16
September 2024
Insurance Authority Review of Actuarial Pricing Reports for 2023
The year 2023 was the fourth consecutive year of insurance companies submitting actuarial reports under the Actuarial Work Rules (AWR) issued in March 2020. The primary objective of those Rules is to enhance the role and responsibilities of actuaries in the insurance sector in order to facilitate informed decision-making by management and to provide greater technical support to the business as the market sophistication continues to grow in the Kingdom.
Under the above Rules, an Appointed Actuary is obligated to carry out technical pricing of risks, at least annually and more frequently if business environment so demands, and report to the Senior Management, Board of Directors and the Insurance Authority (IA) the outcome of those exercises. The pricing exercises are required to be carried out for Health, Motor and Protection & Savings insurance at a minimum; the IA (or the Company management) may also require the Appointed Actuary to carry out a similar exercise for other lines of business.
Depending upon the appropriateness of the assumptions used, range of rating factors considered, allowance made for any regulatory changes, and credibility assigned to a client’s own claim experience, the competitive position of an insurance company is likely to be significantly dependent on the Appointed Actuary’s recommendations.
The regulations allow a Company management to deviate from the technical prices recommended by the Appointed Actuary, provided there are adequate controls in place in the form of i) an underwriting authority matrix that specifies the deviation limit by role, ii) a requirement for the underwriter to document justification for deviation from the technical rate, and iii) quarterly reporting by the Appointed Actuary to the Board of Directors on the expected financial impact of deviating from the technical rate in respect of the policies underwritten in each period.
This document encompasses the IA’s observations from its review of the following actuarial pricing reports:
- Health Actuarial Pricing Report (pages 2 - 10)
- Motor Actuarial Pricing Report (pages 11 - 16)
- Protection and Savings Actuarial Pricing Report (pages 17 - 23)