Governor of the Bank of England says actuaries central to meeting the challenges of the insurance industry at GIRO Conference

Mr Carney spoke about some of the challenges facing the insurance industry, such as preparing for Solvency II implementation next year.  He also gave an indication on the Bank’s thinking on interest rates and said a rate rise is getting closer, but timing depends on the data and any rise will be gradual and limited.

In the speech, the Governor put forward three ideas that would improve the insurance sector:

-  implementation of tailored and consistent capital standards
-  more accountability by those running insurance companies
-  common global standards for systemically important insurers.

On discussing the challenges facing the insurance sector the Governor said that the Bank of England is looking to implement reforms and are closely monitoring how risk is currently being managed and business models are evolving. 

Mr Carney said, “Models must be based on appropriate data and account for all quantifiable risks. Boards have the responsibility to ensure models remain appropriate and to show they are used in practice.”

The Governor went on to speak about the skills actuaries bring to the sector and their increasing importance.  He described actuaries as one of the central roles, specifically recognised by Solvency II, which he described as the “biggest change to insurance regulation in a generation”.

On the reforms, Mr Carney said, “Later this year we will consult on a regime that includes the most senior actuaries – alongside CEOs, Chairmen and Chief Financial and Risk Officers – in our senior managers regime, making them directly accountable for how a firm is run, for their decisions, and for their actions. These senior persons will be expected to prove their fitness to regulators before they take up a role, and the onus will be on them to ensure risks are understood, measured and properly considered.”

On the IFoA, the Governor commented, “The Institute and Faculty of Actuaries has been at the heart of the insurance industry for over 150 years, and the changes to regulation, the industry and the world around us mean your contribution is more essential than ever.”

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The full speech can be found here: https://www.bankofengland.co.uk/news/speeches

For further comment or to answer any questions that you may have please contact Annette Heninger, Media Relations Manager at the IFoA, on 07525 592 198 or by emailing annette.heninger@actuaries.org.uk