The content on this page has been converted from PDF to HTML format using an artificial intelligence (AI) tool as part of our ongoing efforts to improve accessibility and usability of our publications. Note:

No human verification has been conducted of the converted content.
While we strive for accuracy errors or omissions may exist.
This content is provided for informational purposes only and should not be relied upon as a definitive or authoritative source.
For the official and verified version of the publication, refer to the original PDF document.

If you identify any inaccuracies or have concerns about the content, please contact us at [email protected].

TAS 200 Feedback Statement and Impact Assessment

Executive summary

1The Financial Reporting Council (FRC) has consulted on revisions to Technical Actuarial Standard 200: Insurance (TAS 200). The consultation period commenced in February 2024 and ended in May 2024. The FRC received 22 written responses, which were supplemented by 19 stakeholder outreach discussions. Submissions were received from insurance companies, professional services firms, professional and industry bodies and consumer advocates. This executive summary draws out the key areas in which feedback was provided and highlights the main changes made to the exposure draft of TAS 200 v2.0 in response to that feedback.

General observations

2The respondents were mainly supportive of the policy direction of the proposed changes, including the extension of scope to include technical actuarial work to support the tasks of the Actuarial Function and insurance transactions. In particular, they welcomed the proposal to shorten and simplify TAS 200 by removing provisions that have been addressed in TAS 100 v2.0. However, there were requests for greater clarity in drafting and the feedback shows that not all stakeholders fully understood what was required in relation to some of the provisions introduced. In finalising the standard, the FRC has made amendments to provisions in Sections 1 and 4 to address these points. These are further described in the rest of this section.

Provision relating to regulatory obligations relating to customer outcomes

3The FRC proposed to introduce a new provision (P1.1) to support practitioners in considering the implications for technical actuarial work related to products that are within the scope of regulatory obligations relating to customer outcomes. The introduction of such a provision was supported by most respondents. However, written responses and stakeholder outreach have indicated that the scope of the provision, how materiality should be applied, and the role of the practitioner were not clearly understood. In finalising the standard, the FRC has made a number of amendments to the wording of the provision to bring greater clarity to these areas.

4Whilst some respondents queried whether the introduction of a new provision specific to the Financial Conduct Authority's (FCA's) Consumer Duty principle was necessary, the FRC observed through the written responses and stakeholder outreach that the potential impact from the implications of the FCA's Consumer Duty requirements on technical actuarial work was not prominent in practitioners' considerations, particularly where the impact was less direct. The FRC considers this a strong indication that a specific provision in TAS 200 in relation to regulatory obligations relating to customer outcomes in support of TAS 100 v2.0 Principle 1 Risk identification is necessary. The FRC regards the FCA's Consumer Duty requirements as a regulatory obligation relating to customer outcomes, and P1.1 is worded to encompass future similar requirements.

5Consumer advocates expressed the view that TAS 200 should include more specific requirements and suggested that the standard should encourage actuaries to be involved in ensuring good outcomes for consumers, though most respondents agreed with the proposal not to include a specific requirement concerning communications to retail customers. The FRC acknowledges the role that actuaries may have in supporting good customer outcomes but considers that the responsibility for monitoring compliance with Customer Duty is not within the FRC's remit. The FRC agrees that actuaries can play an important role in supporting effective communications to retail customers but considers the requirements of TAS 100 v2.0 Principle 7 Communications and, where applicable, TAS 100 v2.0 Principle 1 Risk identification are sufficient in this regard. The FRC has not introduced additional specific requirements into the final standard in this respect.

Provisions relating to assumptions

6The FRC proposed to introduce provisions P1.2, P1.3 and P1.4 relating to the consistency of assumptions and to their appropriateness in the context of emerging experience. There was general support for these provisions, though there were a number of requests for greater clarity in drafting, noting practical considerations when applying the provisions.

7In finalising the standard, the FRC has amended the wording of those provisions to clarify the application of proportionality and scope of application.

Provisions relating to insurance transformations

8The FRC proposed a number of changes to the provisions in relation to insurance transformations to simplify, clarify or amplify the existing requirements. The FRC also proposed to introduce new provisions to encourage practitioners to approach their work with a questioning mindset, to consider the use of stresses and scenarios (including those that may be outside the scope of prudential capital requirements) and to communicate whether classes of policyholders include subgroups who are affected differently by the transformation.

