The IAA and its contribution to the actuarial profession

Report
The IAA and its contribution to the
actuarial profession:
The importance of Professionalism
Bogota, Colombia
21 November 2011
Chris Daykin, Chief Executive, IAA Fund
International Actuarial Association
A short history
• established 1895 at 1st International Congress
• association of individual members
– organising Congresses
– and, from 1957, starting up Sections
• International Forum of Actuarial Associations formed 1995
• IAA established with new constitution in 1998
– to take over role of IFAA
– worldwide association of professional associations
International Actuarial Association
Vision of IAA
To seek worldwide recognition of the actuarial profession
as a major player in the decision-making process
within the financial services industry,
in the area of social protection
and in the management of risk,
for the well-being of society as a whole
International Actuarial Association
Principle of subsidiarity
• The IAA restricts its activities to strategies and
programmes which require international co-ordination or
direction
• It does not become involved with actions at national
level, except at express invitation of actuarial association
or group
• It avoids duplication or overlap with activities of Member
Associations or regional groups of actuarial associations
International Actuarial Association
Requirements for associations to become Full Member
• code of conduct meeting minimum requirements
• disciplinary scheme meeting certain requirements
• due process before adopting standards of practice
• education of newly qualified actuaries meets requirements
of core syllabus and guidelines
• pay annual dues to IAA
International Actuarial Association
Membership
• Full Member Associations: 63
• Associate Member Associations: 26
• assisting development of profession in 30 additional
countries
• fully qualified actuaries: 60,000+ in more than 100
countries
International Actuarial Association
Institutional Members:
• International Association of Insurance Supervisors (IAIS)
• International Accounting Standards Board (IASB)
• International Social Security Association (ISSA)
• International Organization of Pension Supervisors (IOPS)
• Organization for Economic Cooperation & Development
(OECD)
Observer Member:
• Asian Development Bank (ADB)
International Actuarial Association
Strategic Plan - Five strategic objectives:
1. Build relationships with key supranational audiences
2. Expansion of scientific knowledge to wider fields to
enhance the scope, quality, and availability of actuarial
services
International Actuarial Association
Strategic objectives
3. Common standards of actuarial education and
principles of professional conduct as well as guidance
for actuarial practice; promote development and
issuance of actuarial standards in jurisdictions of Full
Member associations, and the global convergence of
actuarial standards
International Actuarial Association
Strategic objectives
4. Support the development, organization, and promotion
of the actuarial profession around the world
5. Provide a forum for discussion for actuaries and
actuarial associations
Committees and Working Groups
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•
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Executive
Nominations
Audit
Accreditation
Advice & Assistance
ERM and Financial Risk
Insurance Accounting
Standards
• Insurance Regulation
• Education
• Professionalism
• Pensions and Employee
Benefits
• Social Security
• Supranational Relations
• Mortality Working Group
• Population Issues Group
• Actuarial Standards
IAA Sections
ASTIN – general insurance, risk and research
AFIR – investments and financial risk
IACA – consulting
IAAHS – health and care
PBSS – pensions, benefits and social security
IAALIFE – life insurance
AWB – Actuaries without Borders
IAA Activities
• 30th International Congress of Actuaries,
Washington DC, 30 March – 4 April 2014
• IAA Council and Committee meetings:
– Los Angeles, 23-26 May 2012
– Bahamas, 15-18 November 2012
– Netherlands, 23-26 May 2013
• Joint Colloquium of PBSS/IAAHS/IACA
– Hong Kong, 6-9 May 2012
• Joint Colloquium of ASTIN/AFIR/IAALS
– Mexico City, 1-4 October 2012
-
IAA Activities – IAA Fund
• Regional Meeting for Southeast Europe
– Zagreb, Croatia, 3-4 October 2011
• Asian Regional meeting
– Kuala Lumpur, Malaysia, 10 October 2011
• 2nd African Actuarial Congress
– Nairobi, Kenya, 2–4 November 2011
• Introduction to the actuarial profession seminar
– Ulan Bator, Mongolia, 14-15 November 2011
• Latin American meeting
– Bogota, Colombia, 21-23 November 2011
• Introduction to the actuarial profession seminar
– Luanda, Angola, 24-25 November 2011
The importance of professionalism
What is a profession?
