APRA has suggested that the function of the appointed actuary role could be improved as it has become increasingly compliance-focused, particularly in the life insurance sector.
According to APRA’s discussion paper The role of the Appointed Actuary and actuarial advice within insurers, proposals included introducing a purpose statement for appointed actuaries, implementing a clear actuarial advice framework, improving the management of potential conflicts of interest and improving reporting requirements.
APRA said that as the responsibilities of the appointed actuary have expanded, their ability to provide strategic advice to the board and senior management has become limited, with the issue particularly acute in the life insurance sector.
“APRA has observed the increased turnover of appointed actuaries within life insurers and difficulties in recruiting into appointed actuary roles in recent years and is concerned that these trends are driven by the demanding nature and compliance focus of the role,” the paper said.
“There are strongly aligned interests between APRA, insurers and the actuarial profession in implementing change.”
APRA noted that the implementation of the proposals would result in increased flexibility, streamlined requirements and greater clarity in the role that an appointed actuary plays within an insurer.
The regulator added that while the impetus for reform has come from issues in the life insurance sector, it is also an opportunity to apply the same lessons in the general insurance industry.