This document provides a summary of a presentation given to the London Market Actuaries Group (LMAG) in May 2016. It discusses three key topics:
1. Current conditions and trends in the UK general insurance market, including soft market conditions, underwriting practices, reinsurance, and reserving.
2. Proposed changes to the Prudential Regulation Authority's (PRA) approach to internal models used by insurers. This includes a consultation on the model change application process.
3. The implementation of the Senior Insurance Managers Regime (SIMR) and its implications for the actuarial function, including new responsibilities and requirements for the Chief Actuary role.
Risk Mitigation, when applied properly and effectively, will keep the likelihood of a S166 Skilled Person's Report ever being issued against your firm. Yet so often we see reports in "Final Notices" from the FCA that people risk and compliance managers didn't "understand" or "appreciate" the levels of risk they were courting, or they failed to properly notify the board of the issues and tried to stick their heads in the sand. A S166 is a costly business, and not only in the money charged by the Skilled Person, but also in management time, resources, staff liaison and assistance, printing, extra committee meetings, the list goes on.
Then there comes the Risk Mitigation Programme (RMP) that the regulator creates for the firm, a bespoke program to get things right. This, if not managed properly (and they often are not) can result in changes forced into the business but not understood by anyone; no culture change, and things reverting to normal within months after the completion.
To manage a S166 or RMP requires a project manager that fully understands not only the process, but also the inferences and interpretation of the regulators statements - to act on the spirit as well as the letter, and advise you accordingly.
Europe is moving toward a common market
Globalization and increased intensity of international competition
Rapid technological change
Consolidation of major industries
Forces Driving Cross Border Mergers
Risk Mitigation, when applied properly and effectively, will keep the likelihood of a S166 Skilled Person's Report ever being issued against your firm. Yet so often we see reports in "Final Notices" from the FCA that people risk and compliance managers didn't "understand" or "appreciate" the levels of risk they were courting, or they failed to properly notify the board of the issues and tried to stick their heads in the sand. A S166 is a costly business, and not only in the money charged by the Skilled Person, but also in management time, resources, staff liaison and assistance, printing, extra committee meetings, the list goes on.
Then there comes the Risk Mitigation Programme (RMP) that the regulator creates for the firm, a bespoke program to get things right. This, if not managed properly (and they often are not) can result in changes forced into the business but not understood by anyone; no culture change, and things reverting to normal within months after the completion.
To manage a S166 or RMP requires a project manager that fully understands not only the process, but also the inferences and interpretation of the regulators statements - to act on the spirit as well as the letter, and advise you accordingly.
Europe is moving toward a common market
Globalization and increased intensity of international competition
Rapid technological change
Consolidation of major industries
Forces Driving Cross Border Mergers
Meeting the needs of tenants whilst operating within tighter constraints, requires a different way of operating and managing your business. To succeed, we need a new way of looking at how to operate in all areas of your business - consider a combination of best practice from both the public and private sectors (the best of both worlds approach).
Here's the final presentation I've made for my thesis in the International Business Master.
The Comparative Advantages in the services sector of the developing economies.
Workshop 2: Value Chain Development and Inclusive Business Models at The Caribbean-Pacific Agri-Food Forum 2015 (CPAF2015) taking place 2-6 November in Barbados with support from the Intra-ACP Agricultural Policy programme, organized in partnership with the Barbados Agricultural Society (BAS) and the Inter-American Institute for Cooperation on Agriculture (IICA). http://www.cta.int/en/news/caribbean-pacific-agri-food-forum.html
To increase effectiveness in our different roles we are assuming as professionals, we have to be continuously kept up to date with all the developments taking place in our various disciplines. Nkonki Inc has introduced a SlideShare presentation to help you to understand the basics of the latest developments in Auditing, Accounting, Tax and Cyberspace. This week we update you with the new developments in the Auditing arena, the introduction of the New Auditor Report by the International Auditing and Assurance Standards Board (IAASB).
Keeping up with standards and regulation is biggest challenge facing SMPs. Insight from IFAC SMP Quick Poll Findings and tips for audit efficiency are discussed in this presentation by Mats Olsson, Member, IFAC Small and Medium Practices Committee, at the KibR Seminar in Warsaw on November 7, 2013.
• Make Versus Buy
• Benefit of Outsourcing
• Source of Supplier Information
• Strategis Selection
• Supplier Relationship Management (SRM)
• Industry Example
birgli believes that it is better to show what has been done successfully rather than claim what can be done.
This document shows many of our successfully completed projects by type of client.
