Outlook of the actuarial profession in the GCC for 2023

11th Nov 2022, By Shivash Bhagaloo

Outlook of the actuarial profession in the GCC for 2023

Increased demand for actuarial skills

 

The most significant change for the actuarial function in 2023 will be alignment with IFRS 17 from a business as usual (BAU) perspective. This includes the associated development and upskilling of the actuarial function with an increasing level of urgency and importance. There will be an uptick in demand for actuarial students and qualified Fellows and Associates to develop and streamline internal processes, particularly between Actuarial and Finance functions, as these are evolving to suit a new reporting workflow. With a supply that won’t keep pace with demand, we would expect an increase in actuarial costs and likely an enhancement of actuarial packages to include study incentives as a standard offering as the better companies work to secure stronger talent.

 

Outsourcing

 

With many insurance companies in the region currently choosing to outsource the Appointed Actuary function to consultancies, these consulting firms are expected to experience an increase in outsourced responsibilities and will need to adopt an operating model that accommodates a new level of scale. External Auditors, many of which utilise actuarial teams based outside of the region, may also choose to invest in actuarial capabilities based locally as the cost-benefit gradient now tilts more towards benefit.  With financials coming under greater scrutiny, the external audit scope will increase to include greater actuarial involvement and expertise. This in turn will have knock on effects on audit costs. 

 

Regulators

 

Regulators will likely look to issue guidance or regulation on the increased scope that Appointed Actuaries need to fulfil.  The upskilling and expansion of regulatory actuarial departments will be crucial to ensure that the review and monitoring of compliance with the new standard meets the minimum requirements. Regulatory forms will likely undergo change and external actuaries will be critical in the population and signoff of these forms. 

 

Stakeholder communication

 

One of the most pivotal parts of BAU will be the development of forecasts and comprehensive business plans on an IFRS 17 basis, with a comparison of the differences with respect to the conventional IFRS 4 basis and associated rationale. Where actuarial involvement may have been relatively lighter historically, this will necessarily increase. Forecasted Statements of Financial Performance and Financial Position will require more detailed calculations that the actuarial function should be required to perform as these are naturally within the actuarial remit. Rules of thumb that may have been employed historically will likely be replaced by explicit liability calculations, particularly for longer term lines of business. This will require sophisticated software and knowledge of use, involving further investment in training and development.  Explanation of these figures to Senior Management, Rating Agencies and Boards will push the actuarial and finance functions further into the centre of stakeholder communication. 

 

Actuarial education

 

Lastly, the training and development of actuarial students produced by local tertiary institutions, most notably in the KSA and Bahrain, is likely to gather more support. Recent initiatives undertaken by the Bahrain Institute of Banking and Finance (BIBF) together with the Institute and Faculty of Actuaries (IFoA) recognise the importance of locally based graduates meeting the increasing demand for actuarial recruits. The long term success of actuaries in the region will be intrinsically linked to the grassroots coaching and support of universities and training institutes in providing fresh talent prepared to suitably meet the changing requirements of the insurance industry.


 

No doubt the upcoming year brings exciting opportunities for the actuarial graduates, students and qualified Associates and Fellows. Our success in meeting the accompanying challenges depends on a proactive vision of the wider industry in developing and supporting the growth of professionals capable of ensuring the industry is able to successfully navigate around this corner.


 

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