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AN OVERVIEW OF THE STATE OF THE ACTUARIAL PROFESSION IN HUNGARY

AN OVERVIEW OF THE STATE OF THE ACTUARIAL PROFESSION IN HUNGARY. A presentation at the Sixth International Professional Meeting of Leaders of the Actuarial Profession in Central and Eastern Europe Dubrovnik, April 22 - 24, 2004

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AN OVERVIEW OF THE STATE OF THE ACTUARIAL PROFESSION IN HUNGARY

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  1. AN OVERVIEW OF THE STATE OFTHE ACTUARIAL PROFESSIONIN HUNGARY A presentation at the Sixth International Professional Meeting of Leaders of the Actuarial Profession in Central and Eastern Europe Dubrovnik, April 22 - 24, 2004 by Gábor Hanák, Member of the Executive Board of the Hungarian Actuarial Society Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  2. HISTORY After about 40 years of non existence of the profession, the Hungarian Actuarial Society (HAS) was established • in 1991 • by 36 founding members • after an introductory eight-day course was organized jointly by the Budapest University of Economics and the Institute and Faculty of Actuaries Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  3. HISTORY Main objectives of HAS were set in 1991 as • fostering and spreading professional fastidiousness and the culture of insurance mathematics in the insurance business; • creating and running a professional forum, providing self-instruction for the members; • having the actuarial profession widely acknowledged; • representing and safeguarding the professional interests of the Society and that of its members; Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  4. HISTORY Main objectives continued: • participating in organizing professional training; developing the standards of qualification and adjusting those to current requirements; • comment the legislation and jurisdiction affecting the actuarial profession, having these opinions acknowledged; • establishing and maintaining international professional relations; exchanging experiences. Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  5. HISTORY • Diploma Courses organized jointly by the Budapest University of Economics and the Institute and Faculty of Actuaries • Two basic level courses in 1991/1992 and in 1993/1994 • One advance level course in 1994/1995 • Diploma issued by the Budapest University of Economics, endorsed by the Institute and Faculty of Actuaries, in 1998 for 21 Hungarian and 2 Croatian examinees Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  6. ORGANIZATION, OPERATION OF HAS • General Meeting • Memorandum of Association • Rules of Organisation and Operation • Code of Ethics • CPD rules • Election of officers • President (max two two-year periods) • Executive Board (two-year periods) Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  7. ORGANIZATION, OPERATION OF HAS Permanent committees • Ethics • Professional conduct • Disciplinary procedures • Accreditation • Registration of fully qualified members • Registration of curriculum exempt from separate examination requirement for fully qualified members • Proposals for CPD and exemptions Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  8. ORGANIZATION, OPERATION OF HAS Permanent committees • Insurance Regulation • Insurance law • Various decrees (e.g. on insurance accounting, reserves, and actuarial reporting) • Solvency II Jointly with the Supervisory Authority • IASP To coordinate the opinion of the HAS concerning IAA proposals on International Actuarial Standard of Practice Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  9. ORGANIZATION, OPERATION OF HAS Regular events • Seminars jointly organized with Eötvös University of Budapest • New Year Dinner • Annual three-day Symposium (this year the 14th) • Monthly club meetings Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  10. MEMBERSHIP OF HAS • Fully qualified members (79) • From 2005 on: those members who provide evidence of qualification requirements equivalent to those of the Groupe Consultatif’s Core Principles • Exemption may be granted through accredited curriculum • Same rights as ordinary members • More membership fee than ordinary members Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  11. MEMBERSHIP OF HAS • Ordinary members (135) • Admittance by recommendation of two old members • New member has to be involved in actuarial activity • No actuarial qualification required • Professional entry speech is expected • Honorary members (1) • Supporting members (0) Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  12. MEMBERSHIP OF HAS • Employees: 120 • Insurance companies: 75 • Life: 60 • General: 15 • Pension schemes: 8 • Social security: 6 • Supervisory Authority: 7 • Academics: 20 • Other: 14 (Beware ofoverlaps!) Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  13. MEMBERSHIP OF HAS • Consultants: 20 • Insurance: 15 • Life: 10 • General: 5 • Pension schemes: 5 • Social security: 1 • Supervisory Authority: 5 (Beware ofoverlaps!) Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  14. HOW ONE BECOMES AN ACTUARY • Practice at a market player • Most of the insurance companies and pension funds are controlled by big multinationals • Training at the Diploma Courses • Postgraduate courses • Continuation of the Diploma Courses • Undergraduate courses Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  15. FUNCTIONS OF ACTUARIES Functions required by law • Chief Actuary of an insurance company • Valuation (liabilities only) • Minimum solvency margin • Distribution of investment yield, life only • Pricing • Adequacy, completeness and consistency of the data • Adequacy of the methods • Actuarial report Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  16. FUNCTIONS OF ACTUARIES Functions required by law • Chief Actuary of a pension fund • Planning, valuation (liabilities only), reporting • Terms and conditions • Contracts with insurance companies • Adequacy, completeness and consistency of the data • Adequacy of the methods Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  17. LEGAL REQUIREMENTS AGAINST THE CHIEF ACTUARY • Adequate university degree • Consult-level specialized qualification • does not exist • Five-year experience • No criminal record • Employment • Good business reputation Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  18. FUNCTIONS OF ACTUARIES • Functions required by the market players beyond the legal requirements • Product development • Budgeting, planning, and forecasting • Embedded value calculation • ALM • Marketing • Reporting Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  19. QUALIFICATION OF ACTUARIES • A draft has been worked out by HAS • Requirements are based on the syllabuses of the IAA and the Groupe Consultatif’s Core Principles • There are four written exams in a total of 17 fields and one practice exam where a thesis has to be defended Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  20. HARMONIZATION ISSUES • Hungary is becoming a member of the EU on May 1, 2004 • Harmonization of most of the various legal documents has been or is being carried out • HAS is a full member of IAA • HAS is becoming a member in the Groupe Consultatif on May 1, 2004 (until then: associate member) Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  21. SINCE VILNIUS • Integration into EU structures • Introduction of principles of Continuous Professional Development (CPD) • Obligatory for fully qualified members • 48 hours over 3 years • Out of the 48 hours, at least 32 hours must be accredited • If a fully qualified member does not comply he/she becomes ordinary member Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  22. CURRENT MAJOR GOALS OF HAS • Have the qualification requirements worked out by the HAS acknowledged by the state • Participate in the creation and amendment of the various legal documents that affect the duties of the actuary • Further international integration of the profession in Hungary (GC, IAA) • Help Hungary in the advanced harmonization into the EU structures Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

  23. CURRENT MAJOR GOALS OF HAS • Play an active role concerning the international shaping of such projects as • Phase II of insurance related IFRS • Solvency II • In particular, Hungarian actuaries, maybe together with actuaries in other countries in the region in similar circumstances, may play a role in conveying the special points of view of stemming from our situation. Sixth Meeting of the Actuarial Profession in CEE, Dubrovnik, April 22 - 24, 2004

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