The IAA and its contribution to the actuarial profession: The importance of Professionalism

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The IAA and its contribution to the actuarial
professionThe importance of Professionalism

• Bogota, Colombia
• 21 November 2011
• Chris Daykin, Chief Executive, IAA Fund

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International Actuarial Association

• A short history
• established 1895 at 1st International Congress
• association of individual members
• organising Congresses
• and, from 1957, starting up Sections
• International Forum of Actuarial Associations
  formed 1995
• IAA established with new constitution in 1998
• to take over role of IFAA
• worldwide association of professional associations

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International Actuarial Association

• Vision of IAA
• To seek worldwide recognition of the actuarial
  profession
• as a major player in the decision-making process
• within the financial services industry,
• in the area of social protection
• and in the management of risk,
• for the well-being of society as a whole

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International Actuarial Association

• Principle of subsidiarity
• The IAA restricts its activities to strategies
  and programmes which require international
  co-ordination or direction
• It does not become involved with actions at
  national level, except at express invitation of
  actuarial association or group
• It avoids duplication or overlap with activities
  of Member Associations or regional groups of
  actuarial associations

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International Actuarial Association

• Requirements for associations to become Full
  Member
• code of conduct meeting minimum requirements
• disciplinary scheme meeting certain requirements
• due process before adopting standards of practice
• education of newly qualified actuaries meets
  requirements of core syllabus and guidelines
• pay annual dues to IAA

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International Actuarial Association

• Membership
• Full Member Associations 63
• Associate Member Associations 26
• assisting development of profession in 30
  additional countries
• fully qualified actuaries 60,000 in more than
  100 countries

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International Actuarial Association

• Institutional Members
• International Association of Insurance
  Supervisors (IAIS)
• International Accounting Standards Board (IASB)
• International Social Security Association (ISSA)
• International Organization of Pension Supervisors
  (IOPS)
• Organization for Economic Cooperation
  Development (OECD)
• Observer Member
• Asian Development Bank (ADB)

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International Actuarial Association

• Strategic Plan - Five strategic objectives
• Build relationships with key supranational
  audiences
• Expansion of scientific knowledge to wider fields
  to enhance the scope, quality, and availability
  of actuarial services

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International Actuarial Association

• Strategic objectives
• Common standards of actuarial education and
  principles of professional conduct as well as
  guidance for actuarial practice promote
  development and issuance of actuarial standards
  in jurisdictions of Full Member associations, and
  the global convergence of actuarial standards

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International Actuarial Association

• Strategic objectives
• Support the development, organization, and
  promotion of the actuarial profession around the
  world
• Provide a forum for discussion for actuaries and
  actuarial associations

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Committees and Working Groups

• Executive
• Nominations
• Audit
• Accreditation
• Advice Assistance
• ERM and Financial Risk
• Insurance Accounting Standards
• Insurance Regulation

• Education
• Professionalism
• Pensions and Employee Benefits
• Social Security
• Supranational Relations
• Mortality Working Group
• Population Issues Group
• Actuarial Standards

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IAA Sections

• ASTIN general insurance, risk and research
• AFIR investments and financial risk
• IACA consulting
• IAAHS health and care
• PBSS pensions, benefits and social security
• IAALIFE life insurance
• AWB Actuaries without Borders

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IAA Activities

• 30th International Congress of Actuaries,
• Washington DC, 30 March 4 April 2014
• IAA Council and Committee meetings
• Los Angeles, 23-26 May 2012
• Bahamas, 15-18 November 2012
• Netherlands, 23-26 May 2013 -
• Joint Colloquium of PBSS/IAAHS/IACA
• Hong Kong, 6-9 May 2012
• Joint Colloquium of ASTIN/AFIR/IAALS
• Mexico City, 1-4 October 2012

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IAA Activities IAA Fund

• Regional Meeting for Southeast Europe
• Zagreb, Croatia, 3-4 October 2011
• Asian Regional meeting
• Kuala Lumpur, Malaysia, 10 October 2011
• 2nd African Actuarial Congress
• Nairobi, Kenya, 24 November 2011
• Introduction to the actuarial profession seminar
• Ulan Bator, Mongolia, 14-15 November 2011
• Latin American meeting
• Bogota, Colombia, 21-23 November 2011
• Introduction to the actuarial profession seminar
• Luanda, Angola, 24-25 November 2011

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The importance of professionalism
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What is a profession?

