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The Actuary The magazine of the Institute & Faculty of Actuaries
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Profession news - September 2010

The Institute and Faculty of Actuaries officially launched
The Institute and Faculty of Actuaries was launched on 1 August 2010. The new body will be led by Ronnie Bowie, former President of the Faculty of Actuaries. Ronnie outlined his three ambitions for the year: “I want the newly formed Institute and Faculty of Actuaries to engage, deliver and inspire. We will engage by making the body relevant to the work of our members. We will deliver effective and efficient services to our members, including a revitalised research programme and further expansion into the field of risk management. And we will inspire by helping our members feel proud of their profession, proud of their work and proud of how actuaries can make a positive difference to the financial world.”

Caroline Instance, chief executive of the Profession, added: “We will continue to use the Actuarial Profession as our brand so, while we might not look different to external stakeholders, our streamlined governance will enable us to take action more quickly and to greater effect than in the past. We will build on the things the two bodies did well, with experience gained during the merger project showing us to listen to our members and tailor our approach and services to meet their needs and aspirations.”

The launch of the Institute and Faculty of Actuaries follows the vote of 25 May 2010 when voting members of the Faculty of Actuaries and Institute of Actuaries agreed to merge both organisations. The final approval came in June when the Privy Council gave its consent.

Help write a motto for the newly formed IFA
A new coat of arms has been drawn up for the Institute and Faculty of Actuaries. It will incorporate some elements of the former coats of arms and will feature the woolsack as a reference to Staple Inn, the hour glass and the wavy line as a reference to mathematical analysis and the owls as supporters.

The arms will need a new motto. One suggestion, E Peritia Ratio, broadly means ‘reason from experience’ to indicate how actuaries use past experience to reason solutions for their clients. Email your suggestions by 5pm on 17 September to
alison.jiggins@actuaries.org.uk

Awards made at final Institute AGM
The final AGM of the Institute of Actuaries took place at Staple Inn Hall on 30 July, and out-going President Nigel Masters used the opportunity to pay thanks to colleagues and to award prizes to those who had furthered the cause of the Actuarial Profession.

The Finlaison medal was awarded posthumously to Doreen Hart whose daughter was present to accept it. Doreen was awarded the medal in recognition of her exceptional service to the actuarial profession, most notably as editor of the British Actuarial Journal.

The Peter Clark prize for best paper was awarded to the authors of the paper Modelling extreme market events. Two of the authors, Andrew Smith and Elliot Varnell, were present to accept the prize.

Finally, President’s Awards were made firstly to Peter Wright in recognition of his outstanding contributions to the fields of insurance regulation, insurance accounting and regulatory oversight, and secondly to a team of 10 in recognition of their outstanding contributions to achieving the formation of the Institute and Faculty of Actuaries.


Subscriptions and practising certificate fees
Councils agreed not to increase the subscription fees for 2010 but decided to increase the practising certificate fees as noted below. All subscription fees will therefore remain the same as set out below. Subscription fees for 1 October 2010 are as follows:
>> Fellows (full regulation) £690
>> Fellows (partial regulation) £342
>> Associate (full regulation) £456
>> Associate (partial regulation) £228
>> Student (UK/EU) £282
>> Student (overseas) £192
>> Affiliate £69
>> Reduced subscription (all categories) £69

Practising certificate fees:
>> Fees for all practising certificates will be increased to £860 from and including 1 September 2010 for both new and renewal applications.

Subscription policy and membership operation:
>> Members and students should consult the members’ section of the Profession’s website regarding policy and operational procedures. Important information such as how to apply for partial regulation, reduced subscription, surcharges, bankruptcy, and much more can also be found on the Profession’s website at www.actuaries.org.uk

Remittance advice information will be sent to members during August and it is the member’s responsibility to ensure that the correct subscription is paid. If you previously paid a partial or reduced rate, you must ensure that you are still eligible to renew at that rate. Receipts for all payments can be downloaded from the members’ section of the website.

Any enquiries regarding membership matters should be sent to the Membership and Certificates Team, The Actuarial Profession, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP, tel: +44 (0)131 240 1325, or send an e-mail to membership@actuaries.org.uk


Strengthening the relationship with employers
It is individual members that make the Institute and Faculty of Actuaries the highly respected and influential 21st-century professional body that it continues to be, but employers provide the vital support behind that success, in terms of the opportunities and the resources to enable the ongoing development of actuarial work.

