The majority (60%) of general insurers should consider outsourcing their actuarial function as they prepare for Solvency II, according to OAC Actuaries and Consultants. The new regulation requires all insurers to have an actuarial capability to help them assess their liabilities when Solvency II comes into force in January 2016.
OAC’s study of UK general insurance firms found that 60%*could benefit from outsourcing their actuarial function rather than employ an in-house team to fulfil the role. This is due to the need to keep costs down whilst providing an effective and well-supported actuarial function.
All insurers – regardless of size – will need to find a solution that allows them to balance their budgets with their regulatory obligations. Larger insurers, for example, may find that an outsourced solution is actually counterproductive, since they can afford to have a full time actuarial function in-house.
Christopher Critchlow, Consultant Actuary, OAC said:
“Solvency II is bringing about major changes, one of which is the need for all insurers, not just life companies, to have an actuarial function. For many companies, particularly smaller ones, the trend is for them to outsource this requirement. This approach will enable these firms to avoid the cost of taking on additional staff whilst allowing them to access high quality expertise and support when they need it. Whether companies choose to go in-house or outsource this requirement will ultimately be a decision for the management team. However, I would urge companies to start making preparations for these changes now, as the deadline is just around the corner and firms can’t afford to fall behind.”
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