The Arab Actuarial Conference is a regional professional platform for actuaries, actuarial firms, businesses, industries and government executives that depend on actuarial services in the Middle East & North African (MENA) countries.
Conducted in a different Arab capital every year, the highly attended conference tackles emerging issues and trends that are key to the actuarial industry and sectors that are dependent on actuarial services and analysis, such as insurance, finance, investments, pension, risk management, banking, demographic studies amongst many others.
- H.E. Dr. Mohammed Maait, Minister of Finance, Egypt
- H.E. Dr. Mohamed Farid Saleh, Chairman, Financial Regulatory Authority, Egypt
- H.E. Mr. Gamal Awad, Chairman, National Organisation for Social Insurance
- H.E. Mr. Hafedh Al Gharbi, President, General Insurance Organisation, Tunis
Actuaries’ Role in National Economy, Public Finance & Fiscal Planning
This session is about a government culture where actuarial talents/ systems are used to predict/ analyse and model liabilities and revenues in public balance sheets, and dynamically run stress-testing on expenses and revenue streams, so as to inform policy-making and politics. It may contribute great insights on how certain aspects of national economy or financial policies be managed.
Further, the coronavirus pandemic has driven research on population mortality by age, sex, socioeconomic category and by race for obvious historical risk calculations but also for what it can tell us or prepare us for the next pandemic. The impact of positivity on life expectancy was put forth as a topic of global interest to the actuarial community.
To what extent a government actuary department may help improve the stewardship of public sector finances and fiscal planning?
Actuaries, Climate Change and Sustainable Development Goals (SDGs)
Environmental risk, study of weather extremes and international catastrophe pooling, determining the role of anthropogenic climate change on human health outcomes, societal risk management for projected future changes in frequency, severity and variety of weather-related catastrophes and renewable energy are all actuarial topics driven by climate change and the research needed for an actuary to define risk accurately. The actuarial insights on weather study and climate change will be a great contribution to the global SDGs adopted by governments around the world.
Developing Insurance Market and Increasing Product Uptake (Life, Health and Pension)
A long-standing debate within the insurance regulatory world has been to what extent should regulators be responsible for market development. In light of evolving markets, insurers withdrawing from some coverages and persistent (and in some cases growing) protection gaps, this is receiving new attention. From an actuarial perspective, what changes they’d like to see in the regulatory environment that would make local insurance markets thrive?
Additionally, the insurance industry (both regulators and insurers) have suffered for decades from very low rate of penetration of its products and services in domestic markets; whether these services are for general insurance, life insurance, health insurance or retirement savings. From an actuarial standpoint, how can we energise these markets and make a real change in this space?
Post-Pandemic Actuarial Modelling
Prior to COVID-19, actuarial models were focused on mortality as a key risk in a pandemic event. Given this focus on historical data, many actuarial models have proven to be inappropriate in predicting the consequences of COVID-19. Progress in health technology and practices, as well as political intolerance for deaths in most countries, led to pandemic-related mortality predictions being far too pessimistic.
Instead, globalisation led to “event cancellation” and “business interruption” being the main sources of insurance claims. These claims have been significantly inflated by the expectations of customers, public opinion and, in some cases, legislators, to cover losses beyond contractual clauses. .
Lessons are to be taken from this experience. Actuaries should consider embedding more “foresight analysis,” notably for rare events and long-term trends. They therefore need more expert judgment in their models while strengthening governance to ensure adequate outcomes. The session will also highlight the implications of Covid on long-term mortality and morbidity trends and their impacts on MENA insurance markets.
The Future of Underwriting
The future of insurance underwriting looks very different, with digital technology playing a starring role. With customer demands growing, the industry is under tremendous pressure to transform. Customers today expect products, services and experience tailored to them like they have seen elsewhere in life and online. They expect speed and convenience — things the industry hasn’t exactly been known for. Beyond this, we are seeing a paradigm shift with the increased use of technology, as data is now collected (by insurance) rather than declared (by clients) so that insurers price risks appropriately. We are also seeing the big tech enter the insurance space offering products health and home insurance.
With IFRS 17 live as of January 2023, we hear from a range of panel experts on getting to grips with the new standard. We look at implementation challenges, the reasoning behind policy choices and consider different approaches to the actuarial assumptions that underpin IFRS 17 results.
Actuaries in the Age of AI, ML, Big Data and Cybersecurity
Digitalisation is increasing in life and health sectors including wearable and biometric devices, data intelligence on life and health records and the utilisation of genetic data. The customer experience end-to-end from purchasing insurance, premium payments, claims filing and cross-selling, as well as insurance internal activities such as underwriting, claims, billing and processing, are all online. The need for technology (InsureTech) as well as actuaries that can use and understand technology for implementing analytics is vital.
As new data sources, methods, and applications proliferate and the vast universe of Big Data grows ever bigger and less “traditional” by the day, what are the emerging professionalism and regulatory considerations these changes raise for actuaries’ data analytics work. How Big Data and artificial intelligence (AI) are impacting data analytics in the insurance space, and how regulators are scrutinizing data, algorithms and models?
