The Insurance Council of Australia (ICA) wants clarification regarding the Australian Prudential Regulation Authority’s (APRA) discussion paper on the appointed actuary role in insurance.

CEO Rob Whelan says while ICA is “broadly supportive” of APRA’s proposals, insurers have feedback on the paper’s purpose statement, advice framework and sections on managing conflict of interest and actuarial reports.

ICA believes the purpose statement should provide “sufficient flexibility” for an appointed actuary and an insurer to balance the former’s role against other “equally important” strategic roles, such as in accounting and finance, risk and strategy.

It suggests the regulator should clarify that the appointed actuary can be, but is not required to be, part of an executive team, and its proposal should take into account that the appointed actuary may not be an in-house role but an external consultant.

ICA notes that if the appointed actuary is an external consultant, it will be difficult for them to be across “all material activities and decisions of the insurer”.

On the advice framework, ICA wants final approval to rest with an insurer’s CEO or equivalent, especially given the appointed actuary may not be in-house.

“We suggest it would be more appropriate for an insurer’s board to comment on whether a materiality policy has worked effectively and recommend any changes, rather than the appointed actuary,” Mr Whelan says in a submission on the paper.

ICA also wants APRA to clarify “materiality” in its materiality policy, and questions the merit of an appointed actuary commenting on the financial condition report, given “it appears to be non-material”.

It seeks clarification on the benefits of specific conflict management requirements with respect to the appointed actuary, given general insurers are already required to identify and manage conflicts of interest.

ICA suggests the proposal to let APRA request a peer review of “specified” actuarial reports only be used in exceptional circumstances, and asks that the regulator clarify those circumstances and the type of actuarial report to be captured.

It suggests the three-month submission timeframe for financial condition reports and insurance liability valuation reports is too short and will compromise their quality. Instead APRA could formally request information if it needs it in a hurry.