Compliance Review GIRO CAS Convention 2001 Paul

Compliance Review GIRO / CAS Convention 2001 Paul Duffy - Bill Mc. Connell - John Ryan Thursday 4 October 2001

Compliance Review n The Actuarial Profession’s approach to compliance review n The Lloyd’s perspective n How can peer review help improve the quality of the product n What is the proposed process? n Who should be able to undertake peer review n What are the responsibilities of a peer reviewer n Should a peer reviewer be from an independent firm n The Irish perspective Q: CLIENTRyan. JP2001jr 0459 sh. ppt 2

How Peer Review assist the Process n A Second pair of eyes. n Greater consistency of Standards n Encourages documentation of the process n Subjective Judgement becomes more objective n Broader Range of Experience n Helps identify what you don’t know Q: CLIENTRyan. JP2001jr 0459 sh. ppt 3

The Actuarial Profession’s approach to compliance review n All Statutory Opinions will require Peer Review n Lloyd’s Opinions & Friendly Societies will require Peer Review n Overseas Opinions will not initially require Peer Review unless there is an overseas requirement n The individual Practice Boards are managing the process subject to review by the Professional Affairs Board Q: CLIENTRyan. JP2001jr 0459 sh. ppt 4

Lloyd’s View n In general Lloyd’s agrees with principle n Any proposals must be fair & practical - Treatment of similar organisations -Must not discourage managing agents employing inhouse actuaries -Should not involve large increase in costs -Fit in with existing timetable n Actuaries lining own pockets n Review of peer reviewer n Current position on reviews n In-house peer review n Auditors actuaries / peer review Q: CLIENTRyan. JP2001jr 0459 sh. ppt 5

The Proposed Process n For Consultancies & Audit firms there will be an overall review of their processes. n This will likely be carried out by Lloyd’s n It will be necessary to ensure that this is a distinct process to the Audit Process n It is suggested that this should be carried out by someone in an independent organization for In-House Actuaries. n It is not anticipated that this will be a major addition to costs n The process is subject to consultation Q: CLIENTRyan. JP2001jr 0459 sh. ppt 6

Who n Should the Peer Reviewer be from an independent firm? n Is the answer different for a large consultancy to in- house actuaries? n What should be the relationship with the auditor & audit support actuaries? n The peer reviewer must hold a Practice Certificate Q: CLIENTRyan. JP2001jr 0459 sh. ppt 7

What are the responsibilities of the Peer Reviewer n Not to express an independent view of the reserves n Must be comfortable with material assumptions & methodology or at least it gives similar results n Not responsible for checking the arithmetic n Should check results for reasonableness n Applies to the results as a whole & not the individual parts n Should review the documentation process n What else? Q: CLIENTRyan. JP2001jr 0459 sh. ppt 8