• Six key characteristics of a profession are
• members join together to apply a specialised
  skill
• the skill has been developed through appropriate
  education
• members have a special relationship with those
  served
• recognised by the public as an authority in field
  of expertise, able to serve the public interest
• standards of competence and conduct of members
• high level of integrity by members in exercising
  judgement

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What is expected of us as professional people?

• demonstrating, and applying appropriately,
  specialist skills
• providing reliable up-to-date technical knowledge
  and advice
• complying with Professions code of conduct and
  standards
• complying with legislation and regulators
  standards
• performing statutory roles to a high standard
• behaving ethically
• exercising judgement with high level of integrity
• communicating well
• having due regard to the interests of those
  affected
• (continued)

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What is expected of us as professional people?

• respecting and supporting others
• relationship of trust with clients (fiduciary
  relationship)
• being reliably confidential
• life-long learning developing our knowledge and
  skills
• having no adverse disciplinary record
• assisting the profession to serve the public
  interest
• contributing to public debate
• contributing to the work of the profession

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Some key principles of professionalism

• Integrity
• respect, confidentiality, honesty, openness
• Competence and Care
• understand the client and keep competence
  up-to-date
• Impartiality
• avoidance of bias and conflict of interest
• Compliance
• compliance and challenging non-compliance
• Open Communication
• clear, appropriate and accurate

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IAA Core Syllabus

• Subject 10 Professionalism
• characteristics and standards of a profession,
  including need for
• specialised skill and education
• ongoing training and development
• high quality of advice
• exercise of independent judgement
• objectivity, integrity and accountability
• code of conduct
• discipline process
• practice standards set by actuarial bodies or
  other stakeholders
• regulatory roles of actuaries
• the professional role of the actuary

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International Actuarial Association

• Work on professionalism
• Common understanding of principles of
  professionalism
• International actuarial work
• Development of model standards of practice
• Preparation of a pack for professionalism
  education

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International Actuarial Association

• Principles of professionalism
• Professionalism, for the actuarial profession,
  means
• The application of specialist actuarial knowledge
  and expertise,
• The demonstration of ethical behaviour,
  especially in doing actuarial work, and
• The actuarys accountability to a professional
  actuarial association or similar professional
  oversight organisation.

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International Actuarial Association

• Three high level principles of professionalism
• Knowledge and expertise
• Values and behaviour
• Professional accountability

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International Actuarial Association

• Knowledge and expertise
• An actuary shall perform professional services
  only if the actuary is competent and
  appropriately experienced to do so
• This principle is supported by the following four
  elements
• Specialist knowledge
• Professional communication
• Required education
• Continuing professional development

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International Actuarial Association

• Values and behaviour
• An actuary shall act honestly, with integrity
  and competence, and in a manner that fulfils the
  professions responsibility to the public and
  upholds the reputation of the actuarial
  profession.
• This principle is supported by the following five
  elements
• Ethical behaviour
• Integrity
• Independent advice
• Trust and reputation
• Public interest

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International Actuarial Association

• Professional accountability
• An actuary shall be accountable to a
  professional actuarial association or similar
  professional oversight organisation.
• This principle is supported by the following
  three elements
• Entry and qualification standards
• Code of conduct
• Disciplinary process

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Standards of practice

• whilst the Code of Conduct deals with broad
  ethical and behavioural issues
• Standards of Practice are concerned with
  specific behaviours required of the actuary in
  relation to particular practice area
  applications, often in connection with statutory
  duties imposed on the actuary.

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Standards of practice

• neither the IAA nor the Groupe Consultatif
  requires Full Member Associations to issue
  Standards of Practice
• however, if they do, they must first have in
  place a compliant due process for consulting on
  the introduction and wording of Standards of
  Practice.

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Standards of practice

• the Associations in North America and in the UK
  have issued many Standards of Practice
• also in a number of other countries
• in some countries actuarial standards of practice
  are laid down by the regulator
• actuaries should take care to understand which
  Standards of Practice (if any) apply to any
  actuarial services they are providing in any
  jurisdiction where they are working.

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What is going on out there?

• globalization of business and commerce, WTO and
  G20
• demand for level playing field and transparency,
  including in the financial sector
• Regulated Professions Task Force (reported to G20
  on 11 Nov)
• recommendation for global convergence of
  standards, including actuarial standards
• International Financial Reporting Standards
  (IFRS) being developed by the IASB (International
  Accounting Standards Board)
• in September 2009, G20 called the accounting
  bodies to redouble their efforts

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What is going on out there?

