Actuaries and Accounting
The varied scope of the work of actuaries in insurance also extends to the balance sheet valuation of insurance liabilities in accordance with German accounting standards (the so-called HGB or "German Commercial Code") as well as international accounting standards in line with IAS/IFRS. Actuaries are also very active in areas such as internal accounting for supervisory purposes and the implementation of regulatory requirements of national supervisory authorities or EIOPA.
In retirement provision, too, the valuation of occupational pension liabilities for all vehicles is important, especially the calculation of actuarial reserves using national and international accounting principles and standards. The implementation of the German Company Pension Reinforcement Act and the associated regulatory issues are an integral part of actuarial activities.
Actuaries have also been active in the mathematical departments of many federal and state insurance supervisory authorities for many years, performing mathematical and actuarial tasks. They check whether the supervised companies and their actuaries are complying with the regulations laid down in laws and ordinances.
International Accounting
After more than 20 years of preparation, the International Accounting Standards Board (IASB) published the new IFRS 17 standard on international accounting for insurance contracts on May 18, 2017. The DAV has been involved in the project almost from the start - in particular in close cooperation with the International Actuarial Association (IAA) in order to incorporate the interests of German actuaries into the development process at an early stage.
The new IFRS 17 standard is mandatory for the first time for financial years beginning on or after January 1, 2021 and replaces IFRS 4 “Insurance Contracts”. On the occasion of the publication of the standard, the DAV also issued a press release welcoming the fact that IFRS 17 will improve the comparability of various insurance companies and the insurance sector with other industries.
Many technical questions need to be answered when implementing the standard. The DAV's committees and working groups are working intensively on an interpretation of the standard and on corresponding guidance for implementation in German insurance companies. This will lead to an additional need for highly qualified actuaries and to an expansion of the already diverse fields of activity of the more than 6,500 actuaries in Germany. In the future, the DAV will continue to focus on German business models when applying IFRS 17.
DAV's Accounting and Regulation Committee
The DAV's Accounting and Regulation Committee is a body that deals with all specialist issues concerning accounting and insurance supervision / regulation in an inter-disciplinary manner.
Accounting
The committee deals with all national and international accounting issues in order to obtain an overall picture of these topics. Even after the introduction of Solvency II, HGB accounting issues are of great importance from an actuarial perspective. International accounting issues also continue to play an important role in the Committee's work. In particular, the implementation of a new accounting standard, IFRS 17, and its implications for the German insurance market are on the Committee's agenda.
Insurance supervision / regulation
The Committee's second major topic area is cross-sector aspects of national and international insurance supervisory law. At national level, the discussion focuses on professional and legal issues relating to the role of responsible actuaries and the actuarial function as well as the demarcation and interaction between the two roles. At international level, the committee monitors the global capital standards project (ICS) initiated by the IAIS.
Working Groups of the Committee
The Committee has set up the following active working groups to deal with the wide range of issues in the area of accounting and regulation:
The working group HGB of the Accounting and Regulation Committee deals with accounting issues in accordance with the German Commercial Code (HGB) with regard to insurance companies. In view of the volatile interest rate environment and against the backdrop of Solvency II, numerous HGB accounting issues are of importance from an actuarial perspective and are being addressed by the working group.
The Accounting and Regulation Committee has upgraded the previous sub-working group on supervisory rules of the HGB working group to a new working group on cutting red tape, as the topic is becoming increasingly relevant for actuarial work and BaFin. The working group will analyse which supervisory and commercial law regulations are no longer up to date, e.g. due to the introduction of Solvency II, and can either be dropped or modified. The aim of the working group is to identify changes that make sense from an actuarial perspective and to develop concrete proposals for the Accounting and Regulation Committee, which can be discussed with BaFin and politicians in particular.
In addition to further specific assistance for actuaries in interpreting the IFRS 17 accounting standard, the aim of the working group is to address issues relating to planning/forecasting and management as well as other training issues.
The Accounting and Regulation Committee has set up a new working group to look at the impact of AI on accounting and reporting. The aim of the working group is to examine where AI can be used in actuarial activities, which risks can be minimised through the use of AI and which advantages and disadvantages arise for actuaries as a result. The aim is also to examine whether existing legal frameworks allow AI to be used in regulation.
The Insurance Capital Standard working group of the Accounting and Regulation Committee is supporting the ongoing work of the International Association of Insurance Supervisors (IAIS) on the development of a risk-based global capital standard (Insurance Capital Standard, ICS) for internationally active insurance groups. Version ICS 2.0 of the ICS is expected to be adopted in 2019. Further discussions on fundamental issues and fine adjustments are expected during the subsequent five-year monitoring period.
The working group deals with the question of how independent tests can be carried out using model-based methods.
The working group deals with issues relating to mandatory reporting on sustainability topics in insurance companies. Standards for sustainability reporting are currently being developed at both international and European level, which are intended to create transparency about the sustainability goals of companies on the one hand and the sustainability of the products offered on the other. The aim of the working group is to further analyse the current state of affairs and discuss the resulting tasks for actuaries and how the DAV can support them in their fulfilment.
Under the new examination regulations 5, ‘Accounting’ is to be offered as a further specialised knowledge subject. The Qualification Working Group is responsible for the independent quality assurance of the specialised knowledge examinations in accounting and regulation. Its tasks include, in particular, checking and approving the corresponding draft examinations with regard to content, level of difficulty, scoring and proposed solutions. The working group is also involved in the regular review of the underlying learning objectives to identify any need for adjustment or updating.
Publications
The Accounting and Regulation Committee develops professional standards, supports actuaries in their specific activities and provides them with authoritative guidelines for their work.
Find out more about the professional principles and results reports of the Accounting and Regulation Committee by selecting the Accounting and Regulation category in the relevant section of the website.
