Insurance and Sound Business Conduct – Strengthening the Actuarial Function in Ghana Actuarial Capacity Development Committee Victor Aggrey-Fynn (Technical Advisor, GIZ Ghana)

Contents 1.Actuarial functions in insurance and international standards 2.Analysis of actuarial capacities in Ghana 3.Actuarial capacity gap in Ghana 4.The core of ACD Strategy: Vision Development partnerships and initiatives in Ghana 6.Challenges 7.Recommendations

Actuarial functions in insurance and international insurance standards “…calculating, evaluating, reviewing, authorizing and/or providing advice on matters such as” actuarial and financial risks | valuation of assets | calculation of technical provisions | solvency position | financial condition report | investment policies | risk assessment and management policies | approval of dividends or benefits to shareholders | underwriting policies | design of reinsurance programme | risk modelling | product development and design ICP 8 Risk Management and Internal Controls The supervisor requires an insurer to have, as part of its overall corporate governance framework, effective systems of risk management and internal controls, including effective functions for risk management, compliance, actuarial matters and internal audit.

What other things do actuaries do? Opinion on underwriting policy Opinion on reinsurance policy Supporting the risk management system Planning and analysing performance Customer transactions Reporting to regulators on aspects of financial performance

Insurance and the actuarial function Insurance products have associated financial risks that need to be assessed. Actuarial challenges heightened due lack of data, limited population experience, and some underwriting constraints Small errors can be magnified due to scale

Analysis of actuarial capacities in Ghana Three NIC/GIZ studies Ghanaian University actuarial science programs Online survey of students, graduates and actuarial professionals Survey of Ghanaian companies DEMAND - Companies (2013) 45 total number of staff with actuarial background 3 Fellow of IFoA 3 Associate of SOA 13 Student member of SOA 4 Student member of IFoA SUPPLY - Universities (2013)

Actuarial Capacity Gap in Ghana The Regulator and the Network for Actuarial Capacity Development issued an ACD Strategy to the industry: 1.To establish and maintain a robust actuarial function that is well positioned, resourced, staffed and properly authorised. 2.Actuarial work to be carried out by staff with suitable actuarial qualifications. 3.The person having responsibility must be “fit and proper” and needs to satisfy the Regulator’s fit and proper criteria Inadequate actuarial functions in insurance companies Low level recognition of the role by CEO/Directors Graduates do not fulfil requirements for swiftly passing SOA / IFoA exams Actuaries are currently “imported” to Ghana Impacts on the industry: inadequate risks assessment and reserving -impedes risk-based supervision Impacts on the client: could lead to inefficient pricing of insurance policies „Ghanaian“ Actuaries Diploma BSC MSc 

Development Partnerships and Initiatives ACDC - The Network for Actuarial Capacity Development National Insurance Commission (NIC) Actuarial Society of Ghana (ASG) Ghana Insurers Association (GIA) Ghana Insurance College (GIC) Representatives of University lecturers GIZ PromIGH Formed in 2012 in the context of bilateral cooperation between NIC and GIZ (PromIGH) Initiatives Ghana Insurance College – Certified Expert in Microinsurance Course with GIC Ghana Insurance Industry Database (GIID) with Applied Industry Logic Actuarial Pricing Toolkit for Microinsurance (Life) with UK Government Actuary’s Department IFoA Certified Actuarial Analyst Programme Tutorial Programme with GIC AWB Actuarial Professional Exams Tutorial Programme with ASG Insurance Health Pricing Toolkit with GIA/GIC – Milliman and ILO

The Core of the ACD Strategy – Vision 2020 Appointed ActuaryAssociateAffiliate External or employee of insurer Fellow of a full member association of IAA and approved by the regulator Employed full-time Associate of a full member association of IAA Shows aspirations to qualify as Fellow Is being mentored by the appointed actuary Employed full-time Possess a degree in actuarial sciences or related programme (maths, stats) Has passed at least 2 exams leading to an Associate.      

Results, challenges, and feedback Develop Actuarial Society of Ghana IAA syllabus compliance Actuarial student oversupply risk, too many programs Ambitious timetable P&C versus Life capacity differentiation Industry awareness campaigns Tutorial courses and support for CAA Master programs in Actuarial Science for “career switchers”

Recommendations 1.Conduct an Actuarial Landscape Study and Capacity Gap Analysis 2.Build up a network encompassing the relevant stakeholders (e.g. championing insurers and actuaries, the country‘s actuarial association, the regulator, academic institutions and colleges, leading actuaries etc) 3.Get the regulator on board as early as possible; well prepared study tours (conference and business meetings) are an excellent instrument to develop capacities and a joint vision 4.Develop an Actuarial Capacity Development Strategy, define roles and responsibilities and budget for its implementation 5.Involve the industry into dialog and identify incentives to impose a quality standard on actuarial functions in insurance companies 6.Each stakeholder can play a different role on capacity development; identify the champions for each particular project

Key Takeaways 1.Appropriate actuarial functions are needed for insurance companies; risk-based supervision in accordance to international standards is the over-arching measuring stick. 2.Developing National Actuarial Associations are crucial to the development of actuarial practice in Africa. 3.There is practical and exemplary information available in Ghana on how actuarial functions in an insurance industry can be strengthened.

Thank you