Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • January 2014
01

US: Towers Watson poll highlights challenges of life insurance reporting changes

Open-access content Thursday 16th January 2014 — updated 1.14pm, Tuesday 5th May 2020

US life insurers should view new regulatory reporting changes as a way to strengthen their companies or face cost and talent management challenges, according to Towers Watson.

The firm conducted a survey that explored life insurers' preparation to comply with current and emerging regulatory requirements and the impact these new regulations would have on business operations.

Towers Watson polled 20 life insurance chief financial officers and the survey addressed requirements for the International Financial Reporting Standards (IFRS) 4 Phase 2; National Association of Insurance Commissioners (NAIC) Own Risk and Solvency Assessment (ORSA); NAIC Valuation Manual (VM) 20; Actuarial Guideline (AG) 38, revisions for 8D and 8E; and Statement of Statutory Accounting Principles (SSAP) 102/92.

Jack Gibson, managing director of life insurance consulting at the firm said: 'The looming challenges are evident. Preparing for [the regulatory requirements] provides insurers with a great opportunity to assess reserving and capital, reporting functions and enterprise risk management. They can also use it to re-evaluate whether new talent is needed, or existing talent can be further challenged with new responsibilities.

'The complexity of these new life insurance regulatory requirements makes it imperative that insurers understand exactly how these changes will alter everything in their business - from supplementary reporting to capital financing for products such as universal life with secondary guarantees and term insurance.'

However, the survey found that only a small number (13%) of CFOs report that key personnel were experts in each of the regulatory reporting requirements examined in the survey, while slightly over one quarter (27%) understood the basics for each initiative.

Gibson added: 'Even if CFOs have people who know the intricate details of these regulations and are able to focus on near-and long-term planning for financial functions, that planning will be easier if CFOs are well-informed on the life insurance regulatory changes.

'But according to our results, the majority understand just the basics, or have a low level knowledge-base on most of the reporting requirements.'

The survey also highlighted that 80% said they would draw on a combination of maintaining technological knowledge in-house, with at least some outsourcing to comply with the IFRS 4 Phase 2 framework. However, CFOs expect to make only moderate, if any, changes to current staffing levels to address the new reporting requirements.

The firm added that all new regulations were likely to cause changes to insurers' current software models production processes. Over half (56%) of the CFOs surveyed expect major changes to product design and pricing for universal life (UL) with secondary guarantees.

Gibson said insurers that are able to create systems flexible enough to incorporate these new changes and adapt to future changes would be best positioned to manage software-related costs.

Meanwhile, most CFOs expect to make at least moderate changes to their governance, process and controls in response to all five regulations, but more than 60% anticipate implementation challenges.

The firm said it was 'remarkable' that many insurers didn't have significant controls and governance in place to meet these new requirements. 

This article appeared in our January 2014 issue of The Actuary.
Click here to view this issue
Filed in:
01
Topics:
Global

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