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Application provision

1.1 Unless otherwise stated, this Part applies to a non-directive insurer.

5.1

01/01/2016

An actuary appointed to perform the actuarial function must, in respect of those classes of the firm's long-term insurance business which are covered by his appointment:

  1. (1) advise the firm's management, at the level of seniority that is reasonably appropriate, on the risks the firm runs in so far as they may have a material impact on the firm's ability to meet liabilities to policyholders in respect of contracts of long-term insurance as they fall due and on the capital needed to support the business, including regulatory capital requirements;
  2. (2) monitor those risks and inform the firm's management, at the level of seniority that is reasonably appropriate, if he has any material concerns or good reason to believe that the firm:
    1. (a) is not meeting liabilities to policyholders under contracts of long-term insurance as they fall due, or may not be doing so, or might not have done so, or might, in reasonably foreseeable circumstances, not do so;
    2. (b) is, or may be, effecting new contracts of long-term insurance on terms under which the resulting income earned is insufficient, under reasonable actuarial methods and assumptions, and taking into account the other financial resources that are available for the purpose, to enable the firm to meet its liabilities to policyholders as they fall due (including amounts required to enable the firm to fulfil its regulatory duty to treat its customers fairly under any relevant provision in the FCA Handbook);
    3. (c) does not, or may not, have sufficient financial resources to meet liabilities to policyholders as they fall due (including reasonable bonus expectations) and the capital needed to support the business, including regulatory capital requirements or, if the firm currently has sufficient resources, might, in reasonably foreseeable circumstances, not continue to have them;
  3. (3) advise the firm's governing body on the methods and assumptions to be used for the investigations required by IPRU(INS) rule 9.4 or IPRU(FSOC) rule 5.1, each of the PRA Handbook as at 31 December 2015;
  4. (4) perform those investigations and calculations in (3), in accordance with the methods and assumptions determined by the firm's governing body;
  5. (5) report to the firm's governing body on the results of the investigations and calculations in (3);
  6. (6) in the case of a friendly society, perform the functions of the appropriate actuary under section 87 (Actuary's report as to margin of solvency) of the Friendly Societies Act 1992; and
  7. (7) if applicable, be responsible for the actuarial function required by Governance 10.2.