Tuesday, June 24, 2014
Attended by CEOs and officials from control and risk departments of government entities and insurance companies...
The Insurance Authority organizes a workshop on the role of the actuary in developing the insurance sector
Al Zaabi: The growing size of the UAE’s insurance market and future aspirations boost the role of actuaries in developing companies' performance and boosting competitiveness
Abu Dhabi, June 24, 2014
The Insurance Authority recently organized a specialized workshop on the role of actuaries in developing the insurance sector. The workshop was attended by high-profile officials, CEOs, and officials from control and risk departments in government entities, insurance companies, and insurance-related professions.
The inauguration of the workshop was held at Yas Island Rotana Hotel Abu Dhabi. In his opening speech, H. E. Ebrahim Obaid Al Zaabi (Director General of the Insurance Authority) said that the IA chose to organize this workshop because of its commitment to continuously pursuing and developing the competitiveness of local insurance markets. The IA also looks to boost the performance of the insurance sector through multiple channels and mechanisms, all of which essentially focus on deepening scientific and practical awareness of developed and state-of-the-art concepts in insurance business areas. Positive practices must all be encouraged in the insurance market from all aspects, which would boost the sector’s ability to face potential future challenges.
Al-Zaabi added that there have been developments that have increased the size of the insurance market in the UAE in terms of the number of companies, premiums, and investments available. This factor, along with the factor of the IA's aspirations and future hopes about the package of requirements expected of the UAE’s insurance sector, cater to the role of actuaries who appraise and assess risks, set appropriate rates, and study market cases now and in the future. He pointed out that this attention has increased and improved amid the development of the role and functions of expert actuaries; from working in life insurance to working in all insurance classes, and moving beyond that to important roles in investment and pension areas.
Al-Zaabi said that if expert and specialized staffing in the insurance business represents the core element of the insurance system, then actuarial expertise represents the foundation and backbone of any insurance company. He noted that actuarial expertise has the ability to manage risks and meet obligations in the future, as well as achieving successes and creating continuous growth in the long run.
The IA's Director General unveiled the IA’s current proposals. Due to the important role of actuarial experts, the IA is currently working to improve the actuary profession in the UAE from legislative, scientific, and practical perspectives. The IA is working to empower the role of actuaries, with the aim of directing insurance activities in the UAE toward practices that contribute to enhancing the technical aspects shown in the performance and activities of the companies. This will eventually develop the insurance sector and other associated sectors, and will reflect positively on the growth of the national economy.
He noted that the large number of attendants shows the keenness of relevant parties and insurance companies to develop performance and improve the methods of handling forthcoming potential risks and challenges. This will lead to thriving insurance operations in the UAE, thereby moving toward more progressive horizons.
Al Zaabi hoped that the workshop constitutes an opportunity to exchanges experiences and ideas to achieve mutual interests; namely, to develop performance and move the UAE’s insurance industry toward work areas which are more advanced and harmonized with the achievements of the national economy and its ongoing growth. He pointed out that the IA plans to organize other specialized workshops to present the role of actuarial experts and their work areas. Efforts like these will ensure that the performance of the companies and the market improves.
In four main sessions, the one-day workshop discussed many key issues related to the role of actuaries. The most important of these was to explain the role of actuaries in insurance in general. Specific discussions included the role of actuaries in motor and health insurance, the role of actuaries in life insurance and their contributions when developing similar insurance types, and the role of actuaries when assessing risks in insurance company portfolios. These discussions were enabled by studying the role of actuaries in risk management, underwriting policy, retention rates, reinsurance coverage, and investment policy. Furthermore, the workshop dedicated a session to discussing a report on the evaluation of the insurance companies’ financial positions.
Specialized actuarial experts registered with the IA and lectured on specific topics.
The session concerning the role of the actuary in general, medical, and motor insurance included an overview on the work areas of actuaries and the key international institution that are specialized in this area. Furthermore, the responsibility of the actuary when pricing medical insurance products was examined and discussed in detail, in addition to the key challenges that actuaries and insurance companies face in relation to these products. Additionally, the session discussed the pricing of motor insurance products and the importance of linking insurance products to vehicle risks and the resulting claims.
The session concerning the role of actuaries in life insurance discussed the importance of the role when developing this insurance type. Actuaries contribute through their evaluation of the risks undertaken by the insurance companies, and provide the management of these companies with specialized financial and technical reports which define their obligations and potential risks. The objective of this process is to maintain the funds needed and meet all obligations when due (in order to protect the rights of life insurance policyholders).
The session concerning the role of actuaries in risk assessment addressed the factors affecting the assessment and identification of risks, including the underwriting and pricing policy, the risks of reinsurance and investment, and the risk management policy in the company. The session also discussed the investment policy of the company and how it observes a risk-based framework, and the relationship this has with the regulatory requirements of solvency and the technical provisions observed by the insurance companies.
The session concerning the financial position of the insurance companies addressed the importance of actuarial reports when evaluating an insurance company’s financial position. Actuarial reports are one of the key tools used to control and examine the financial position of the company, and the ability of the company to continue in business and pay out its obligations. Moreover, the key components of the aforementioned reports were discussed, in addition to the legislative requirements and international standards observed by the actuary when developing and issuing these reports.
The workshop designated a long session for instructors and attendants to discuss and exchange their views and ideas. This session contributed to enriching the scientific material of the workshop and allowed for the exchange of views, visions, and best experiences concerning the work of actuarial experts. The implications of actuarial work on the performance of companies were also discussed.
The CEOs and representatives of the insurance companies who participated in the workshop extended thanks and appreciation to the IA. It was agreed that the IA had provided all attendants with the opportunity to develop their knowledge and expertise about the roles and tasks of actuaries in developing the performance of companies and investment institutions, which positively reflects on the entire economy.
They affirmed that the experience of attending specialized workshops is important and rich, as it directly contributes to enriching general concepts about insurance-related professions, including the task of actuaries. This leads to positive developments in the performance and procedures of the attending companies, particularly in the area of risk management.
The attendants indicated the important and effective role of actuarial experts in developing the performance of general insurance, life insurance, and risk assessment. They noted that the tasks assumed by actuaries include the development, pricing, and management of insurance products, as well as determining the size of the reserves that need to be maintained by insurance companies in order to meet their financial obligations. Other tasks include the design and evaluation of financial security programs and plans that achieve strategic objectives. In addition, actuaries conduct marketing and competitive analyses of companies' files and risk management policies.
Attendants affirmed the role of actuaries in developing and preparing financial work models that enable companies to determine potential future scenarios and the inherent risks associated with each one. This helps the companies to achieve growth and secure the adoption of wise governance principles.