One of the priority themes of the work of the Profession’s Member Support Executive Committee (MSEC) is to strengthen the links between the Actuarial Profession and employers of actuaries, and we are looking for volunteers to work with us to help develop strategic relationships between the two. MSEC is seeking to understand the needs of major employers — especially in terms of education, CPD, the maintenance of professional standards, the development of actuarial work and ongoing co-operation and collaboration — to ensure that we can work together more effectively and to enable the future strategic relationship between employers and the Profession to be focused continuously towards meeting those needs.

MSEC is in the process of holding a number of meetings with a wide range of actuarial employers to develop these strategic relationships, and is now calling for volunteers to support this initiative. Specifically, volunteers would work alongside MSEC in hosting meetings with employers and developing a draft strategic framework for the Profession’s relationship with employers.

If you would be keen to help or would like to find out more, please contact Margaret Marchetti at margaret.marchetti@actuaries.org.uk or telephone +44 (0)20 7632 2184.


Can car insurance pricing keep up with an increase in injury claims?
Third-party injury claims are rising, according to the preliminary findings of a report due to be published later this year by the Actuarial Profession’s third-party motor insurance working party.

Much of the information is still being analysed, but the working party has already identified that, while settlement rates across the industry are speeding up, settlement amounts are increasing.

David Brown, chair of the working party, said: “With both numbers and average costs up, the cost of settling injury claims is now growing by 30% each year. At a time when the industry already isn’t making money and the combined operating ratio for private car insurance is running above 120%, this is not good news. The industry is going to need to recoup costs if it is going to turn to profit. Premiums have indeed gone up across the market already, but with these new findings we must question whether those increases are enough.”

Mobile phone version of Profession’s website available now
The Profession’s new website went live in early August. A version designed specifically for mobile phones is now available. This is accessible by clicking on the text ‘mobile site’ in the top left-hand corner of the Profession’s website at www.actuaries.org.uk


Volunteers for Consumer Information in Financial Planning working party
Financial planning has not generally been at the forefront of actuarial activity. However, it represents a natural evolution of the application of our risk management knowledge base and skill set. Developments in institutional risk management, the wealth management product landscape and changing demographics have led to a need for a reassessment of the sharp end of the financial services industry, ie. communicating and using financial products effectively.

Consumer insight implies that customers do not value or fully understand the current illustration framework. It is crucial to address this issue if we are to increase consumer engagement in their savings and to reduce the risk of mis-selling based on poor understanding of potential outcomes.

There are a variety of areas where the Actuarial Profession could support the financial services industry in communication to help consumers make better decisions with their money. This topic is particularly relevant in the build-up to the implementation of the Financial Services Authority’s (FSA’s) Retail Distribution Review framework.

The purpose of the working party is to:
>> Compile and embed a body of work to illuminate the issues and potential opportunities in this area for actuaries, the wider financial community and consumers.
>> Propose tangible action to address issues with the current illustration framework, which meet the regulator’s objectives and increase consumer confidence in managing their finances. This will include linking with existing analysis, such as the Board for Actuarial Standards’ consultation on TM1: Statutory Illustrations of Money Purchase Benefits.
>> Build into a wider analysis in areas the Actuarial Profession could support the industry (eg. financial planners, product providers, trustees) to deliver effective information and advice.
>> Provide a platform for engagement on this topic with industry bodies such as the FSA, financial planning groups, consumer groups, media and government.
>> Facilitate distribution of this knowledge to actuaries (for continuing professional development) and the wider financial services industry where appropriate.

We have three Profession members so far (Alan Ritchie, Joshua Corrigan and Keith Miller) and are seeking three more with relevant interest and experience. We are also looking for access to subject-matter experts. We have already confirmed one subjectmatter expert to represent the independent intermediary view. The following would ideally also be available to contribute their knowledge and challenge our thinking:
>> An FSA representative (to help ensure we design potential solutions that fit with FSA objectives).
>> An academic specialising in the fields of behavioural finance (to help us explore a wider range of options that may resonate with consumers).
>> A consumer champion (eg. from the Consumer Association, to provide external challenge and ensure proposals will fit with customer needs).

If you would be interested in joining the working party, either as a full member or a subject-matter expert, then please contact the chair, Alan Ritchie, at alan_ritchie@standardlife.com