The roles of actuaries in UK life offices: changes and challenges

Abstract

We examine the roles of actuaries in UK life offices, along with trends, challenges to and opportunities for actuaries. We carry out an analysis of senior roles in life offices, a questionnaire survey and interviews with relevant senior personnel. We find that actuaries occupy many important roles in life offices and are regarded as having good industry knowledge and technical skills, especially in financial modelling. There are fewer executive directors and more non-executive directors of life offices who are actuaries compared with the position in 1990. A higher proportion of reserved roles is outsourced to consultants than was the case in 1990. Only a small number of Actuarial Function Holders are directors. Actuaries are more siloed than was the case in the past, although actuaries are well represented in the finance and risk functions of many offices. Although actuarial work in connection with the preparation for Solvency II will decline, there will be important ongoing requirements for actuaries following Solvency II implementation. We also see opportunities for actuaries in four areas: in risk management, in financial analysis and management based on Solvency II and international financial reporting standards, in connection with “big data”, and in product development and the customer proposition. There are implications for the examination syllabus, continuing professional development and research.

The importance of actuarial management in insurance business decision-making in the twenty-first century

“…In addition, the literature on the financial services industry points out the importance of having the lead actuary advising the board of directors of the entity. In the insurance market, customers and shareholders perceive the actuary as technically trusted, credible, and analytically oriented, as well as a guarantee of good financial counsel, because of the vision an actuary can offer when pricing complex products (O'Brien et al, 2016). Because of the complexity and long-term nature of the insurance industry, corporate governance requires the lead actuary to have a positive influence on the decisions of senior management.…”