Financial projections and models have been a mainstay of actuarial departments for years. As we look ahead to an environment where models are used for financial reporting as well as financial projections, there is little question that the actuarial workload will increase.
Since actuarial models historically have been used for ad-hoc processes such as pricing, business planning, strategy analysis, and cash-flow testing, there is an acknowledgement that better processes and controls will be required to meet SOX and internal audit requirements as these models will now be used for setting reserves and capital.
However, it appears that few companies are anticipating significant restructuring or strategic modeling changes and are simply planning to expand existing processes. Suppose, however, that your company would need to double its actuarial staff to meet emerging regulatory requirements with current processes? Would “do nothing” continue to be an option? This is the reality that is being faced by some European insurers as they come to grips with implementation of Solvency II and look ahead to IFRS Phase 2, and market-consistent reporting.
This article appeared in the October 2009 issue of CompAct, a quarterly newsletter published by the Society of Actuaries.Read or print the article