May 2018

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