9Most respondents were supportive of the FRC's proposals, and some respondents sought greater clarity in the drafting. The FRC has made amendments to these provisions to bring greater clarity and explicit reference to proportionality.

Pricing frameworks

10Most respondents agreed that technical actuarial work carried out to support pricing frameworks should remain in scope of TAS 200, with some respondents emphasising the importance of this given the FCA's Consumer Duty requirements. Some respondents highlighted practical difficulties of TAS compliance where work is carried out in multi-disciplinary teams, dynamic pricing environments with time-critical deadlines or an underwriter-led environment (but non-specific to TAS 200) and requested more guidance. The FRC has not made further changes when finalising TAS 200 v2.0 and will review our existing guidance to assess whether there is a need for further support for practitioners in this aspect.

Introduction and background

1The Financial Reporting Council (FRC) is the UK's independent regulator responsible for issuing and maintaining actuarial standards. The FRC keeps the Technical Actuarial Standards (TASs) and other actuarial standards under regular review and reconsiders them at least once every five years. Technical Actuarial Standard 200: Insurance (TAS 200) was issued in December 2016, becoming effective 1 July 2017.

2The FRC published a Call For Feedback in May 2022 as part of the post implementation review of the sector-specific TASs, including TAS 200. This was followed by the publication of a position paper in February 2023 summarising the responses to the Call For Feedback.

3In February 2024, the FRC issued a consultation paper titled 'Technical Actuarial Standards for Insurance', which included an exposure draft of the proposed revised standard TAS 200 v2.0. The consultation closed on 10 May 2024.

4This paper provides a summary of the feedback received and sets out the FRC's response, summarising material amendments to the exposure draft in response to the consultation, and the impact assessment. The final version of TAS 200 v2.0 is issued alongside this paper.

Explanation of key changes

1The key changes to TAS 200, as set out in the consultation paper, relate to:

the introduction of a new provision to support practitioners in considering the implications for technical actuarial work of regulatory obligations relating to customer outcomes such as the Financial Conduct Authority's (FCA's) Consumer Duty principle, as well as an extension of the scope to include technical actuarial work supporting the tasks of the Actuarial Function and insurance transactions.
the removal of provisions where they are addressed in TAS 100 v2.0, including all 11 provisions under the ‘Core Provisions' section and 2 existing provisions (as well as 2 sub-provisions) under the 'Provisions for specified work' section out of a total of 23 provisions in the existing standard.
a revision to provisions to rectify known gaps in the quality of technical actuarial work relating to insurance transformations, audit, and assumptions setting.

2In addition, the FRC revised TAS 200 in relation to structure, syntax and the inclusion of a Glossary in line with TAS 100 v2.0.

3Following the consultation, the FRC has made a number of drafting amendments to the final standard TAS 200 v2.0 to address the feedback received. The key amendments aim to bring greater clarity to the intended scope or the application of the provisions, and to make explicit the application of proportionality and materiality.

4A full list of the amendments is set out in Appendix 1.

5Technical Actuarial Standard 200 v2.0 will be effective for all technical actuarial work in scope issued on or after 1 January 2025.

Summary of responses

Responses to the public consultation

1The FRC received 22 written responses relating to TAS 200, 17 of which were not confidential and have been published on the FRC website. Table 1 summarises the number of responses by respondent type. A list of respondents is set out in Appendix 2.

Category of respondent	Number
Insurance firms	5
Professional and industry bodies	4
Consultancies and professional services firms	9
Government bodies	1
Consumer advocates	3
Total	22

2In addition, 19 outreach meetings were held with stakeholders during the consultation period. In particular, the FRC engaged with the Institute and Faculty of Actuaries as part of the consultation process and thanks them for their constructive feedback.

3In this section we summarise the points raised in the written submissions and provide comment on the FRC position, which is informed by the outreach meetings.

Question 1: Do you agree with the proposed new provision in relation to Consumer Duty? Do you consider that more specific requirements would be more appropriate?

421 out of 22 respondents answered this question.

5The majority of respondents supported the inclusion of a provision in relation to Consumer Duty¹ in principle. Within this context, a range of views were expressed and we summarise them below.

6A quarter of respondents (including some of those who agreed with the inclusion the provision) queried the necessity of the new provision P1.1 given that the TAS 100 v2.0 Principle 1 Risk identification covers all risks including Consumer Duty. Some expressed concern that practitioners would not consider a wider range of risks because TAS 200 has identified one risk specifically through the inclusion of P1.1.

