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The assumptions on future rates of mortality are important in valuing the liabilities of pension schemes and life insurance companies.
Speakers at the seminar at Staple Inn covered financial modelling, systemic risk and the lack of commonsense in risk management in the past. Delegates included researchers, regulators, actuaries and mathematicians.
Faculty of Actuaries President Ronnie Bowie said the Actuarial Profession had an important role to play in providing a forum for debate for those at the centre of financial regulation.
In a plenary session, BESTrustees plc chairman Alan Pickering said better adult education opportunities were needed to enable older workers to remain in employment longer.
He said: “We need to understand that there isn’t a solution to the longevity issue that is driven purely by the pensions industry or pensions policy.”
“We have to provide opportunities for people to work longer by offering access to lifelong learning. The emphasis on education needs to be taken away from universities and more needs to be spent on adult education.”
In a workshop titled Financial Modelling Needs to Change in Light of the Credit Crunch, Institute of Actuaries Fellow Martyn Dorey, from CAMRADATA Analytical Services, said financial models should be based on an ‘economic clock’ rather than the calendar clock.
He said: “The Value at Risk [VAR] measure of risk has broken because risk managers took comfort from using historical data to calibrate models that determine what might go wrong in the marketplace.”
In a plenary session titled The Economy – Where are we now and how did we get here?, Mr Spencer, of the University of York, said the bailout had paved the way for a shorter and less dramatic breakdown than might have occurred in the financial sector.
He said: “The efforts the government made to stabilise the financial system appear to have worked, and although the economy is still weak, it is no longer in freefall. We are not yet at the bottom, but we are at the point of inflection and the falls are getting much, much smaller.”
In a workshop session titled Wellness programmes and private medical insurance, Institute of Actuaries Fellow Emile Stipp spoke about the data from studies into the programmes used by private medical insurers in the UK and South Africa.
The risk-adjusted studies revealed that the programmes had reduced costs of healthcare for both the well and the chronically ill.
In a workshop titled ‘Who cares?’ Reforming long-term care, University of Birmingham Health Services Management Centre co-director Jon Glasby said the current system placed an unfair burden on individuals.
Professor Glasby said alternative methods of funding long-term care that needed to be discussed included:
Actuaries are experts in risk, and the rise of risk management to the top of the financial services business agenda offers unprecedented career opportunities for the profession. Increasing regulation in actuaries’ traditional career areas of pensions and insurance has created significant demand in recent years, while the regulation that is now set to increase across the banking sector, as a result of the global financial crisis, is likely to fuel this demand.