The Blurry Line, when Saying Nothing Is Unethical
The microinsurance market in South Africa is a growing and dynamic. Since the introduction of the microinsurance license in 2017, there are an increasing number of actuaries consulting to microinsurers or taking on the role of the microinsurance Head of the Actuarial Function (HAF). Actuaries providing advice to microinsurance businesses are often exposed to wider business practices beyond pricing and solvency calculations that may infringe on regulatory requirements or raise ethical practice questions.
Prudential Rules for microinsurers sets out the responsibilities for the HAF for microinsurers, covering expressing an opinion on the reliability and adequacy of the technical provisions and solvency requirements of the business and giving advice on the design of products. Members of the Actuarial Society have a responsibility to act in the public interest and treating customers fairly is receiving increased attention. Actuaries need to consider their responsibilities beyond the clearly demarcated role in the prudential rules and debate ethical questions around product offerings and operational areas of microinsurance business. These questions are pertinent for microinsurance where there are new players and diverse service providers with little experience with regulatory requirements and many actuaries servicing these providers or acting as the HAF in an outsourced capacity. This heightens the risk of non-compliance, unethical business practices and unfair treatment of customers. Actuaries working in this space should be aware of potential pitfalls in considering their obligations to their employer or clients and to the wider public.
The panel will explore the difficult questions around the regulatory and public interest responsibilities for actuaries advising microinsurers using several scenarios adapted from the experience of the panel members. The panel will cover the following professional issues:
- Tricky scenarios prevalent in microinsurance business including renting out licenses, fair products and outsourcing.
- The statutory and wider public interest role for actuaries in microinsurance.
- Managing conflicts of interest for the outsourced HAF and balancing responsibilities to clients, different stakeholders and the wider public interest in a new regulatory environment.
- Insights from panel members’ experiences in providing actuarial advice in the inclusive insurance environment.
- Increase awareness of types of scenarios that actuaries involved in advising microinsurers may come across.
- Debate statutory and public interest responsibilities of consulting actuaries and the HAF for microinsurance business.
- Discuss managing conflicts of interest and balancing responsibilities to the client, different stakeholders and wider public interest in giving advice for microinsurance business.
- Discuss insights from experiences acting as a HAF and first line actuary in the inclusive insurance environment.