7A quarter of respondents had questions regarding the scope of P1.1. A few respondents commented on the element of proportionality that should be applied or sought guidance on how materiality should be applied. One respondent expressed concern at the practical implications of a TAS 200 requirement to consider Consumer Duty when working on a narrowly scoped assignment. One respondent commented that the wording of P1.1 did not emphasise that the requirement to consider Consumer Duty was an ongoing requirement.

8Half of respondents commented on the actuary's role in relation to Consumer Duty and practicalities of how the practitioner can comply with this provision. For example:

Some respondents asked whether P1.1 suggested that actuaries need to assess whether the insurer is compliant with Consumer Duty requirements rather than relying on those responsible for Consumer Duty within the insurer to make such an assessment. A couple of respondents were concerned that this may lead to conflicts between the practitioner and those responsible for compliance.
A third of respondents were concerned about the ability of actuaries to identify the actions that may be taken by the entity to fulfil the regulatory obligations. The concerns included that practitioners would not have access to the information for logistical reasons; the scope for a piece of work may be limited; the actions may be commercially sensitive. It was suggested that it is not the responsibility of the actuary to propose actions.
A couple of respondents thought that the consultation paper suggested that the Actuarial Function Holder needed to opine on the Consumer Duty compliance of the insurer.

9Consumer advocates expressed the view that TAS 200 should include more specific requirements and suggested TAS 200 should encourage actuaries to be involved in ensuring good outcomes for consumers. Suggestions included:

Actuaries should be required to
1. proactively engage with a firm's Consumer Duty champion to ensure the champion understands Consumer Duty issues
2. provide an objective view on customer outcomes specifically relating to fair value assessments and the quality of communications
3. be partly responsible for testing communication materials with end-users, gaining feedback and acting on the feedback.
A specific requirement could be introduced for actuaries to include details of the fair value assessment and their assessment of it in the report they prepare to policyholders of with-profits funds.

FRC response

10There is broad support from the written responses for the introduction of P1.1 in principle. Stakeholders who contributed comments during outreach but did not respond in writing generally agreed with the addition of the new provision. There were some requests, though, from both written responses and during outreach that the wording of the provision be made clearer.

11The FRC observes both through the written responses and stakeholder outreach that the potential impact from the implications of the Consumer Duty requirements on technical actuarial work was not prominent in practitioners' considerations, particularly where the impact is less direct. This is the case notwithstanding that TAS 100 v2.0 Principle 1 Risk identification has been effective since July 2023. Therefore, the FRC considers this a strong indication that a specific provision in TAS 200 in relation to regulatory obligations relating to customer outcomes in support of Principle 1 of TAS 100 v2.0 is necessary.

12TAS 200 Paragraph 1.4 states that the standard should be read in conjunction with TAS 100 v2.0, i.e. TAS 200 P1.1 does not replace the need to apply Principle 1 of TAS 100 v2.0. The FRC considers that TAS 100 v2.0 Principle 1 Risk identification is clear in that practitioners '... must identify and consider all relevant material factors and relevant material risks that may affect or have the potential to influence their technical actuarial work...' and therefore the risk of practitioners not considering a wider range of risks as a result of TAS 200 identifying one specific risk through the introduction of P1.1 is minimal. The FRC has therefore retained P1.1 in finalising the standard.

13Based on the number of questions in relation to the scope of P1.1 raised both in the written responses and during stakeholder engagement, the FRC observes that the wording in P1.1 in the exposure draft led to more than one interpretation. Together with provisions within the rest of Section 1, the FRC intends P1.1 to apply to all technical actuarial work within the scope of TAS 200 (as set out in the section 'Scope and compliance'). However, as stated in the start of P1.1, the rest of the provision will only apply if the technical actuarial work the practitioner is carrying out relates to products that are within the scope of regulatory obligations relating to customer outcomes. Therefore, where the practitioner is carrying out technical actuarial work that relates to other products, the practitioner will not be required to make further considerations according to the rest of the provision. In finalising the standard, the FRC has amended P1.1 to bring greater clarity to the intended scope.

14For technical actuarial work that is in scope of P1.1, the FRC expects the practitioner to consider whether the implications from relevant regulatory obligations are material to the technical actuarial work. There could be some technical actuarial work where the practitioner will determine as part of their consideration, that there are no material factors arising from relevant regulatory obligations to the technical actuarial work, in which case no further action is required.

