Luis Huerta RosasImmediate Past President

International Actuarial Association

DEVELOPMENT OF THE ACTUARIAL PROFESSION

IN LATIN AMERCIA

November, 2005

Washington, D.C.

IAISInternational Association of

Insurance Supervisors

IAISIAIS

Established in 1994

Insurance Supervision Authorities

In over 100 jurisdictions

IAISIAIS

OBJECTIVES

Promote cooperation among supervision authorities

Establish international standards for insurance supervision and regulation

Provide training to its members

Coordinate work with regulators from other financial sectors and international financial institutions

Develop Standards that can be used by all insurance supervisors around the world

IAISIAIS

Actuaries are able to: • Quantify present and future liabilities

• Implement standards to determine what should be included in the technical reserves

• Develop and implement techniques to guarantee sufficiency of the technical reserves and identify how the company’s liabilities are structured in case there are no standards in their jurisdiction

IAISIAIS

Actuaries must take this standards into consideration

when:

• Developing technical notes on new products

• Reserves valuation

• Risk Appraisal

(wrong appraisal might cause insolvency)

IAISIAIS

Actuaries must be certified due to the type of

essential activities they carry on in:

• The supervision process

• Determining risk

• Determining premiums

• Establishing the technical provisions to face liabilities contracted by the insured parties

• Financial statements

• Insurance Operation as well as supervision

ACTUARIAL

PROFESSION IN

LATIN AMERICA

ACTUARIAL PROFESSION IN LATIN AMERICA

Current situationThere are very few actuaries

What’s going on with insurance companies ? They are hiring mathematicians for actuarial

jobs

ConsequencesA general concern about the reliability on the methods and techniques used in this countries on premium calculation and technical reserves.

The only countries in Latin America that have Actuarial Associations members of the IAA are:

-México-Brasil-Argentina

What must be done:

• Guarantee that actuarial practice is only carried on by insurance specialists

• Standardize the actuarial profession in Latin America

ACTUARIAL PROFESSION IN LATIN AMERICA

INTERNATIONAL ACTUARIAL

ASSOCIATION

INTERNATIONAL ACTUARIAL ASSOCIATION

• Founded in 1895

• Restructured in 1998

• One of its main objectives is the development of the actuarial profession

• The Latin America Subcommittee was constituted in November 2004 as part of the Advice and Assistance Committee

PROP0SALS

• PHASE I: short term

• PHASE II: long term

INTERNATIONAL ACTUARIAL ASSOCIATION

PROPOSALS

PHASE I

To satisfy immediate needs the IAA with the support of the Colegio Nacional de Actuarios (México), will certify professionals with the

appropriate knowledge and experience in the actuarial practice.

INTERNATIONAL ACTUARIAL ASSOCIATION

MEXICAN EXPERIENCE

WHAT HAS BEEN DONE SO FAR:Comply with the requirements established by:

• IAA Syllabus

• Current Standards of practice

• The New Vision / Mission of actuaries

• Mutual Recognition, among others

INTERNATIONAL ACTUARIAL ASSOCIATION

WHAT HAS BEEN DONE SO FAR:

Law changes have taken place that stipulate actuaries developing and signing Technical Notes and/ or valuating technical reserves must:

• Follow Actuarial standards of practice • Have a Professional license• Be Certified

INTERNATIONAL ACTUARIAL ASSOCIATION

MEXICAN EXPERIENCE

WHO CERTIFIES?1. CONAC2. CNSF

HOW?

• Feel out the application form • Comply with all law requirement• Have a professional license• Pass the necessary exams

The actuary may be certified in one or various fields:

Life Non life A and HBonds Pensions

INTERNATIONAL ACTUARIAL ASSOCIATION

MEXICAN EXPERIENCE

CERTIFICATION RENEWAL

The certification is renewed every two years

HOW?• With a continuous Education Program• With Professional Practice • Exams

INTERNATIONAL ACTUARIAL ASSOCIATION

THE MEXICAN EXPERIENCE

CONAC AND ASSAL • Designing material for courses• Implementing Courses • Developing exams • Applying exams

Taking into consideration the standards published by IAIS.

INTERNATIONAL ACTUARIAL ASSOCIATION

INTERNATIONAL ACTUARIAL ASSOCIATION

IAA PROPOSALS

SUBJETCTS TO BE EVALUATED FOR CERTIFICATION

• Actuarial Practice-Basic concepts -Premium Calculation / Solvency Tests.-Determining Technical Provisions-Valuating / Reserves-Technical Notes-General Operation

• Regulation according to each jurisdiction

INTERNATIONAL ACTUARIAL ASSOCIATION

IAA PROPOSALS

PHASE II

• Establishing Actuarial Education Centers

• Founding Actuarial Associations country wise and / or region wise.

INTERNATIONAL ACTUARIAL ASSOCIATION

Establishing Actuarial Education Centers

• Comply with IAA standards and Syllabus

• Ideally in existing Education Centers or creating faculties at existing Universities (Mexico and Argentina support)

(We propose Mexico and Argentina as a basis considering the language)

INTERNATIONAL ACTUARIAL ASSOCIATION

Founding Actuarial Associations country wise or region wise

Region wise: Central America , The Caribbean, South America.

Objective:• International recognition

• Getting involved and being updated over actuarial subjects that would be of interest to governments and supranational organizations

• Developing and maintaining close relations with outstanding international and professional organizations.

INTERNATIONAL ACTUARIAL ASSOCIATION

A Regional Seminar for Actuarial Leaders and Educators was held in February this year in Panama.

Conclusions:

• Great Interest in founding Actuary Associations

• Have one or two Actuarial Education Centers in the region by the year 2006 with the support of Universities of Mexico and Argentina.

INTERNATIONAL ACTUARIAL ASSOCIATION