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Update on Current Activities Grant Peters – Chair November 2006

This update provides information on the activities of the Institute of Actuaries of Australia's Life Insurance and Wealth Management Practice Committee (LIWMPC). It covers industry experience investigations, product rationalisation, legacy portfolio management, IFRS, LIASB assistance, pandemics and catastrophe risk, new regulator prudential standards and practice guides, and other relevant issues.

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Update on Current Activities Grant Peters – Chair November 2006

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  1. Institute of Actuaries of AustraliaLife Insurance and Wealth Management Practice Committee (LIWMPC) Update on Current Activities Grant Peters – Chair November 2006

  2. Agenda • Industry Experience Investigations • Product Rationalisation • Legacy Portfolio Management • IFRS • LIASB Assistance • Pandemics and Catastrophe Risk • New Regulator Prudential Standards and Practice Guides • Other Issues

  3. Industry Experience Investigations • Historic studies • Lump Sum Investigation covering 1998 - 1999 period released in 2004 • Future studies • Lump Sum Investigation • Disability Investigation covering 1998 - 2001 • Preliminary findings presented at IAAust FS Forum in May 2006 • Other? (eg trauma, longevity)

  4. Industry Experience Investigations (cont.) • Issues • How to get industry to contribute more effectively • Future funding of studies • Timelines – turnaround and frequency

  5. Product Rationalisation • Submission provided to Treasury • Role of actuary in customer “equity” issues • Define IAAust public policy on product rationalisation • Provide input and comment on IFSA and government proposals • Produce an actuarial framework for assessing rationalisation proposals

  6. Legacy Portfolio Management • Regulator interest • Assess current actuarial management of closed books • Tontine effects • Bonus and crediting rate setting • Management of guarantees

  7. IFRS • Phase I • Removal / upgrading of existing Guidance Notes (GN 258, GN259 and GN260) • Monitoring of variations in practice • Monitoring of issues requiring discussion or guidance • Phase II • Monitoring developments

  8. LIASB Assistance • Resilience Reserve Taskforce • Review of existing basis and parameters • Potential alternatives • Risk business (including annuities) • Review of existing basis and parameters • Potential alternatives

  9. Pandemics and Catastrophe Risk • Regulator currently surveying market • Regulator information paper issued October 2006 • Discussion note for Appointed Actuaries? • Claims cost impacts? • Broader operational and systemic impacts? • Public comment and/or research?

  10. New Regulator Prudential Standards and Guidance • New Prudential Standards and Practice Guides for life companies released October 2006 • Discussion Paper: Prudential Supervision of Life Companies

  11. New Regulator Prudential Standards and Guidance (cont.) • LPS 220: Risk Management • LPG 200: Risk Management • LPG 230: Operational Risk • LPG 240: Life Insurance Risk and Life Reinsurance Management • LPG 250: Asset and Liability Management Risk • LPG 260: Conflict of Interest under Section 48 • LPS 232: Business Continuity Management • LPG 232: Business Continuity Management

  12. New Regulator Prudential Standards and Guidance (cont) • Other Papers, Standards and Practice Guides Released • LPS 510 / LPG 510: Governance (May 2006) • LPS 520 / LPG 520: Fit and Proper (March 2006) • Information Paper: Pandemic Planning (October 2006) • LPS 231 / PPG 231: Outsourcing (October 2006)

  13. Other Issues • PS 200 Review • Superannuation Reforms • External Peer Review • GN552 / GN252 Review • Target Surplus – discussion note • Unit Pricing

  14. Other Issues (cont.) • Solvency II • Education Programme – volunteers • Member Communications – briefing sessions, website minutes

  15. Other Issues (cont) • Potential Wealth Management Topics • Distribution economics (including structure of remuneration) • Risk capital techniques • Product profitability • Value based management • Reverse mortgages / Retirement income products

  16. Other Issues (cont) • Potential Research Topics • Correlation of assumptions to external factors (eg. economic cycles) • Greater use of statistical techniques • Impact of genetic advances of life company claims • Retirement income solutions • Longevity risk • Operational Risk

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