15P1.1 in the exposure draft refers to 'material impacts on policyholder behaviour, premiums...' in which the FRC intends for 'material' to be interpreted according to the definition as set out in the Glossary of the standard, i.e. the materiality relates to the technical actuarial work in question and the extent to which matters could influence the significant or relevant decisions that could be taken by an intended user. The consultation responses suggest that there is a risk that the provision as drafted could be interpreted that the materiality relates to impact on factors e.g. premiums. In finalising the standard, the FRC has reworded P1.1 to bring greater clarity to the application of materiality by referring to 'material factors' rather than material impacts on the factors. This aligns with the use of materiality in TAS 100 v2.0 Principle 1 Risk identification.

16When working on an assignment that is narrowly scoped by the intended user, the practitioner should use their judgement to determine whether the scope of the work is appropriate to the needs of the intended user and whether the resulting actuarial information would be reliable.

17In response to the concern that P1.1 does not emphasise the ongoing nature of the requirement, the FRC considers that P1.1 is an ongoing requirement and does not consider the provision as set out to imply otherwise. In finalising the standard, the FRC has amended P1.1 to refer to changes in premiums, charges or other terms and conditions which are changes at any point due to the relevant regulatory obligations, and not solely at the point of introduction of the relevant regulatory obligations.

18In response to queries asking whether P1.1 suggested that actuaries need to assess whether the insurer is compliant with Consumer Duty requirements, as set out in the first part of paragraph 2.7 of the consultation paper, the FRC acknowledges that the responsibility for Consumer Duty compliance rests with the senior management of an insurer. The FRC does not place obligations on practitioners through the TASs to comply with requirements set by other regulations, such as the FCA's Consumer Duty. The remit of the TASs relates to the technical actuarial work carried out by practitioners including where such work is carried out in order to comply with requirements set in legislation or by other regulations. The FRC considers the responsibility for monitoring compliance with Consumer Duty falls within the remit of FCA.

19In finalising the standard, the FRC has amended the wording of P1.1 to bring greater clarity to the provision in response to comments which queried the ability of practitioners to have full knowledge of agreed and plausible actions.

We have added the phrase 'in so far as the practitioner might reasonably be expected to know about these factors at the time of carrying out the work.' This is consistent with TAS 100 v2.0 Principle 1 Risk identification.
We have removed the explicit mention of actions and instead referred to planned or likely changes in premiums, charges or other terms and conditions.

20If factors arising from obligations relating to customer outcomes are not known and the practitioner considers they could be material to the technical actuarial work, then the FRC would expect the practitioner to communicate this to the intended user, as required in TAS 100 v2.0 Principle 7 Communications. The related Application statement A7.2 states that '...practitioners' communications should state the nature and significance of each material risk... and explain the approach taken to the risk.'

21As set out in paragraph 18 above, the FRC does not place obligations on practitioner through the TASs to comply with requirements set by other regulations. The remit of the TASs relates to the technical actuarial work carried out by practitioners, where such work may be carried out in order to comply with requirements set in legislation or by other regulations. The FRC notes that under Solvency UK, the Actuarial Function is required to include conclusions in the Actuarial Function Report regarding a list of considerations which includes legal risk.

22The FRC thanks the consumer advocates for their responses and acknowledges the role that actuaries will have in supporting good consumer outcomes. We detail in Paragraph 18 our view on the role of actuaries in the compliance of Consumer Duty requirements. In carrying out their technical actuarial work, the FRC encourages practitioners to support those tasked with FCA's Consumer Duty responsibilities (as the intended user of their actuarial work). For example:

In the case of providing actuarial advice, TAS 100 v2.0 Principle 1 Risk identification requires practitioners to consider relevant material risks which will include the intended user's need to comply with Consumer Duty requirements and Principle 7 Communications requires practitioners' communications to be such that the intended user can understand matters relevant to the actuarial information. Similarly, practitioners must comply with the care and competence requirements of the Actuaries' Code in understanding the needs of their intended user.
We cover specific requirements concerning communications to retail customers in the response to Question 2.

23However, in response to the suggestion that TAS 200 should require actuaries to provide an assessment of consumer outcomes, the FRC is of the view that this is not within the FRC's remit.

Question 2: Do you consider that a specific requirement concerning communications to retail customers is required?

2420 out of 22 respondents answered this question.

25Most of those who responded agreed with the proposal not to include a specific requirement concerning communications to retail customers.