Furthermore, the insurance market is growing in terms of cyber risk insurance, which is already well-developed in the US. The next major catastrophe (CAT) event could be a major cyberattack rather than another Hurricane Katrina. Cyber risk should not be priced using historical data, since the future will look nothing like the past.
Interest Rate, Inflation’s Effect and Financial Products
Over the last couple of decades, we have experienced a consistent decrease in interest rates which have even dropped significantly below zero for swap rates. This is a trend not only in Europe, but in many markets globally, and it has been a massive challenge for guaranteed business. To overcome these challenges, innovative solutions are emerging. An example is newcomers building models based on credit underwriting capabilities that allow additional spread to be generated within a risk tolerance technique similar to large insurance risk, even if the spread risk is classified within financial risks. This represents a fantastic opportunity for life actuaries to help adapt the business model of “general business” despite a sustained low interest rate environment.
Further, panellists from different practice areas will share their insights into the potential impact of inflation for private insurance, personal finance, pension plans and major public systems. What opportunities and challenges does high inflation present to life and general insurers?
Cryptocurrencies: Fad or Fab? And How Do DeFi and Blockchain Affect Insurance and Pension?
Since the launch of Bitcoin in 2009, cryptocurrencies have made the headlines with astronomical returns and equally spectacular falls in value. Speculative investors have driven volatility in crypto assets to record levels. Traditional thinking says that such assets should not form part of the portfolios of pension funds, insurance companies and other similar entities. Is it time to challenge that thinking? Does blockchain technology have a part to play in keeping the records of pensions schemes?
Decentralised finance (DeFi) and blockchain technology have the potential to revolutionise the insurance industry. DeFi protocols can provide alternative risk management strategies, such as peer-to-peer insurance, and offer insurance products with lower costs and higher returns. But, what are the challenges that need to be addressed? The insurance and pension industries need to explore and understand the potential benefits and limitations of DeFi and blockchain in order to make informed decisions on how to leverage these tools for their business?
Systemic Risk & Resilience
In 2008, the failure of few large financial institutions triggered a global recession. The response has been an attempt to increase the resilience of the financial system, such as revised asset allocations, stress testing and enhanced capital requirements. More than a decade later, the COVID-19 pandemic highlighted the role of resilience in other key systems, as transportation, energy, and healthcare were overwhelmed by disruptions to global supply chains.
Governments have an interest in protecting society as a whole from extreme shocks to the system (public & private, financial & non-financial, etc.). Regulators have an interest that should such a shock manifest that their sectoral market doesn’t collapse. For example, disruptions can be managed, or companies can recover from the shock, or if a company is unable to recover, then it can exist the market in an orderly fashion that protects consumers and the market. This is equally applicable to financial and non-financail sectors. Companies and organisations need to have in place contingencies, operational resilience plans (preventative action) and business continuity plans (reactive action) to be able to weather the shocks.
This session will discuss how the study of systemic risk and resilience is crucial for understanding and managing complex systems, and will show that by addressing sources of systemic risk and building resilience into critical systems, societies can protect themselves from tail risks.
Longevity Increases – The Good and Bad News from Actuarial Perspective
Increases in longevity have positive and negative effects on many parties, depending on their side of the deals, services and commitments they have entered. Life insurance, pension funds, social and medical care providers on one side, and the general public and pensioners on the other side, etc. What’s the true and full impact as seen by actuaries?
Intergenerational Fairness in Pay-As-You-Go Pension, and the Actuarially Fair Price
In a defined-benefit pension system that may be generous today with current retirees at the expense of its future sustainability, how is intergenerational equity achieved or governed in an actuarial viewpoint?
Actuaries have long been the stalwart of pension scheme advice – providing valuations, funding updates, advice on benefits changes, product design. We look at this area in the context of the Arab region, where generous government pensions have been the norm, but are now viewed as unsustainable. What role private and personal provision has to play and how actuaries can contribute towards the design of such systems. We consider the ‘cutting edge’ of global pension designs and identify those that would be seen as most favourable across the Arab region.
In this context also, what is an actuarially fair price for obtaining guaranteed retirement benefits for life from government pension funds that adopt defined benefits? In a lot of the pension funds that are experiencing major actuarial deficits in the region, the chief reason attributed to this chronic issue is lower employee contributions, either at present or in the past.
Strategy for Developing University Actuarial Curriculum
What is the minimum foundation necessary to ensure that B.Sc. and M.Sc. actuarial graduates are fit to join at entry or higher levels in professional actuary functions? What are the common core competences expected among actuaries? How much theory vs. practice needs to be embedded in these programs, and how much traditional vs. digital when it comes to coping with increased global digitalisation?
Actuarial students are being prepared to operate in a wide variety of professional environments, including insurance, health, pension, risk management, government, regulatory organisations and other fields. Actuaries need to have a detailed understanding of economic, financial, demographic and insurance risks and expertise in developing and using statistical and financial models to inform financial decisions as well as for pricing, establishing the amount of liabilities and setting capital requirements for uncertain future events. A detailed understanding of these risks requires a solid mathematical knowledge and analytical competence. A strong technical toolkit, specifically the ability to model and understand risk, will allow the profession to thrive and grow globally.