ROLE OF THE

ACTUARY
CHAPTER 1
 WHAT IS AN ACTUARY ?
⮚ Dictionary: A person who does insurance or related calculations.
⮚ Current era, we might define an actuary as a financial risk
manager.
⮚ Historically, actuarial work was concerned with LIFE
INSURANCE.
⮚ Nowadays, actuaries are employed in a range of other activities
in the financial sector.
⮚ Review a variety of documents. These documents relate to
statistical information, insurance plans, annuity plans, pension
plans, contracts and company policies.
 WHAT IS AN ACTUARY ?
⮚ Then construct concise tables evidencing the results of the intense document review.
The tables will diagram the statistical evidence as well as highlight the recommended
route to pursue with regard to disbursements, premiums and retirement funds.
⮚ To determine company policy and explain such policy and its aspects to those who
will benefit from it.
⮚ Do consulting work and help various companies with their statistical needs and
company policy construction
⮚ may also be asked to testify as expert witnesses in various forms of litigation. Their
testimony most often relates to the lifetime earnings an individual would have seen
based on a variety of factors
⮚ develop mathematical ideas and formulas so that the proper data can be assessed.
The actuary must use his/her mathematical abilities to format equations which will
aid in the resolution of an issue
 Guidance To Appointed
Actuaries
• Continuously monitor the financial condition of the
company.
• Annual investigation into company’s financial condition
with a report to the directors.
• Advise on disclosure of charges and expenses in sales
projection.
• Reserving standard – that require to make proper provision
for all liabilities on prudent assumptions that shall include
appropriate margins for adverse deviation of relevant
factors.
 Guidance To Appointed
Actuaries
• Prepare the Financial Condition Report (FCR).
• Provide recommendations to the Board on the appropriateness
of surplus distribution to policyholders or participants as well
as any relevant distribution to shareholders.
• Apply the appropriate tests to reasonably satisfy himself of the
completeness and accuracy of the current database of business
used to perform the specific duties.
• The appointed actuary must take reasonable steps to avoid
actual and potential conflicts of interest in the course of
carrying out his duties.
ROLE OF ACTUARY IN LIFE
INSURANCE
 PRUDENTIAL
SUPERVISION
✔ Definition :
✔ Sensible (showing good judgment ) and careful, especially by
trying to avoid unnecessary risks.
✔ E.g : Bank Negara, MOF, SC.
✔By PS, the regulator aims to reduce the risk.
✔The regulators may delegate some activities that support
prudential supervision to actuaries. ( pricing , liabilities
etc )
✔Actuary may have to approve what is done OR simply
provide advice ( to take or ignore )
 MONITORING STANDARDS WITHIN
ACTUARIAL PROFESSION
o All actuaries have a joint responsibility for the standards of the
profession.
o In order to make sure behaviour is up to standard.
o Peer review is a positive component of professionalism, and
actuaries should consider whether it is appropriate to seek peer
review of their work, whether or not there is any formal
requirement to do so.
DATA
QUALITY