The 5th African Actuarial Congress, organised by the Moroccan Association of Actuaries (AMA), chaired by Mr. Mohamed El Amrani and the International Actuarial Association (IAA), was held last Thursday in Casablanca. It is worth knowing that the AMA became a member of the IAA in 2008.
This event came under the spotlight due to it being organised under the patronage of His Majesty Mohamed VI as well as being a pan-African forum inaugurated by Mr. Mohamed Boussaid, Minister for the Economy and Finance, Mr. Hassan Boubrik, Chairman of the Insurance and Social Welfare Supervisory Authority (ACAPS), and Mr. Mohamed Bensalah, Chairman of the Moroccan Federation of Insurance and Reinsurance Companies (FMSAR).
In his opening address, Mr. Boussaid emphasised “the event’s African dimension, thanking the International Actuarial Association for having chosen Morocco and recalling the strategic importance that His Majesty the King has placed on the strong and sustainable development of this continent which is ours!”.
The actuarial profession, playing a crucial role
But the most important aspect was the interest shown in the actuarial profession, remarked on successively by the Minister of Finance and the chairmen of both the supervisory authority and the insurance federation, affirming that it was a real turning point for the insurance and pensions sector.
Because actuaries are involved in the sensitive aspects of risk management such as calculating technical provisions, premiums and solvency ratios and, therefore, in implementing risk management systems effectively.
Indeed, for Mr. Boussaid, “the insurance and pensions sectors pose major challenges for all African countries, and as such, the actuarial industry has a crucial role to play. It is also important to the banking sector given its role with regard to each stakeholder in the capital markets industry. In African countries, this profession is still relatively immature.”
And the minister then recalled that “in our country, actuaries were heavily involved in the recent pensions reform, culminating, in 2016, in parametric changes to the civil pensions system managed by the Moroccan Pension Fund (CMR)”.
Especially as one of the key responsibilities of actuaries is to ensure that life tables, a fundamental instrument in pensions as well as in life insurance, are appropriate and properly adapted.
In this respect, Mr. Bensalah regretted that the life tables used in Morocco had not changed for a very long time and harked back to the time of the French protectorate.
International regulations now require that the mortality experience tables used are certified by an actuary. And, in Europe, the actuarial function is now considered to be a “key function” by the Solvency II Directive.
Mr. Boubrik confirmed this to be the case in his opening address, noting that “with the different jurisdictions around the world gradually converging towards risk-based regulations underpinned by international standards, the actuarial profession is in the process of assuming a new importance. Actuaries will no longer be limited to simply making quantitative calculations within the actuarial department or the risk department. They will be required to go far beyond that, fostering a risk culture at every level of the organisation by adopting an overall qualitative approach”.
And Mr. Boubrik unveiled that new “risk-based” prudential regulations for determining solvency were under discussion with the insurance and pension funds industry in Morocco under ACAPS’ supervision.
A risk culture, absolutely essential!
This reform should bolster the risk culture in every aspect of the insurance business and, as a result, profoundly change the supervisory approach adopted by insurance and reinsurance companies. Satisfying this reform’s requirements will pose a real challenge to both insurers and the regulatory authority.
The timing of this African Actuarial Congress is therefore particularly opportune on the eve of introducing a major reform, which will see the insurance industry assume a risk-based approach.
And Mr. Boubrik then asserted that actuarial practice was a science that combined a number of disciplines including economics, probability, statistics, financial mathematics and IT. It was absolutely crucial in maintaining financial equilibrium in an environment of growing uncertainty.
Actuarial science was therefore crucial to resolving the challenges faced by life insurers, as well as property and casualty insurers, pension funds, banks and asset management companies.
To understand this issue more fully, Mr. Boubrik made a short but very interesting instructive demonstration: “The insurance industry is inherently complex and uncertain.
Despite an insurer having a precise idea of its turnover, this was certainly not the case when it came to knowing the amount of benefits that had to be paid out to policy-holders. It could therefore be said that insurance was a business which had an inverse production life cycle.
It was this specific characteristic that made actuaries an essential cog throughout the entire insurance value chain… Their skills were needed to devise viable products for customers and insurers alike, as well being able to prudently evaluate an insurer’s liabilities to its policyholders in order to implement an appropriate reinsurance policy or establish appropriate investment and asset/liability management policies.”
The implication of the choice of theme for this 5th African Actuarial Congress, ‘Financial Development in Africa: Expertise and Public Interest’ is that the latter cannot be served without actuarial science. And this was clearly demonstrated during the two days of the congress.
Two aspects were highlighted. First, the worldwide trend towards regulatory convergence in support of better risk management by all financial institutions and insurers. Second, the importance of actuarial practice when factoring in risk in a preventive and structural manner.
There is also a genuine need for additional actuarial training with the International Association of Actuaries (IAA) needing to increase its focus on member countries in the southern hemisphere, especially in Africa. The IAA must also help standardise actuarial practice as a financial tool so as to be able to meet international regulations.
Morocco can hold its head up high as far as actuarial training is concerned. A variety of training courses exist, and the Moroccan Association of Actuaries lists a number of practising actuaries.
However, actuaries will be required in growing numbers given the rapidly changing regulatory environment surrounding the insurance industry, as foreseen by ACAPS. Furthermore, given the growing need by banks and other fund managers for these kinds of specialist to appraise the temporal dimension of risk in finance, there is a definite need to emphasise training…
Afifa Dassouli
Original article : https://lnt.ma/lactuaire-colonne-vertebrale-de-lassurance-caisses-de-retraite-aujourdhui-de-banque-demain/