The ABI has launched guidance for life insurers on when internal actuarial advice should be subject to external review. It follows a public consultation earlier this year. Its origins lie in the Morris review and subsequent work by the actuarial profession and the Financial Reporting Council.
The guidance, External Reviews of Internal Actuarial Advice: Best Practice for Life Insurers, recommends that boards consider seeking an external review when actuarial advice is critical to a decision that has significant implications for the company.
This could include where there are major changes to the running of life insurance policies, the regulatory environment and established industry and actuarial practice.
The ABI guidance is not prescriptive and recognises that external advice may often be unnecessary.
Peter Vipond, the ABI’s Director of Financial Regulation and Taxation, said: “This guidance is designed to assist boards in making informed decisions based on sound advice. We urge boards to assess each case individually, and to consider the advantages and disadvantages an external review would have.”
