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The Actuary The magazine of the Institute & Faculty of Actuaries

Asian actuaries urged to prepare for Solvency II opportunities

Addressing the East Asian Actuarial Conference in Kuala Lumpur last week, Philip Scott, President Elect of the Institute and Faculty of Actuaries, talked of the knock-on effect of Solvency II on firms with direct and indirect links to EU insurers, saying that an increased focus on proactive risk management means actuaries have a vital role to play in developing new business models.

"Solvency II requires certain functions to be performed in the risk and actuarial areas," he said. "This places risk management and actuarial thinking at the centre of the regime, and recognises the importance of actuarial science in the soundness of the insurance industry."

Mr Scott claimed that the insurance industry had emerged relatively unscathed from the global financial crisis due to its sound risk management credentials and a basis in trust - which regulation serves to uphold - and that Solvency II had given non-EU regulators a useful template to work from.

"I am not so arrogant to expect other countries to adopt Europe's rules and regulations directly but I do over time expect to see elements of the regime adopted elsewhere. There is evidence of this in Bermuda and South Africa already - and we are already seeing much more demand for actuaries working on Solvency II that are centred in and around Hong Kong, where many life companies base their regional headquarters.

Mr Scott stated his belief that Solvency II, in bringing risk control and management to the centre of the business, gave actuaries greater opportunities to influence and adopt key roles.

"Many actuaries are directly involved in risk management as an integral part of their routine activities, but often in relatively narrow defined areas. Solvency II, with its central focus on enterprise risk management, provides just one of several cues for ambitious actuaries to broaden their risk management skills and add value to their employers and clients in a wider business context."

He said that the Profession's chartered enterprise risk actuary (CERA) credential had been developed to help actuaries capitalise on opportunities in this area.

Mr Scott will become President of the Institute and Faculty in June 2012. The full text of his speech to the East Asian Actuarial Conference can be found here.