ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has directed all insurance companies to establish “Actuarial Function,” which shall commensurate with the nature, size and complexity of their insurance businesses.
The SECP has issued SRO 458(I)/2025 on Thursday to amend Code of Corporate Governance for Insurers, 2016. Every insurer shall establish an actuarial function, which shall commensurate with the nature, size and complexity of its business.
The actuarial function shall at a minimum would evaluate data quality in line with actuarial standards to ensure accuracy, appropriateness, completeness and comprehensiveness of data for the purpose of the investigations carried out.
It would maintain strong processes and controls to ensure adequate valuation of liabilities and assess minimum solvency requirement in accordance with the requirements of the Insurance Ordinance, 2000.
The actuarial function shall carry out experience studies on the demographic, macroeconomic and expense analysis for different purposes and the appropriate use of assumptions for investigations and evaluate the adequacy of overall pricing policy and its alignment with the underwriting and claims management policy of the insurer.
The actuarial function shall evaluate the adequacy of reinsurance arrangements against business size, nature, risk appetite and solvency position of the insurer and advice on the investment policy of the insurer in the context of asset liability management with regards to the adequacy and sufficiency of assets and future revenues to cover the insurer’s obligations to policyholders; and in case of life insurer, perform coordination with the appointed actuary in all the matters assigned as per the requirements of the Insurance Ordinance, 2000 and the Rules and Regulations made there under.
There shall be a head of actuarial function appointed by an insurer. The head of actuarial function must fulfill the following requirements:
(a) Such person in addition to being a member of Pakistan Society of Actuaries, must at least be an Associate member of the Institute and Faculty of Actuaries UK, the Society of Actuaries US, the Casualty Actuarial Society, or any other body as may berecognized by the Commission after obtaining views of the Pakistan Society of Actuaries.
(b) Such person must have at least five (5) years of experience with an insurer, actuarial firm or any insurer incorporated under the law of any jurisdiction outside Pakistan.
The head of actuarial function shall report directly to the Chief Executive Officer and shall have access to the Board to submit its findings on regular frequency. However, the insurer shall ensure that the independence of actuarial function is maintained and the actuarial function does not perform any such function(s) which may give rise to conflict(s) of interest, the SECP added.
Copyright Business Recorder, 2025