26Consumer advocates expressed the view that TAS 200 should include more specific requirements and highlighted the role of the actuary in helping support the entity achieve the Consumer Understanding outcome. They suggested TAS 200 should require actuaries to be partly responsible for testing communication materials with end-users, gathering feedback and acting on the feedback. One respondent commented that TAS 200 should make it clear that customers are intended users.

FRC response

27The FRC agrees that actuaries can play an important role in relation to gathering feedback on communications to retail customers and reacting to that feedback. As set out in paragraph 2.9 of the consultation paper, the FRC considers actuaries may have a direct or indirect role when involved in communications to retail customers:

Practitioners may have a direct role in communicating information to retail customers, such that the retail customers are the intended users of the technical actuarial work.
Practitioners may also be asked to provide actuarial advice or expert input in relation to information to be provided to retail customers. In this case, the intended user is whoever requested the advice or input (for example a colleague within the entity or a governance committee).

28The FRC is of the view that, in both scenarios, the requirements of TAS 100 v2.0 Principle 7 Communications and, where applicable, TAS 100 v2.0 Principle 1 Risk identification are sufficient in relation to practitioners' involvement in the preparation of communications to retail customers. This view is supported by the majority of the responses. In response to the suggestion that TAS 200 should require practitioners to gather feedback on consumer understanding, we do not believe this falls within the FRC's remit. However, as set out in TAS 100 v2.0 P7.6, if the practitioner becomes aware of any feedback that the communication has not been understood by the intended user (as described in the bullets of paragraph 27), the practitioner must provide clarification or information to correct the misunderstanding.

29Further guidance on the concept of intended users and other users of the actuarial information is available in guidance on Technical Actuarial Work and Geographic Scope.

30The FRC has finalised the TAS 200 v2.0 without further amendment in relation to communications to retail customers.

Question 3: Do you agree that the proposed new provisions in relation to Consumer Duty should be applied to 1) technical actuarial work to support the tasks of the Actuarial Function, and 2) technical actuarial work in connection with the merger, acquisition or disposal of insurance companies or portfolios or risk-transfer transactions?

3120 out of 22 respondents answered this question.

32The majority of respondents who answered the question agreed with the proposed extension to the scope of TAS 200.

33Many respondents commented on the points raised in their responses to questions relating to the proposed core provisions P1.1 to P1.4 explaining that these points were also relevant in the context of the technical actuarial work to support the activities of the Actuarial Function and technical actuarial work in connection with the merger, acquisition or disposal of insurance companies or portfolios or risk transfer transactions.

34One respondent commented that many Actuarial Function activities are already in scope of TAS 200 and another respondent suggested technical actuarial work in relation to insurance transactions could be included in scope under heading of ‘Valuation of insurance contract assets and liabilities'.

FRC response

35In addition to the written responses, stakeholders also indicated during outreach that many practitioners supporting the tasks of the Actuarial Function already consider their work to fall within the scope of TAS 200 as the underlying areas of work are within scope.

36The FRC's responses to Questions 1, 2 and 6 consider the specific comments made by respondents in relation to the new provisions for all work in scope of TAS 200 and, where deemed appropriate, changes have been made to provisions in response to those comments.

37The FRC is grateful for the suggestion that technical actuarial work in relation to insurance transactions could be included in scope under the heading of 'Valuation of insurance contract assets and liabilities'. Given this is a minority view, the FRC will consider this when the standard is next reviewed, noting that a change of this nature would need to be consulted on.

38The FRC has finalised the standard as set out in the exposure draft in respect of applying the new provisions in relation to Consumer Duty to 1) technical actuarial work to support the tasks of the Actuarial Function, and 2) technical actuarial work in connection with the merger, acquisition or disposal of insurance companies or portfolios or risk-transfer transactions.

Question 4: Do you agree that no further amendments are required to TAS 200 in light of the proposed Solvency UK reforms? If not, please provide further information.

3919 out of 22 respondents answered this question.

40All but one who responded agreed with the FRC's proposal to make no further amendments to TAS 200 in light of the proposed Solvency UK reforms.

41The respondent who disagreed with the proposal expressed concern at the extent of the use of the Matching Adjustment (MA) by life insurers and the changes to the rules around the use of the MA under Solvency UK. The respondent proposed that TAS 200 should include a new requirement for actuaries to pay special regard to and report to both management and policyholders on the use of the MA, and the impact thereof.

