The ABI suggests insurers seek an external review when the actuarial advice influences decisions that can result in significant changes in the running of life insurance policies and therefore policyholder benefits.
It also proposes reviews when the advice affects the decision to enter into and / or the price paid in large transactions, when the advice is critical to the implementation of material new regulatory or equivalent requirements or when advice is provided in an area where industry practice has significantly developed since the last time advice was sought.
The consultation closes on March 31, 2009 and the ABI’s guidance should be issued in July, with it coming into force from September 30, 2009.
ABI director of financial regulation and taxation Peter Vipond says: “The ABI guidance will codify existing best practice and will help life insurers take decisions on the basis of robust actuarial advice. It is vital that governing bodies are confident that they can rely on the actuarial advice they receive.”
The background to the guidance lies in the Morris Review of the actuarial profession and in subsequent work by the Actuarial Profession, the Professional Oversight Board and the Financial Reporting Council.