Industry Questions/Comments
[Sections 214 & 215 of the Insurance Act 2018]
While there is a 3 year timeframe for general insurers to sort out the appointment of an actuary for their financial condition reports and actuarial valuation of policy liabilities, once they do not have any accident and sickness business, the challenge that will be faced is the fact that there is only one local actuary known to be familiar with general insurance business and he cannot service the entire general insurance industry. It should also be noted that based on that the definition, an Actuary has to be a Fellow of an actuarial accreditation body that is a full member of the International Actuarial Association. This may pose further challenges for general insurance to appoint an actuary within the three year time frame. It is currently not known whether any other local actuaries intend to get the requisite training to perform the required functions for the general insurance industry. This may be additionally complicated for composite insurers who may currently have a life actuary who is not familiar with general business which means they will either have to search for another actuary who can do both or engage 2 separate actuaries, potentially at a significantly increased cost. Furthermore, the requirements of the regulation seems to imply the need for an in-house actuary. It is unclear in any respects what is expected, so any guidance that can be provided would be extremely helpful.
Central Bank of Trinidad and Tobago
Insurers carrying on general insurance business are required to appoint an actuary within 3 years, and this appointed actuary can be either in-house or external. Notably, the definition of an actuary in the Act, and the Fit and Proper requirements in both the Act and Guideline are necessary, as the relevant technical knowledge and experience are pre-requisites for providing sound actuarial opinions, particularly on the valuation of insurance liabilities which often represent the single largest liability item on an insurer’s balance sheet. The transition period of 3 years is sufficient time for the insurers to appoint an actuary that meet the criteria of the Act, Regulations and Guidelines.
It should be further emphasized that the role of the actuary in providing objectivity and professional judgement is an important element in claims reserving process and the valuation methodology used, which involves assessing the relevance of data, deriving assumptions and in providing early warning signals. It is important to note that the actuary needs to work closely with various functional areas within the general insurance operations. Communication between the actuary and both the claims and legal functions is particularly important.
