The IFoA is carrying out regular Thematic Reviews looking at particular topics, roles and/or areas of work relevant to actuaries. This involves reviews of how work is carried out in practice by actuaries, including review of the work itself.
Outputs of the Thematic Review Programme explain and present the scope of the reviews as well as providing analysis, findings and recommendations.
GI pricing thematic review: involvement of actuaries in pricing of UK home and motor insurance
The UK home and motor insurance market has received a high level of regulatory focus in recent years, following growing concerns among consumer groups and regulators – particularly in relation to the issue of ‘dual-pricing’. Although level of involvement differs across organisations, actuaries continue to play a key role in personal lines pricing. In this thematic review we examine the role and influence of actuaries in this important area of work.
Our review has benefited from constructive engagement with a range of industry participants, as well as input from IFoA volunteers practising in this area. This has provided a range of contexts in which to consider both the current position of actuarial involvement in this area, and the standards and education in place to help members.
The findings of the review, endorsed by the IFoA Regulatory Board, are centred on two key elements, both in the context of actuaries sharing responsibility for pricing with other professionals:
- An increased focus on customer fairness, ensuring standards, guidance and education appropriately balance this with the commercial and innovation drivers important in pricing
- Ensuring that advances in data science and machine learning modelling are adequately covered by standards, guidance and education
GI pricing thematic review webinar
The IFoA held a webinar to provide members with an opportunity to learn more about the review findings. A recording of the webinar is available to members on the IFoA's Virtual Learning Environment (VLE).
Alan Marshall, IFoA Review Actuary, said: “The UK home and motor insurance market has been through a challenging period in relation to pricing practices. The recent FCA pricing practices policy statement provides an opportunity for the industry to move forward, and actuaries in this field will be a key part of this. We hope that our findings encourage members to promote a balance of customer fairness and commercial considerations, and that actuaries can continue to drive forward data science and machine learning innovation in this domain alongside other professionals.”
Pensions: actuarial factors used to calculate benefits in UK pension schemes
This review looked at current practices adopted by actuaries advising on commutation rates and transfer values in the calculation of benefits for UK pension schemes. Endorsed by the IFoA Regulation Board, the review recommended that actuaries improve the quality of their advice by following existing actuarial standards fully. Download the full report to read the complete recommendations.
The thematic review included an exercise to combine the benchmarking information compiled by the participating organisations. The Review Team has prepared a presentation setting out sharts summarising all the information obtained as part of the benchmarking exercise.
The IFoA held a webinar in early 2021 to provide members with an opportunity to learn more about the review findings. A recording of the webinar is available to members on the IFoA's Virtual Learning Environment (VLE). You can also read Senior Review Actuary David Gordon’s responses to questions raised during the webinar in this news article on the IFoA website.
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