Under the new regime, the role of the Head of Actuarial Function (Head of Actuarial Function) replaces the Appointed Actuary and Signing Actuary roles which used to operate in the domestic regulatory framework.
The Head of Actuarial Function will be responsible for producing an annual Actuarial Opinion on Technical Provisions (AO TPs) to be delivered to the CBI along with the SII annual quantitative reporting templates (QRTs). In addition, the Head of Actuarial Function must present an Actuarial Report on Technical Provisons (ARTPs) to the Board. The Requirements incorporate a further actuarial opinion to be provided by the Head of Actuarial Function on the ORSA process which includes an assessment of the range of risks considered and the adequacy of the scenarios developed as part of the ORSA process.
This function must be held by one individual who will have to be pre-approved by the CBI through its Fitness and Probity (F&P) regime. The Society of Actuaries in Ireland has introduced a voluntary practising certificate regime which can be expected to facilitate actuaries and Boards in demonstrating compliance with F&P requirements.
Outsourcing of the Head of Actuarial Function role is permitted except for High Impact firms. Applications by composite reinsurers to appoint a single Head of Actuarial Function will be considered by the CBI on a case by case basis.
There was no ‘grandfathering’ of the existing Chief Actuary or Signing Actuary roles into the Head of Actuarial Function. Firms were advised not to assume that those performing these existing roles would automatically transition to the Head of Actuarial Function. Requirements of the Head of Actuarial Function role mean that this will represent more than just a change in job title.
One of the notable differences between the Head of Actuarial Function regime and the current Appointed Actuary / Signing Actuary roles is that there is no explicit requirement for the Head of Actuarial Function to be a qualified actuary. The Requirements do specify that the Head of Actuarial Function must be a member of a recognised actuarial association and appropriately experienced to fulfil the role. As the role is a Pre-Approval Controlled Function (PCF) position it is very likely that it will need to be fulfilled by a suitably experienced and qualified actuary in order to pass the fitness tests.
In the previous regime actuaries frequently occupied roles within the first and second line of defence and in a small number of cases occupy both e.g. fulfilling both Chief Actuary and Chief Risk Officer roles. While the new requirements do not impose restrictions on the Head of Actuarial Function fulfilling the role of Chief Risk Officer, firms now have an opportunity to clearly define duties and responsibilities of the respective roles.
The Society of Actuaries in Ireland has outlined the main responsibilities of the Head of Actuarial Function as follows:
- Co-ordination of the calculation of Technical Provisions
- Data quality
- Assumptions and methodology
Comparison of best estimate versus experience
- Informing the Board of the reliability and adequacy of calculation
- Adequacy of reinsurance arrangements
Contribution to the Risk Management System
- Risk modelling underlying the Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR)
Contribution to the Own Risk and Solvency Assessment (ORSA) process
The Head of Actuarial Function should also be able demonstrate the ability to influence decision-making at a senior level within the company and that he or she:
Is a key source of expertise on actuarial matters for the Board.
Should be accountable to the Board.
Should provide guidance to the Board on the selection of key actuarial assumptions.
Should be capable of influencing Board decisions in key areas of actuarial expertise.
- Should be capable of driving risk awareness and an appropriate risk culture within the company.
Further information on the responsibilities of a Head of Actuarial Function can be found at:
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