The life assurance industry is experiencing unprecedented change, introducing many new challenges for actuaries involved with life insurance companies. There is an important need to keep abreast of developments in the business, and in the actuarial thinking and techniques that may be applied. This is relevant to all Category 1 and Category 2 actuaries in the life industry.

Areas that are developing fast at the present time include

• The launch of an independent Board for Actuarial Standards, which took on responsibility for setting standards in technical areas, which were covered by Professional Guidance Notes. Existing guidance notes have already been through significant change in the recent past to coincide with the implementation of FSA’s Integrated Prudential Sourcebook as at 31 December 2004.
• Individual Capital Assessments (ICAs) – most firms will now have submitted their first ICAs to FSA and many will have now received Individual Capital Guidance from FSA. ICA methodologies are certain to be subject to further refinements in the coming years.
• European Embedded Values – principles were established in 2004 and in 2005 a number of life companies restated their embedded values for year-end 2004 using methodologies and assumptions consistent with these principles.
• Treating Customers Fairly – Life offices, and With Profits Actuaries in particular, have spent significant amounts of time on all issues relating to Treating With Profits Policyholders fairly in the recent past. This is substantially in response to specific FSA initiatives on this topic, which will remain high profile for many years yet. However, firms have a responsibility to treat all customers fairly (not just those holding with profits policies) in areas where they have the right to exercise discretion and the profile of this area is likely to increase substantially in the near future. An example of such an area would be reviewable death-in-service rates under unitised pensions contracts.

Subjects for technical needs analysis

With so much change it is vital that each of us ensures we keep our level of life insurance knowledge up-to-date so that we can provide high professional standards of service and advice to our companies and our external clients. The Life Assurance Practice Executive Committee will continue to provide an ongoing programme of life insurance related CPD opportunities covering a wide range of topics that are of particular interest currently to life actuaries.

Due to rapid developments, both of a regulatory and technical nature, the Committee acknowledges that no one can be expected to be an expert in all fields. For example, those holding the statutory roles of Actuarial Function Holder, With Profits Actuary and Reviewing Actuary are not expected necessarily to have full knowledge in all areas. However, actuaries fulfilling these roles must be able to recognise problems underlying particular issues and, if these issues call for more specialist knowledge, know who can provide that.

For the statutory roles, a practising certificate and meeting CPD requirements continue to be mandatory. In addition, CPD requirements are now also a requirement for life actuaries who fall into Category 2 of the CPD Scheme. Like all actuaries, those working in life assurance must continue to be aware of, and abide by, the requirements of the Professional Conduct Standards and all relevant Guidance Notes.