FRC response

42The FRC considers that the general principles set out in TAS 100 v2.0, covering risk identification, judgement, data, assumptions, models, documentation, and communications are an adequate and proportionate way to support the provision of high quality technical actuarial work both prior to and after the implementation of the Solvency UK regime. The FRC further considers that the same principles provide an adequate and proportionate way to address the concerns raised in relation to the use of the MA by life insurers.

43The FRC has finalised TAS 200 v2.0 without amendments to reflect the Solvency UK reforms and will consider the effectiveness of the TASs in promoting high quality actuarial work in the context of the Solvency UK regime and, in particular, in relation to the use of the MA as part of the next post implementation review.

Question 5: Do you agree with the proposed removal of TAS 200 Provisions 1 to 11? If not, please provide further information.

4418 out of 22 respondents answered this question.

45All respondents who answered this question agreed with the proposed removal of TAS 200 Provisions 1 to 11, with some commenting that this was a helpful change.

FRC response

46The FRC has finalised the standard without these provisions.

Question 6: Do you agree with the proposed new provisions P1.2, P1.3 and P1.4? If not, please provide further information.

4719 out of 22 respondents answered this question.

48Three-quarters of respondents who answered the question agreed in principle with the new provisions regarding assumptions setting.

P1.2 and P1.4 consistency of assumptions

49Half of respondents, including respondents who were broadly supportive of the provisions, commented that there could be difficulties in ascertaining the assumptions used for other purposes. Examples of practical issues included practitioners working for an external firm of consultants without access to details of assumptions used for other purposes within the entity, differing modelling approaches, ethical walls and business confidentiality.

50Several respondents noted that there are valid reasons for the assumptions for different purposes to be different.

51A couple of respondents commented on materiality and noted that assumptions that are material for one purpose may not be material for a different purpose.

52Some respondents commented that P1.2 was too wide ranging because the list of other purposes was non-exhaustive.

53In addition to practical issues, a few respondents disagreed with the provision; they thought that it may lead to practitioners putting too much emphasis on using the same assumptions as those used for other purposes rather than considering the most appropriate assumptions for the technical actuarial work they were carrying out (possible anchoring bias).

P1.3 consistent pattern

54There were no respondents who disagreed with the principle of looking at previous exercises for a consistent pattern.

55Some respondents expressed a view that the application of materiality and proportionality would be important for this provision.

56A few respondents noted practical issues in looking at previous exercises which included:

Bias may not be clearly interpretable due to complexities in underlying data or processes.
Where previous exercises are performed by different entities, it may be impractical to gather full information.

General observation on P1.2, P1.3, P1.4

57One respondent commented that there was an inconsistency with the documentation and communications requirements for P1.2 and P1.4 compared to P1.3.

FRC response

P1.2 and P1.4 consistency of assumptions

58The FRC notes the respondents' broad agreement with the provisions and the comments in relation to the practicalities on the application of the provisions.

59The FRC does not intend to require practitioners to obtain information where there are valid reasons for such information to be unobtainable and acknowledges there may be circumstances where it is not reasonable to expect the practitioner to have access to the information regarding assumptions for other purposes. In finalising the standard, the FRC has amended provision P1.2 to include 'where the practitioner might reasonably be expected to have access to such information'.

60Provisions P1.2 and P1.4 require that practitioners should consider whether assumptions are consistent and describe the material inconsistencies. They do not require the practitioner to change their assumptions to make the assumptions consistent. In relation to consistency, assumptions used for different purposes may be considered to be consistent even though they may differ. For example, an assumption that includes a margin for prudence may be considered to be consistent with the corresponding best-estimate assumption. Similarly, an assumption for use in a stress scenario may be consistent with the assumption used for the base scenario if both were determined using consistent methodologies.

61Further, the FRC agrees that there are valid reasons for the assumptions used in technical actuarial work for different purposes to be derived on different bases. For example, a best estimate assumption used for product pricing may take into account more recent or specific information than that used for valuation purposes. The FRC expects practitioners to describe any material inconsistencies as set out in P1.4. For example, if the use of the more granular pricing assumptions in the valuation would materially alter the outcome of the valuation, then the practitioner carrying out the valuation would describe the difference and explain why the valuation assumption remains appropriate. The FRC considers this to be aligned with the requirement for assumptions to be appropriate as set out in TAS 100 v2.0 Principle 4 Assumptions.

