Actuaries are traditionally very active in the field of life insurance. Among other things, they concern themselves with the following activities:
The variety of tasks involved in the field of product development in life insurance demands mathematical and economic thinking as well as intuition. Using market analyses of the needs of insurance customers, actuaries gain insights into the necessity to adjust existing tariffs and to introduce new ones. Using these insights they then work on the calculation of the premiums and the technical actuarial reserves as well as technical specifications for the tariff in question. In so doing, they use appropriate actuarial assumptions. One means of overseeing these conditions is so-called contribution margin calculation. Thus, the field of mere product development has expanded into the more comprehensive one of product controlling.
One key field of activity for life actuaries is the business plan for the company's products. These are drawn up by actuaries in accordance with legal regulations and the standards for calculation stipulated by the DAV. Actuaries are accountable for compliance with the business plans, and thus for the integrity and probity of the company's mathematical bases for calculation, as well as for ensuring that the business plans comply with prevailing legal regulations.
An important task for actuaries is pricing, that is the individual valuation of the risk and the inclusion of the risk features within the insurance premium. In life insurance, for example, the risk premiums or loadings are derived from this task.
After the company's annual financial accounts have been produced, life actuaries have to make a recalculation. The business results are broken down into their various origins: risk, investment income, lapses and cancellations, costs, reinsurance and others. This gives rise to the actuaries' proposals concerning the level of with-profits bonus participation for policyholders as well as to suggestions and feedback for the further development and enhancement of the company's products.
One particular responsibility that is incumbent on actuaries in life insurance is that of their function as the
Under § 141 of the German Insurance Supervision Law (VAG) a life insurer must appoint a so-called Responsible Actuary, who must have an appropriate specialist education as well as at least three years of professional experience as an actuary. He or she is appointed by the Supervisory Board and may also, if appropriate, be dismissed by the Supervisory Board. The duties of the Responsible Actuary are as follows:
To ensure that the calculation of premiums and the premium reserve is in line with legal regulations and that the life insurance undertaking is in a position to fulfil its liabilities under the insurance contracts at all times;
To certify at the end of the balance sheet that the premium reserve has been established correctly and to specify in a report to the management board of the insurance undertaking the calculation basis and any additional assumptions upon which the certification is based;
To inform the life insurance undertaking's management board and the Supervisory Authority (BaFin) if, in the performance of his or her assigned duties, the Responsible Actuary recognises a possibility that circumstances will preclude the granting of a certification in accordance with number 2, or allow only a qualified certification;
To submit to the life insurance undertaking's management board proposals for suitable with-profits bonus / surplus participation. The life insurance undertaking's management board must provide the Responsible Actuary with all necessary information.
The DAV's specialist work in the field of life insurance is performed by the Life Insurance Committee. The results of this committee are published as technical principles or as reasoned opinions or statements and may also be used in public discussion.
The DAV's and DGVFM's section meetings enable their members to keep their required specialist know-how and expertise up to date as well as enabling the transfer of the results of fundamental scientific and/or academic work into everyday actuarial practice. In addition, they also promote and foster the exchange of experience and knowledge and, at a personal level, enable networking with peers.
The LIFE Section deals with the full range of actuarial problems and issues that are relevant in practice for life actuaries. It was convened in order to foster actuarial research and exchange of specialist know-how and expertise on the subject of life insurance. The issues it focuses on include, for example, the further development of biometric calculation principles, the management and steering of investments, valuing guarantees and options as well as implementing the requirements arising from the European Framework Directive, Solvency II.
The LIFE Section meetings take place twice a year during the Annual Meeting of the DAV and DGVFM at the end of April and the Autumn Meeting in November. Participation in the meetings is open to any interested party and not restricted to members of the DAV or the DGVFM.
If you have any questions regarding life insurance please contact:
Birgit Kaiserbirgit.firstname.lastname@example.org+49 221/912 554-210
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