Six key characteristics of a profession are:
• members join together to apply a specialised skill
• the skill has been developed through appropriate
education
• members have a special relationship with those served
• recognised by the public as an authority in field of
expertise, able to serve the public interest
• standards of competence and conduct of members
• high level of integrity by members in exercising
judgement
What is expected of us as professional people?
• demonstrating, and applying appropriately, specialist skills
• providing reliable up-to-date technical knowledge and
advice
• complying with Profession’s code of conduct and standards
• complying with legislation and regulator’s standards
• performing statutory roles to a high standard
• behaving ethically
• exercising judgement with high level of integrity
• communicating well
• having due regard to the interests of those affected
(continued)
What is expected of us as professional people?
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•
•
•
•
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•
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respecting and supporting others
relationship of trust with clients (fiduciary relationship)
being reliably confidential
life-long learning – developing our knowledge and skills
having no adverse disciplinary record
assisting the profession to serve the public interest
contributing to public debate
contributing to the work of the profession
Some key principles of professionalism
• Integrity
– respect, confidentiality, honesty, openness
• Competence and Care
– understand the client and keep competence up-to-date
• Impartiality
– avoidance of bias and conflict of interest
• Compliance
– compliance and challenging non-compliance
• Open Communication
– clear, appropriate and accurate
IAA Core Syllabus
Subject 10 – Professionalism
• characteristics and standards of a profession, including need for:
• specialised skill and education
• ongoing training and development
• high quality of advice
• exercise of independent judgement
• objectivity, integrity and accountability
• code of conduct
• discipline process
• practice standards set by actuarial bodies or other stakeholders
• regulatory roles of actuaries
• the professional role of the actuary
International Actuarial Association
Work on professionalism
• Common understanding of principles of professionalism
• International actuarial work
• Development of model standards of practice
• Preparation of a pack for professionalism education
International Actuarial Association
Principles of professionalism
Professionalism, for the actuarial profession, means:
• The application of specialist actuarial knowledge and
expertise,
• The demonstration of ethical behaviour, especially in
doing actuarial work, and
• The actuary’s accountability to a professional actuarial
association or similar professional oversight organisation.
International Actuarial Association
Three high level principles of professionalism
• Knowledge and expertise
• Values and behaviour
• Professional accountability
International Actuarial Association
Knowledge and expertise
An actuary shall perform professional services only if the
actuary is competent and appropriately experienced to
do so
This principle is supported by the following four elements:
a. Specialist knowledge
b. Professional communication
c. Required education
d. Continuing professional development
International Actuarial Association
Values and behaviour
An actuary shall act honestly, with integrity and
competence, and in a manner that fulfils the profession’s
responsibility to the public and upholds the reputation of
the actuarial profession.
This principle is supported by the following five elements:
a. Ethical behaviour
b. Integrity
c. Independent advice
d. Trust and reputation
e. Public interest
International Actuarial Association
Professional accountability
An actuary shall be accountable to a professional actuarial
association or similar professional oversight organisation.
This principle is supported by the following three elements:
a. Entry and qualification standards
b. Code of conduct
c. Disciplinary process
Standards of practice
• whilst the Code of Conduct deals with broad ethical and
behavioural issues…
• …Standards of Practice are concerned with specific
behaviours required of the actuary in relation to particular
practice area applications, often in connection with
statutory duties imposed on the actuary.
Standards of practice
• neither the IAA nor the Groupe Consultatif requires Full
Member Associations to issue Standards of Practice
• however, if they do, they must first have in place a
compliant due process for consulting on the introduction
and wording of Standards of Practice.
Standards of practice
• the Associations in North America and in the UK have
issued many Standards of Practice
• also in a number of other countries
• in some countries actuarial standards of practice are laid
down by the regulator
• actuaries should take care to understand which Standards
of Practice (if any) apply to any actuarial services they are
providing in any jurisdiction where they are working.
What is going on out there?
•
globalization of business and commerce, WTO and G20
– demand for level playing field and transparency, including in the
financial sector
– Regulated Professions Task Force (reported to G20 on 11 Nov)
• recommendation for global convergence of standards, including
actuarial standards
•
International Financial Reporting Standards (IFRS) being
developed by the IASB (International Accounting
Standards Board)
– in September 2009, G20 called “… the accounting bodies to
redouble their efforts …”
What is going on out there?
