Life Insurance (prudential standard) determination No. 2 of 2014 - Prudential Standard LPS 320 - Actuarial and Related Matters
Actuarial advice regarding policies and Actuarial advice regarding policies and reinsurance
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Actuarial advice regarding policies and reinsurance
- A life company must not issue or modify a policy unless either[9]:
(a) the Appointed Actuary has given written advice about:
(i) the proposed terms and conditions on which it is to be issued or modified;
(ii) the proposed basis on which the surrender value is to be determined;
(iii) if the policy provides for benefits to be calculated by reference to units, the proposed means by which the unit values are to be determined;
(iv) if the life company is a friendly society, the proposed approved benefit fund rules or modification of the benefit fund rules, and whether the benefit fund rules will result in unfairness to any prospective or existing members of the benefit fund; and
(v) if the life company is a friendly society, any change to the investment management or strategy of an approved benefit fund beyond that disclosed in the approved benefit fund rules; or
(b) the proposed modification is assessed by the life company as not being material under the written policy approved by the Board for the purposes of paragraph 27 and the Appointed Actuary has been advised of the proposed modification and advises the life company that the modification is not material.
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The Appointed Actuary’s written advice may relate to a number of policies of a similar kind.
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A life company must not enter into, modify or terminate a reinsurance arrangement unless the Appointed Actuary has given the company written advice as to the likely consequences of taking such action.
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A life company must have a written policy, approved by the Board, which:
(a) sets out the situations where the Appointed Actuary’s written advice may relate to more than one life policy under paragraph 25;
(b) enables the life company to decide whether any proposed modification to a policy is material or not for the purposes of paragraph 24(b), taking into account the likely impact of the modification on policy owners and the financial position of the life company; and
(c) sets out who must consider the advice under paragraph 24 or 26 and, in particular, the situations where the advice must be considered by the Board.