Should you have needs that are similar to what we have delivered on, you will have some assurance that we have the experience to successfully deliver the outcomes you may be seeking.
Contact us and we will be happy to learn about your needs and how we can support.
Meeting the needs of tenants whilst operating within tighter constraints, requires a different way of operating and managing your business. To succeed, we need a new way of looking at how to operate in all areas of your business - consider a combination of best practice from both the public and private sectors (the best of both worlds approach).
Here's the final presentation I've made for my thesis in the International Business Master.
The Comparative Advantages in the services sector of the developing economies.
Workshop 2: Value Chain Development and Inclusive Business Models at The Caribbean-Pacific Agri-Food Forum 2015 (CPAF2015) taking place 2-6 November in Barbados with support from the Intra-ACP Agricultural Policy programme, organized in partnership with the Barbados Agricultural Society (BAS) and the Inter-American Institute for Cooperation on Agriculture (IICA). http://www.cta.int/en/news/caribbean-pacific-agri-food-forum.html
To increase effectiveness in our different roles we are assuming as professionals, we have to be continuously kept up to date with all the developments taking place in our various disciplines. Nkonki Inc has introduced a SlideShare presentation to help you to understand the basics of the latest developments in Auditing, Accounting, Tax and Cyberspace. This week we update you with the new developments in the Auditing arena, the introduction of the New Auditor Report by the International Auditing and Assurance Standards Board (IAASB).
Keeping up with standards and regulation is biggest challenge facing SMPs. Insight from IFAC SMP Quick Poll Findings and tips for audit efficiency are discussed in this presentation by Mats Olsson, Member, IFAC Small and Medium Practices Committee, at the KibR Seminar in Warsaw on November 7, 2013.
• Make Versus Buy
• Benefit of Outsourcing
• Source of Supplier Information
• Strategis Selection
• Supplier Relationship Management (SRM)
• Industry Example
birgli believes that it is better to show what has been done successfully rather than claim what can be done.
This document shows many of our successfully completed projects by type of client.
Should you have needs that are similar to what we have delivered on, you will have some assurance that we have the experience to successfully deliver the outcomes you may be seeking.
Contact us and we will be happy to learn about your needs and how we can support.
What is the impact of digital technology on marketing and brand management. This interesting session and case studies was introduced by Guy Chapniss. Here is the summary of the event in this year.
PENGARUH PIJAT BAYI TERHADAP PENINGKATAN BERAT
BADAN BAYI DI WILAYAH KERJA PUSKESMAS MALIGANO
KECAMATAN MALIGANO KABUPATEN MUNA
PERIODE JULI 2016
Karya Tulis
Doa adlah nafa hidup rohani orang Kristen. Jadi kalau kita tidak berdoa, maka kita mati secara rohani. Doa yang berkuasa dan efektif merupakan keinginan hati kita kepada Tuhan.
This presentation by Paul Thompson, Deputy Director, SME & SMP Affairs, explores the challenges currently faced by SMP's, provides regulators' observations and offers tips for audit efficiency.
As the methodologies for IFRS 9 Implementation are still evolving, many banks are in the process of developing a roadmap towards implementation and are still evaluating methodologies that are likely to conform to the principles of proportionality and materiality. To this end, Banks being advised are to develop a Target Operating Model (TOM) design, which seeks to identify and document the work program required to meet IFRS 9 requirements on Impairment modelling and ECL estimation.
Fca Business Plan and Outlook 2015/16 - Bovill BriefingBovill
Bovill - the UK financial services regulatory consultancy - runs regular briefings. These are the slides from the April 2015 briefing on the FCA's Business Plan and Outlook for 2015/16. For more information visit www.bovill.com.
Further information on the event is below:
The FCA’s year ahead
This year’s combined Business Plan and Risk Outlook has reiterated many of the FCA’s current concerns, including technology and data issues, and added financial crime to its list of key risks.
As well as the usual thematic work there’ll be an emphasis on market studies – including looking into the post MMR world and the ways in which asset managers charge for their products.
Not surprisingly there’ll be a lot on pensions, and various thematic projects on things like non-advised sales, inducements and other conflicts of interest. Also under the microscope will be incentive structures and debt collection practices among consumer credit firms.
And the regulator is restructuring again …
Our briefing will walked through the highlights of the document, and looking at what you might need to be doing differently in the year ahead.