62In addition to written responses commenting on the materiality of assumptions, participants in outreach meetings expressed the view that the emphasis should be on the material items. In order to clarify that the focus of P1.2 is on assumptions that are material to the technical actuarial work being carried out by the practitioner, when finalising the standard, the FRC has amended P1.2 to refer to 'whether the assumptions material to the technical actuarial work are consistent'.

63The FRC intends for practitioners to only consider whether the assumptions are consistent with those used in other relevant purposes and that practitioners should apply judgement to determine whether the technical actuarial work used for other purposes are relevant. In finalising the standard, the FRC has added the word 'relevant' to describe the other purposes, and separately listed the examples to show the list of purposes is not exhaustive but limited to what is relevant.

64The FRC has also amended the wording of P1.4 to reflect the amendments in P1.2 by adding 'material' to the assumptions and 'relevant' to describe the other purposes and by deleting the list of examples of such purposes.

65In response to the concern regarding possible anchoring bias when looking at the assumptions for other purposes, the FRC considers that this is a risk that can be managed by practitioners by considering the extent of material bias within assumptions as referred to in TAS 100 v2.0 P4.1.

P1.3 consistent pattern

66The FRC notes the comments surrounding the practical issues in determining a consistent pattern from previous exercises.

67In response to comments from the written responses and the stakeholder outreach asking about materiality, the FRC has added 'for material assumptions' to the provision. This is to clarify that practitioners should focus their considerations on assumptions that could influence decisions.

68The FRC has also amended P1.3 to include 'for the same purpose' to 'previous exercises' to clarify the policy intention and to be consistent with TAS 100 v2.0.

69The FRC agrees that there could be justifiable circumstances where the practitioners cannot meet the requirements of P1.3. As P1.3 is a regulatory expectation intended to assist in compliance with mandatory requirements, where material, practitioners could note this as a limitation in the practitioners' efforts at complying with P1.3. The justification must demonstrate how compliance with the relevant mandatory requirements (e.g. TAS 100 v2.0 Principle 4 Assumptions) has been achieved despite not meeting regulatory expectations.

General observation on P1.2, P1.3, P1.4

70The FRC notes that the requirements are different for provisions P1.2, P1.3 and P1.4:

P1.2 does not have a documentation requirement but has a communications requirement in P1.4.
P1.3 includes a documentation requirement within P1.3 but does not have a communications requirement.

71The FRC considers that it is appropriate for the consistency of assumptions to be communicated to allow the intended user to understand the judgements surrounding the choice of assumptions. On the other hand, checking for consistent patterns over time is considered a validation technique and will not necessarily need to be communicated.

Question 7: Do you agree with the proposed changes to provisions in relation to the valuation of insurance contract assets and liabilities? If not, please provide further information.

7216 out of 22 respondents answered this question.

73Most of the respondents who answered the question agreed or broadly agreed with the changes to the provisions in relation to the valuation of insurance contract assets and liabilities.

74Respondents who agreed with the changes welcomed the simplification of the section heading and the revisions to Provision 12 as set out in provisions P2.1 and P2.2 of the exposure draft. Some respondents noted practical concerns with the provisions:

There can be difficulties in obtaining the relevant information about the previous exercise if the previous exercise was carried out by a different practitioner.
The practitioner may not have access to the full information required for compliance.
It is not always possible to identify the causes of the differences in reserving. This may be due to the underlying cause of differences being outside of the practitioner's experience and responsibility so they may need to rely on other professionals.

75Two respondents suggested that P2.1 was not needed as P1.3 covered the issues.

76One respondent commented on the removal of Provision 13, noting that TAS 100 v2.0 A7.1 does not make any reference to communicating the derivation of any adjustment for risk or margin for prudence – it only requires the practitioner to communicate the level of prudence and any material changes from the previous exercise. The respondent considered that it would be appropriate to include the derivation of the margin for prudence or adjustment for risk, if applicable, in the list of items to be communicated.

FRC response

77As noted in paragraph 2.24 of the consultation paper, the FRC proposed minor changes to the provisions in relation to 'valuation of insurance contract assets and liabilities'.

78The FRC agrees that there could be justifiable circumstances where the practitioners cannot obtain the information needed to make the assessment as set out in P2.1 (and communicate such as set out in P2.2) and consider these circumstances in the minority. As P2.1 and P2.2 are regulatory expectations intended to assist in compliance with mandatory requirements, where material, practitioners could note these as a valid limitation in the practitioner's efforts at complying with P2.1 and P2.2. The justification must demonstrate how compliance with the relevant mandatory requirements (e.g. TAS 100 v2.0 Principle 4 Assumptions) has been achieved despite not meeting regulatory expectations.

