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Week 12 Tutorial Questions

Actuaries must abide by a code of ethics beyond legal requirements due to their role in managing risks in banking, insurance, and finance. When designing insurance contracts, setting premiums and liabilities, recommending risk margins and reinsurance, and reviewing investments, actuaries must consider their moral obligation to act in customers' and companies' best interests. While performance-based pay could incentivize actuaries, it also raises issues, as actuaries' work differs from other executives and priorities may not always align with customers' long-term well-being.

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31 views1 page

Week 12 Tutorial Questions

Actuaries must abide by a code of ethics beyond legal requirements due to their role in managing risks in banking, insurance, and finance. When designing insurance contracts, setting premiums and liabilities, recommending risk margins and reinsurance, and reviewing investments, actuaries must consider their moral obligation to act in customers' and companies' best interests. While performance-based pay could incentivize actuaries, it also raises issues, as actuaries' work differs from other executives and priorities may not always align with customers' long-term well-being.

Uploaded by

leolau2015
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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UNSW

ACTL1122 Corporate Governance for Actuaries


Tutorial Exercises
Week 12 Summary and Revision
1. Over the past year, you have become more familiar with the role of
an actuary as a manager of risks, working in particular in the elds of
banking, insurance and nance. You have also developed some foundational skills of used by actuaries.
(a) Refer back to the Professional Standards from ACTL1101. Discuss
in broad terms the rationale behind actuaries needing to abide by
a code of ethics beyond what is set by society and the institutions
they operate under.
(b) Discuss how an actuary needs to consider their moral and ethical
obligations in undertaking the following business activities :
(i) Designing insurance contracts and its conditions (risks covered, exclusions, limits to cover)
(ii) Premium rate setting
(iii) Insurance liability setting and provisioning for liabilities
(iv) Recommending a suitable risk margin for the insurance liabilities
(v) Recommending a suitable level of reinsurance to take to manage risk exposure
(vi) Reviewing investment portfolio management and performance
(c) Discuss some pros and cons for oering performance-based pay for
actuaries. How may the performance measures for remunerating
actuaries dier from other executives and company sta?

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