European actuaries make proposals for Solvency II professional standards

The vast majority of those who will carry out the actuarial function under Solvency II will be qualified actuaries and members of the professional actuarial bodies which make up the Groupe. The Groupe proposes that there should be two main categories of standards: 1) public interest standards and 2) technical standards. Public interest standards would include qualification standards, ethical standards, governance standards and communication standards. Technical standards would include interpretative standards and technical implementation standards.

The Actuarial Profession’s Chief Executive, Caroline Instance, said:

“The Profession shares the Groupe’s view that the development of technical standards for the actuarial function under Solvency II should draw on the experience of actuarial practitioners and the strengths and resources of CEIOPS and national supervisory authorities.

“In the UK, we are committed to supporting the work of the Board for Actuarial Standards whose technical standards cover all actuarial work, not just Solvency II related issues, and we are keen that standards set at a European level are co-ordinated with those set in the UK. The Groupe Consultatif document has drawn heavily on the work of the BAS and we are pleased that good open lines of communication have been established between these two bodies.

“The Groupe’s submission considers the various stages of the process of setting, implementing and enforcing standards and makes some suggestions on how these responsibilities might be allocated. The paper acknowledges that the issues involved in setting a full range of public interest and technical standards are far-reaching and complex. The paper also notes that, currently, there is a wide diversity within Europe of types of standards and arrangements for setting them, with differing roles for the professional bodies, supervisors or regulators and new public interest bodies such as the BAS in the UK.

“We consider that the implications of the Groupe’s submission for the UK should be considered collectively by the FSA, the FRC and the UK Profession and we shall be taking this forward with our colleagues in these organisations.”

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Enquiries: Tel. Michael Scanlan on 020 7632 1453 / 07798 804 871 or email michael.scanlan@actuaries.org.uk

Notes to Editors

1. The Groupe Consultatif’s submission is on the Groupe’s web site at http://www.gcactuaries.org/documents/GC_standards_paper_CEIOPS_final_290909.pdf.
2. Article 47 of the Solvency II Directive requires insurance and reinsurance undertakings to provide for an effective actuarial function to carry out important tasks concerning the calculation of technical provisions, as well as expressing an opinion on underwriting policy and on the adequacy of reinsurance arrangements and contributing to the implementation of effective risk management. Those carrying out the actuarial function need to “demonstrate their relevant experience with applicable professional and other standards”.
3. In March 2009 the Committee of European Insurance and Occupational Pension Supervisors (CEIOPS) issued a consultation paper on Level 2 Implementing Measures relating to Governance (CEIOPS-CP-33/09), in which it discussed various options for the development of professional and other standards, as required by Article 47(2) of the Solvency II Directive. The Groupe responded in detail in May 2009 but has now made an extended submission to CEIOPS on Professional Standards for the Actuarial Function under Solvency II.
4. The Groupe proposes that there should be two categories of standards: 1) public interest standards and 2) technical standards. Public interest standards would include qualification standards, ethical standards, governance standards and communication standards.
5. The Groupe proposes that qualification standards should include requirements for a specified minimum level of education, relevant practical experience and mandatory continuing education.
6. Ethical standards should cover matters such as competence, integrity, objectivity, confidentiality and avoidance of conflicts.
7. Governance standards would address the relationships with senior management and with the Board of the undertaking, cooperation in dealings with other internal functions and external parties, checking and quality control of work, speaking up in case of serious concerns and protection for those who do speak up.
8. Communication standards would cover matters such as explanation of the purpose and scope of any report, comprehensibility, completeness, transparency, independence and accountability.