The introduction of the new European insurance regulation regime, Solvency II, will fundamentally change the regulatory roles of actuaries working in both life insurance and nonlife insurance. Milliman's Summer 2015 edition of Issues in Brief features an article entitled "Actuaries under Solvency II" which considers roles where actuaries, under Solvency II, can add value. The article also assesses roles where actuaries are specifically required, or are natural candidates, to fulfill the updated controlled functions envisaged by the Prudential Regulation Authority (PRA).

The future role of actuaries under Solvency II represents a hot topic in the insurance industry today. The actuarial function, as introduced by the Level 1 Framework Directive under Solvency II, is a natural role for actuaries to fill. However, the exact structure of this function, the level of overlap permitted between it and other key functions and activities of a firm, as well as the specific requirements of the individuals who perform it, are not yet entirely clear.

While it is not expected that the Solvency II actuarial function will introduce unfamiliar tasks for actuaries, there are a number of differences to be observed. For example, when comparing the tasks with the current UK actuarial functions required under Solvency I, at least two differences are apparent:

- Rather than being limited to a single individual, the Solvency II actuarial function may be structured in a range of ways, e.g., a group of people.
- There is no explicit requirement for the Solvency II actuarial function to be conducted by qualified actuaries (although proposed changes to the PRA Rulebook seem to suggest this is required where the function is outsourced).

Areas where actuaries are either natural candidates or where they can add value following the implementation of Solvency II include:

- The role of the with-profits actuary in the UK
- First-line activities such as underwriting, pricing, reinsurance management, or asset management
- Independent and external reviews of the output submitted to the regulator and public

This article was first published on LinkedIn.