Insurance companies will soon be required to have their new policies examined by a panel of actuaries before they hit the market. This will be in addition to an initial round of screening of the policies which will be undertaken by the insurance regulator.
Insurance companies will soon be required to have their new policies examined by a panel of actuaries before they hit the market. This will be in addition to an initial round of screening of the policies which is undertaken by the insurance regulator.
In a circular the Insurance Regulatory and Development Authority of India (IRDAI) said the panel of actuaries to be employed by insurance firms will have to satisfy certain criteria. The regulator also added that life and general insurance companies will have separate teams of actuaries. The tenure of each panel will be for a period of three years from April 1, 2017 to March 31, 2020.
On an average, a product approval takes 30-40 days depending on the type of product. Here, IRDAI looks into the product features and pricing before giving it a green light to allow it to be sold in the market. Now, a panel of actuaries will also examine the product.
IRDAI has said that generally the scope of work will include an estimation of reserves and solvency margin at the end of the financial year as well as preparation of reports which are normally required under current regulations.
There is also a dearth of actuaries in the market due to the level of difficulty of the actuaries qualification. IRDAI has said that if the insurers are not able to appoint an actuary, they can use services of one from the ‘Panel of Actuaries’ for estimation of reserves, solvency margins and preparation of reports which are normally required at the end of every financial year.
However, the actuary who is part of the panel cannot be involved in the annual statutory valuation of more than one insurer during any financial year. Also, they cannot be involved in the annual statutory valuation of any insurer for more than two consecutive financial years.
Before commencement of the work, the insurer has to inform IRDAI about the scope of the work, time schedule for completion of work and professional fees payable to the panel actuary. IRDAI has said that the actuary should have at least 5 years of post-qualification experience in the relevant field.
To become a qualified actuary, an individual needs to be accredited by a body like the Institute of Actuaries of India. This is done after a prospective candidate clears all 15 papers in actuarial science and gets a fellowship. However, companies also appoint individuals who have passed 10 papers as an associate in the actuarial department. India has less than 500 fully qualified actuaries.