Rsm GC PAT Advisory and Escert Trading ver 1RSM GC
PAT – Perform Achieve and Trade – a Regulation of Government of India
Seeks to regulate energy usage in your organization – mandates by statute improvement in energy efficiency
Immediately impacts 8 sectors of the Indian Economy
Notified on 30th March,2012
Rsm gc pat advisory and escert trading ver 1praghya30
PAT – Perform Achieve and Trade – a Regulation of Government of India
Seeks to regulate energy usage in your organization – mandates by statute improvement in energy efficiency
Immediately impacts 8 sectors of the Indian Economy
Notified on 30th March,2012
Jeffery Smith, Partner, Crowell & Moring
Katie Schmitz Eulitt, Director of Stakeholder Engagement, Sustainability Accounting Standards Board (SASB)
As stakeholder interest and engagement in sustainability issues have increased, so has the level of noise and thus distraction, frustration and (occasionally) deception. Communicating sustainability is now in a crucial but difficult stage of its development. By developing industry-specific language and using signals and standards recognized by U.S. and global capital markets, can the Sustainability Accounting Standards Board (SASB) bring focus and clarity?
IFRS9 is a new international accounting standard that will affect debt owners, including mortgage lenders and Special Purpose Vehicles, from January 2018. It will replace IAS39.
At present under IAS39, lenders need to calculate an expected loss value for just those accounts that are impaired. Under IFRS9, a lender must reassess the probability of any of their customers defaulting and the resulting expected losses for all exposures - and this will need to be carried out each reporting period.
This white paper explains the challenges IFRS9 presents and how HML’s can help lenders and SPVs with accurate provisioning.
This slide presentation has been prepared by the IAASB’s Auditor Reporting Implementation Working Group to assist IAASB members, national standard setters, auditors and others promote awareness of the new and revised Auditor Reporting standards within their respective jurisdictions.
2. Purpose
LMAG May 2016
• These slides were originally presented to the London Market
Actuaries Group (LMAG) on 26 May 2016.
• The slides collate information published by the PRA as follows:
– Letter to firms titled ‘Continued soft market conditions in the UK
general insurance sector’ dated 4 December 2015
– ‘Solvency II: Changes to internal models used by UK insurance
firms’ – CP19/16, published on 5 May 2016.
• These slides also contain updates from the PRA on other
relevant areas.
• Readers should continue to refer to the PRA section of the Bank
of England website and liaise with their usual supervisory
contact.
2
3. Contents
LMAG May 2016
• Current conditions & trends in the market
• Model Change
• SIMR and Actuarial Function
3
5. ‘Dear CEO’ Letter of 4 December 2015
Current conditions & trends in the market
5
• Soft market conditions
– continued low interest rates
– absence of significant natural catastrophes
– abundance of (re)insurance capacity
• Underwriting
we expect comprehensive board engagement to ensure:
– adequate information to understand pricing trends
– monitor and report accumulations…by geography, product or total
– governance around new products and markets (e.g. cyber)
6. ‘Dear CEO’ Letter of 4 December 2015 (cont)
Current conditions & trends in the market
6
• Reinsurance
– understand the risk transfer taking place
– economic impact reflected in planning, capital and reserving
– appreciate wider associated risks
– appropriate recognition in financial and regulatory statements
– appropriate treatment when considering capital requirements
7. ‘Dear CEO’ Letter of 4 December 2015 (cont)
Current conditions & trends in the market
7
• Reserving
– robust approach to setting provisions
– demonstrate independent challenge
– have regard to underwriting, reserving and economic cycles
– feedback loops between underwriting, claims and reserving
• and to profit and loss attribution for internal models
8. Why does technical price matter?
Current conditions & trends in the market
• Links between pricing, reserving and capital should be consistent
– for instance an optimistic view on pricing can result in an optimistic
view of reserves and capital
Set Planning
Targets
Pricing /
Exposure
Monitoring
Reserving
Portfolio
Planning
Strategy,
Capital,
Reinsurance
8
9. Reserving Reviews
Current conditions & trends in the market
9
• PRA Reserving Adequacy Framework - Overview
Numbers
Governance
Process
Methodology
Data
10. PRA Reserving Adequacy Framework - Governance
Current conditions & trends in the market
10
– Is the right expertise and regular involvement from the top in place for reserving?
11. PRA Reserving Adequacy Framework - Process
Current conditions & trends in the market
11
– Is there a rigorous and expansive reserving process in place?
12. PRA Reserving Adequacy Framework - Methodology
Current conditions & trends in the market
12
– Does the firm’s reserving account for key risks with sufficient technical depth?
13. PRA Reserving Adequacy Framework - Data
Current conditions & trends in the market
14
– Is the integrity of data upheld such that it may be relied upon in the firm’s reserving
analysis?