• IAIS is developing international standards for
  solvency regulation and supervisory purposes
• Common Framework for the Supervision of
  Internationally Active Insurance Groups
  expected to take three years to develop
• financial stability issues
• Own Risk Solvency Assessment (ORSA)
• cooperation with banking and securities
  regulators

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Why develop actuarial standards of practice?

• To serve the public interest
• enhance the quality of delivery of actuarial
  services
• ensure actuarial services meet the needs of users
• narrow the range of results
• contribute towards harmonisation and convergence
• To support professionalism
• promote consistency
• provide guidance on good practice
• To protect actuaries
• reduce the likelihood of the actuary being sued

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What is happening now?

• Due Process Task Force (DPTF)
• Interim Actuarial Standards Sub-committee (of EC)
  (IASSC)
• Develop the following standards (to be confirmed)
• generic standard on data, modelling, reporting,
  etc. (ISAP1)
• specific standard on actuarial work for IFRS4
• specific standard on actuarial work for IAS19
• specific standard for social security actuaries
• specific standard on actuarial work on ERM
• Task force on permanent structure for
  standard-setting
• Groupe Consultatif will develop specific
  standards for Solvency II

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Objectives of standards (IASSC paper at Zagreb)

• International Standards of Actuarial Practice are
  established to promote high quality actuarial
  practice globally.
• High quality actuarial practice
• helps serve the public interest by benefiting
  users of actuarial work, regulators, and
  participants and beneficiaries of financial
  security programs and
• benefits both actuarial associations and
  individual actuaries by providing clear guidance
  and enhancing the credibility of the actuarial
  profession.

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Objectives of standards (IASSC paper at Zagreb)

• Characteristics of high quality actuarial
  practice include
• Consistency providing users of the actuarial
  work product with confidence that practice is
  consistent over time and across clients subject
  to similar requirements
• Usefulness adding substantial value to
  financial analysis and,
• Clarity clearly articulated and understandable.

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Exposure draft for International Standard of
Actuarial Practice 1 (ASAP1)

• exposure draft issued 26 July 2011
• deadline for comments is 1 December 2011
• The IASSC particularly asks us to consider the
  following questions
• 1. Is the guidance clear and unambiguous?
• 2. Is the guidance at the right level of detail,
  or should it be more or less detailed?
• 3. Is the guidance on when to issue an actuarial
  report and what should be covered in the report
  appropriate?
• 4. Are there other matters that should be
  included in this standard on general actuarial
  practice? Are there some included here that
  should not be?
• 5. The intent is to use the same format for
  future ISAPs. Is the format of this ISAP
  appropriate?
• 6. Is the change in nomenclature (from IASP to
  ISAP) appropriate?

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Exposure draft for International Standard of
Actuarial Practice 1 (ASAP1) - topics

• Section 3. Appropriate Practices
• 3.1 Acceptance of Assignment
• 3.2 Knowledge of Relevant Circumstances
• 3.3 Employed Actuaries
• 3.4 Reliance on Others
• 3.5 Materiality
• 3.6 Data Quality
• 3.7 Assumptions and Methodology
• 3.8 Assumption Setting
• 3.9 Process Management
• 3.10 Responsibility for Assumptions and
  Methodology
• 3.11 Peer Review
• 3.12 Documentation

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Continuing Professional Development

• Formally defined by the IAA as
• The development of knowledge and of technical,
  personal, professional, business and management
  skills and competencies throughout a persons
  working life.
• CPD guidelines approved by IAA Council on 2
  October 2011

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Continuing Professional Development

• CPD and the individual actuary
• CPD is an important element of the actuarys
  lifelong process of learning and development
  within the profession. The initial qualification
  process is the first step in this journey.
  Thereafter, it is the responsibility of all
  actuaries to plan their own professional
  development programme.

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Continuing Professional Development

• The importance of CPD for the individual actuary
• to ensure competence for everything you do
• to gain knowledge and experience
• to keep up to date and stay abreast of
  developments
• to learn about new methodologies
• to develop non-technical and professional skills
• to be able to move into new fields of activity
• to keep up with new standards of practice and
  regulations

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Continuing Professional Development

• CPD should include
• technical skills
• professionalism
• personal skills
• communication skills
• management skills
• business skills
• IT skills
• keeping up to date with developments

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The IAA and its contribution to the actuarial
professionThe importance of Professionalism

• Bogota, Colombia
• 21 November 2011
• Chris Daykin, Chief Executive, IAA Fund