Actuaries need to move beyond their “familiar zone”: OSFI

As expectations of risk management functions grow in the current economic and regulatory climate, actuaries will have to move beyond their “familiar zone” and begin to consider the entire range of risks faced by an insurer, said Julie Dickson, the Superintendent of Financial Institutions.
Dickson delivered a speech to the Actuaries Club of Toronto on Sept. 23, 2009.
In it, she noted appointed actuaries have traditionally been considered as a separate “independent oversight function” with the authority to carry out their responsibilities and have direct access to an organization’s board as required under the Insurance Companies Act.
“The role has been about valuing an insurer’s insurance obligations and assessing its financial condition,” she said.
When considering insurance risks, such as segregated funds or longevity risks, OSFI expects the actuarial profession to develop appropriate views with respect to policy liabilities and related capital amounts, Dickson continued.
“As we move towards more comprehensive risk management, actuaries will be involved in the determination of each insurer’s own economic capital needs. To do this, actuaries will have to be more concerned about all the risks,” she said.
“While assessing liabilities has been a familiar ‘zone’ for actuaries, it will be necessary to move outside that comfort zone and consider the entire range of risks faced by an insurer.”