The Actuarial Function: Adding Value Beyond Compliance
How leading insurers are leveraging their actuarial function as a strategic asset rather than a regulatory checkbox.
Beyond the Regulatory Minimum
Under Solvency II, every insurer must have an Actuarial Function that performs specific regulatory tasks: opining on technical provisions, underwriting policy, and reinsurance arrangements. For many firms, this has become a compliance exercise—necessary but not particularly valued by the business.
However, leading insurers are taking a different approach. They're positioning their Actuarial Function as a strategic resource that provides valuable insight to boards and management, not just regulatory sign-off. The difference in value creation is substantial.
What High-Performing Actuarial Functions Do Differently
1. They Engage Early and Often
Rather than providing retrospective opinions on decisions already made, high-performing Actuarial Functions are involved early in strategic discussions. They contribute to product development, business planning, and risk appetite setting—not just signing off at the end.
2. They Communicate in Business Terms
Technical accuracy is necessary but not sufficient. The most effective Actuarial Functions translate technical findings into business implications that resonate with non-actuarial stakeholders. They answer "so what?" not just "what."
3. They Challenge Constructively
The Actuarial Function should provide independent challenge, but this needs to be constructive. The best Actuarial Functions combine technical rigour with practical understanding of business constraints, offering solutions not just criticism.
4. They Focus on Material Issues
Not every technical refinement matters. High-performing Actuarial Functions prioritise their efforts on issues that are material to the business, avoiding the trap of perfectionism on issues that don't move the needle.
Practical Steps to Add More Value
- Review your reporting: Are your reports read and acted upon? If not, why not? Consider what changes would make them more useful.
- Build relationships: Invest time in understanding what business stakeholders need and how you can help them.
- Get upstream: Ask to be involved earlier in processes where you currently only provide end-stage opinions.
- Develop business acumen: Ensure your team understands the commercial context in which technical work sits.
The Role of the Board
Boards play a crucial role in setting expectations for the Actuarial Function. By asking probing questions about actuarial inputs and demonstrating that they value actuarial insight, boards can create an environment where the Actuarial Function flourishes as a strategic resource.
How Wizard and Company Can Help
We can help you enhance your Actuarial Function's effectiveness, from reviewing current practices to supporting the development of more impactful reporting. We can also provide Actuarial Function holder support for firms seeking independent, senior-level expertise.
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