•
IAIS is developing international standards for solvency
regulation and supervisory purposes
– Common Framework for the Supervision of
Internationally Active Insurance Groups – expected to
take three years to develop
– financial stability issues
– Own Risk Solvency Assessment (ORSA)
– cooperation with banking and securities regulators
Why develop actuarial standards of practice?
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•
•
To serve the public interest
– enhance the quality of delivery of actuarial services
– ensure actuarial services meet the needs of users
– narrow the range of results
– contribute towards harmonisation and convergence
To support professionalism
– promote consistency
– provide guidance on good practice
To protect actuaries
– reduce the likelihood of the actuary being sued
What is happening now?
1.
2.
Due Process Task Force (DPTF)
Interim Actuarial Standards Sub-committee (of EC)
(IASSC)
Develop the following standards (to be confirmed)
3.
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4.
5.
generic standard on data, modelling, reporting, etc. (ISAP1)
specific standard on actuarial work for IFRS4
specific standard on actuarial work for IAS19
specific standard for social security actuaries
specific standard on actuarial work on ERM
Task force on permanent structure for standard-setting
Groupe Consultatif will develop specific standards for
Solvency II
Objectives of standards (IASSC paper at Zagreb)
International Standards of Actuarial Practice are established
to promote high quality actuarial practice globally.
High quality actuarial practice:
• helps serve the public interest by benefiting users of
actuarial work, regulators, and participants and
beneficiaries of financial security programs; and
• benefits both actuarial associations and individual
actuaries by providing clear guidance and enhancing the
credibility of the actuarial profession.
Objectives of standards (IASSC paper at Zagreb)
Characteristics of high quality actuarial practice include:
• Consistency – providing users of the actuarial work
product with confidence that practice is consistent over
time and across clients subject to similar requirements;
• Usefulness – adding substantial value to financial analysis;
and,
• Clarity – clearly articulated and understandable.
Exposure draft for International Standard of
Actuarial Practice 1 (ASAP1)
• exposure draft issued 26 July 2011
• deadline for comments is 1 December 2011
The IASSC particularly asks us to consider the following questions:
1. Is the guidance clear and unambiguous?
2. Is the guidance at the right level of detail, or should it be more or less detailed?
3. Is the guidance on when to issue an actuarial report and what should be
covered in the report appropriate?
4. Are there other matters that should be included in this standard on general
actuarial practice? Are there some included here that should not be?
5. The intent is to use the same format for future ISAPs. Is the format of this ISAP
appropriate?
6. Is the change in nomenclature (from IASP to ISAP) appropriate?
Exposure draft for International Standard of
Actuarial Practice 1 (ASAP1) - topics
Section 3. Appropriate Practices
3.1
Acceptance of Assignment
3.2
Knowledge of Relevant Circumstances
3.3
Employed Actuaries
3.4
Reliance on Others
3.5
Materiality
3.6
Data Quality
3.7
Assumptions and Methodology
3.8
Assumption Setting
3.9
Process Management
3.10
Responsibility for Assumptions and Methodology
3.11
Peer Review
3.12
Documentation
Continuing Professional
Development
Formally defined by the IAA as:
The development of knowledge and of technical, personal,
professional, business and management skills and
competencies throughout a person’s working life.
CPD guidelines approved by IAA Council on 2 October 2011
Continuing Professional
Development
CPD and the individual actuary
CPD is an important element of the actuary’s lifelong
process of learning and development within the profession.
The initial qualification process is the first step in this
journey. Thereafter, it is the responsibility of all actuaries to
plan their own professional development programme.
Continuing Professional
Development
The importance of CPD for the individual actuary
• to ensure competence for everything you do
• to gain knowledge and experience
• to keep up to date and stay abreast of developments
• to learn about new methodologies
• to develop non-technical and professional skills
• to be able to move into new fields of activity
• to keep up with new standards of practice and
regulations
Continuing Professional
Development
CPD should include
• technical skills
• professionalism
• personal skills
• communication skills
• management skills
• business skills
• IT skills
• keeping up to date with developments
The IAA and its contribution to the
actuarial profession:
The importance of Professionalism
Bogota, Colombia
21 November 2011
Chris Daykin, Chief Executive, IAA Fund

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