15. Approved Internal Models
Model change
15
• The PRA approved 20 internal models as at 26 May 2016
• Input into the approval of a further 4 Non-UK firms with a UK
subsidiary
• Most if not all will apply for a model change this year
16. Consultation Papers
Model change
16
• On 5th May PRA issued two consultation papers
– CP19/16 ‘Solvency II: Changes to internal models used by UK
insurance firms
– CP20/16 ‘Solvency II: consolidation of Directors’ letters
• Internal model change policy
– available on the Bank website
– consultation closes on 5 August
17. Model Change Application process
Model change
17
• Same PRA process for model change & extension of scope
• Encourage early engagement with supervisory contact
– scope & timing of application
– reason for & impact of model change
• Similarities to IMAP
– possibility of a pre-application process in some cases
– assessment of completeness
• Primary focus of assessment are areas that have changed
18. Model Change Applications
Model change
18
• Propose ideally no more than one model change application a
year except under exceptional circumstances.
• Quality of application
– sign-off by the board
– validation
– model outputs
• Version control & ability to unwind changes
• Possibility that the model change application is not approved or
is delayed due to poor quality application
• Other considerations
– business transactions
– delays in implementation of changes
19. Content of an application
Model change
19
Article 2 &7 of the Commission
Implementing Regulation EU 2015/460
PRA expects the following will be useful
- Cover letter & confirmation that the
application is complete
- Evidence that the model change
application has been signed-off by the
board
- Documents set out in Article 2 where
their content would be affected by the
major change, together with an indication
of the changes made to them
− Model change log
− updated Common Application Package
(CAP) indicating clearly which items of
evidence have changed since last PRA
approval
- A detailed description of the qualitative
and quantitative impacts of the major
change to the approved internal model
and its results
- A description of the changes that have
been made from the latest approved
model
- Documentary evidence setting out how
the internal model fulfils the relevant
internal model tests and standards
− Justification for the model change(s)
− Evidence that the model change(s) have
been independently validated
This list is not exhaustive!
20. Model Change Policy
Model change
20
• Central role in wider governance of a firm’s internal model
• Spectrum of approved model change policies
• Highlight a few consideration when drafting / changing MCP
– major change indicators - threshold level, justification
– scope – sufficiently broad, exclusions
– accumulations of minor changes
• absolute values
• resetting accumulations
22. Outline of SIMR regime
SIMR and Actuarial Function
22
• Chief Actuary is now a controlled function, subject to PRA
approval, fit and proper assessment and conduct rules.
• Chief Actuary remains responsible for work that is delegated and
we expect them to supervise, monitor and question underlying
work
• Firms should consider the need for additional key functions
• Firms must maintain a governance map
• Scope of Responsibility documents should clearly articulate what
responsibilities SIMFs hold (note 7/9/16 deadline for submission)
• Outsourcing must be overseen by a suitable senior manager,
such as someone in another controlled function
23. Application of SIMR regime
SIMR and Actuarial Function
23
• Firms should decide how to organise their own functions,
including the use of external providers.
• Considerations for Key Functions include:
– the allocation of responsibilities should be clear
– it should be clear where critical decisions are made and individuals
should be accountable for these.
– conflicts of interest should be identified and managed
– they should be free from influence from other teams / Board
– avoid dominance by any one individual
– advice given in a timely way and not just retrospectively
– reporting of significant issues to the Board in a clear & relevant
manner
24. Actuarial Function requirements
SIMR and Actuarial Function
24
> Objective: expert actuarial advice to the Board
• Design of structure and process, address conflicts of interest
• Appropriate competencies and resourcing
• Specific tasks:
– technical provisions
– opinion on Underwriting Policy
– opinion on adequacy of Reinsurance
– contribution to Risk Management (capital calculations and ORSA)
• Reporting and Use
25. Actuarial Function – PRA approach
SIMR and Actuarial Function
25
• Will be reviewing actuarial function work this year onwards.
– we are keen to engage with firms.
– selection of firms and timings is not final.
• We are also engaging with Lloyd’s.
• We plan to give feedback to firms as we carry out reviews and
also collect general emerging themes to feed back to industry at
a later point.
26. Actuarial Function – areas to consider
SIMR and Actuarial Function
26
• Consider the level of independence needed
• Design an appropriate process for validation of TPs,
proportionate to the risks, including feedback loops
• Consider how to communicate the work and who to, so that it can
be used in decision making.
• We’d expect to see meaningful conclusions and
recommendations made.