Appointed actuary increasingly outsourced to consultants

A continuing trend for companies to engage a senior member of a firm of actuarial consultants to act as their Appointed Actuary is highlighted in the 9th GAAPS International Survey of Appointed Actuaries (copy enclosed).

The survey found that compared with direct employment, contracting independent Appointed Actuaries is considered by many to be the most effective way of achieving the required degree of regulatory independence. Many large companies continue to employ an Appointed Actuary directly; but the trend to outsource the function is particularly prevalent amongst smaller, independent insurance companies. GAAPS attributes this to the fact that the role and function of the Appointed Actuary is increasingly subject to public scrutiny and any concerns about independence can be allayed by employing a consultant Appointed Actuary.

The survey also found that while a few very large consulting firms continue to dominate the provision of outsourced Appointed Actuary functions, there is a trend towards wholly independent Appointed Actuaries. This is attributed in the survey to holders of the position retiring from the companies for which they acted as Appointed Actuaries and continuing to undertake their roles, post-retirement, in an independent capacity.

GAAPS believes that these two trends are likely to continue. Dr Geraldine Kaye, GAAPS managing director, said: ìWhen the Integrated Prudential Sourcebook is published later in the year by the FSA, the role of the Appointed Actuary will be replaced by two new controlled actuarial functions, which cannot be performed by the same Actuary, unless the Actuary is independent of the life company. We believe this new regime will increase the need to provide independent Actuaries that can fulfil these two highly scrutinised roles; a need in which we feel we can play a pivotal role in recruiting.

ìBecause of the forthcoming changes this 9th GAAPS survey may prove to be effectively the last before the end of the Appointed Actuary as we know them. Personally I find it strange that the Appointed Actuary is disappearing in the UK and yet a number of overseas countries are developing Appointed Actuary roles.

Dr Kaye added, ìHaving been in the actuarial profession for over 30 years, I can see no evidence of a lack of independence by Appointed Actuaries, with the vast majority continuing to show traditional ethical values and an ability to handle conflicting interestsî.

For further information please contact:
Dr Geraldine Kaye, managing director
GAAPS International, Grafton House
2/3 Golden Square, London, W1F 9HR
Tel: 020 7437 8899