Introduction

This concept paper (CP) proposes Bank Negara Malaysia's (the Bank) enhanced supervisory expectations on the duties and responsibilities of the Appointed Actuary as well as provides greater clarity on the expectations around his/her relationship and interactions with different stakeholders, particularly other functions within the insurer/takaful operator. The current requirements on Appointed Actuary under the Guidelines on the Role of "Appointed Actuary" (JPI/GP10) and the Guidelines on the Role of Appointed Actuary (BNM/RH/GL/004-10) will continue to be in force under the Financial Services Act 2013 and the Islamic Financial Services Act 2013 until the proposed requirements in this CP have been finalised.

The enhanced supervisory expectations seek to, among others, promote an effective and robust accountability structure, in particular between the Appointed Actuary, Board and senior management within the insurer or takaful operator. The supervisory expectations are also intended to promote the fair treatment of policyholders by ensuring adequate consideration of the value and suitability of products for different groups of policyholders.

In order to help enhance the Board's understanding of actuarial issues and their linkages to the business and risk profile of the insurer or takaful operator, greater emphasis has also been placed on the quality of communication between the Appointed Actuary and the relevant stakeholders.

Key changes from current requirements

When the proposed requirements in the CP are finalised and take effect, they will supersede the Guidelines on the Role of "Appointed Actuary" (JPI/GP10) and the Guidelines on the Role of Appointed Actuary (BNM/RH/GL/004-10).This CP proposes the following enhancements on the role of the Appointed Actuary:

1. "Appointed Actuary" to be the term used, in accordance with the Financial Services Act 2013 and the Islamic Financial Services Act 2013, for a life insurer, family takaful operator and a general insurer or takaful operator (previously known as the Signing Actuary for a general insurer or takaful operator);
2. the removal of the product pricing duty from the role of the Appointed Actuary to reduce conflicts of interest and enhance the objectivity and independence of the Appointed Actuary;
3. further elaboration of the Bank's expectations with respect to Board oversight and understanding of actuarial issues; and
4. the additional duty for the Appointed Actuary for a general insurer or takaful operator to prepare the Financial Condition Report (FCR).

The Bank invites written comments on this CP. Please support each comment with a clear rationale, accompanying evidence or illustration, as appropriate. In addition, all insurers/ takaful operators are invited to respond to the specific questions set out in this CP.

Responses must be submitted to the Bank by 2 August 2013:

Pengarah
Jabatan Dasar Kewangan Pruden
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur
Email: [email protected]
(Please note that the email address will only be valid until 2 August 2013)

Click here to download concept paper.

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