If there is no Appointed Actuary, no approval for new products: IRDAI
The Insurance Regulatory and Development Authority of India (IRDAI) has tightened norms relating to Appointed Actuaries (AA) in insurance companies.
If there is no appointed actuary, the regulator will not approve new products.
“If there is no appointed actuary for a considerable period of time, say, more than one year, the companies will not be allowed to transact new business,’’ Pournima Gupte, Member (Actuary), IRDAI, said in a circular sent to the insurers.
Actuaries play the crucial role of maintaining solvency position of insurance companies. Other aspects of the insurance business, such as new product approval, also require inputs for certification from actuaries.
To increase the supply of actuaries for the insurance industry, the IRDAI has been encouraging young actuaries to take up position of AA if they can be mentored by an experienced actuary. ( If the designation changes to AA, you know what it means 🙂 )
“However, currently it appears that the mentoring may not be happening as envisaged,’’ the member said.
For ensuring uniformity in appointing mentors as well as to ensure that the companies and the appointed actuaries get full benefit of knowledge and expertise of the mentor, IRDAI has put in place a set of guidelines.
Panel of actuaries
For companies that do not have an appointed actuary, an estimation of its financial position at the end of every financial year may be made through one of the actuaries from the panel, which needs to be appointed in line with the guidelines, Gupte said.
IRDAI also advised insures to strengthen the actuarial function by employing enough students. This will help the AA in getting detailed analysis required for performing various statutory duties. In the process, the students will also get practical experience necessary for taking up more responsible positions. The norms come into effect immediately.
General insurance sector
Though AA system has been in vogue for over a decade, the industry is wary of deploying actuaries, citing non-viability of talent.
In a recent interaction, IRDAI Chairman TS Vijayan told BusinessLine that in the life insurance segment the basic actuarial needs are broadly met but in the general insurance sector, fewer number of actuaries get engaged.
To protect the interests of policyholders, the IRDAI is also considering putting in place a panel of actuaries and will use their services should it feel that the required actuarial functions are not adequately carried out in any insurance company. ( A kind of audit function)