79For example, where the previous exercise was carried out by another practitioner, the FRC would expect that practitioner to have met the requirements of the Communications Principle of TAS 100 v2.0 as well as relevant TAS 200 provisions requiring communications relating to the previous exercise. However, if these communications are not made available to the practitioner carrying out the current exercise by the intended user or the other practitioner, then this could be noted as a valid limitation in the practitioner's efforts at complying with P2.1 and P2.2.

80As noted in paragraph 2.19 of the consultation paper, there is a difference between the requirements of P1.3 and P2.1. P1.3 relates to identifying trends in actual versus expected experience over time in the various types of work within scope of TAS 200, whereas P2.1 is about considering actual versus expected experience over one time period in the context of the valuation of insurance contract assets and liabilities and identifying the causes of those differences (for example, as part of an analysis of movement in technical provisions or own funds).

81In relation to the comment with regards to the explicit inclusion of the derivation of the margin for prudence or adjustment for risk, if applicable, in the list of items to be communicated, the FRC considers that it is adequately covered by TAS 100 v2.0 as a principles-based standard:

Application statement A7.1 of TAS 100 v2.0 includes requirements for communicating the level of prudence, where applicable, in actuarial information, as well as defining terminology such as 'best-estimate, 'central estimate' or other similar terms.
Application statement A7.5(a) requires communications to state the material assumptions describing how they were derived and their rationale considering the consistency of individual assumptions.

82The FRC has finalised the standard making no further changes to the provisions relating to the valuation of insurance contract assets and liabilities.

Question 8: Do you agree with the proposed changes to provisions in relation to prudential regulatory capital requirements and the ORSA? If not, please provide further information.

8316 out of 22 respondents answered this question.

84The majority of those who answered the question agreed or broadly agreed with the proposed changes to provisions in relation to prudential regulatory capital requirements and the ORSA. There were no respondents who disagreed.

85A few respondents provided favourable feedback on the proposed changes along the following lines:

The changes don't materially change the requirements and are reasonable.
The rationale for the changes makes sense and the rearranging of the provisions as well as the inclusion of the word 'material' is welcomed.

FRC response

86The FRC has finalised P3.1 to P3.3 without further change.

Question 9: Do you agree with the proposed changes to provisions in respect of insurance transformations? If not, please provide further information.

8717 out of 22 respondents answered this question.

88The majority of those who answered the question agreed or broadly agreed with the proposed changes to provisions in respect of insurance transformations.

89Some respondents commented on the definition of 'insurance transformations'. One respondent suggested a more open-ended definition so that some areas of technical actuarial work (such as supporting the execution of a sunset clause on a with-profits fund, or execution of termination clauses in group life contracts) were not excluded.

90Three respondents commented on the requirements to consider and communicate the impact on groups or subgroups of policyholders under proposed provisions P4.1 and P4.7(a): The comments relate to how 'materiality' would apply and at what level of granularity, and to the consistency of terminology within those provisions.

91One respondent suggested that the reference to 'different parties' in the proposed provision P4.2 should be adapted to allow for the different individuals considering a transaction (such as the With-Profits Actuary, Chief Actuary and Independent Expert) having a different focus and not necessarily needing to consider all parties.

92Regarding the proposed provision P4.3, two respondents commented that the wording 'alternative material assumptions' could be amended to clarify the range of assumptions that should be considered.

93Two respondents commented on the requirement to consider changes in material risks in the proposed provision P4.4, one requesting further application examples in relation to the scenario and stress testing outlined in that provision. Another suggested that 'changes in the material risks' would be better expressed as 'material changes to the risks'.

94In relation to the proposed provision P4.6, one respondent noted there may only be a finite amount of available information that can be analysed and processed in the time given and would welcome further guidance. Another commented that the provision duplicates TAS 100 v2.0.

95The responses from consumer advocates commented on the role of actuaries during reattributions of inherited estate, particularly concerning their having sufficient expertise and experience to advise on the reasonableness of new business assumptions, and suggested new provisions in that respect. One respondent also expressed concerns over the conflicts of interest arising from the Independent Expert being paid by the firm and proposed further provisions in that respect. They also suggested expanding the communications provision to include requirements around the Consumer Duty Consumer Understanding outcome.

96Additionally, one respondent commented that the proposed provisions duplicate existing Prudential Regulation Authority (PRA) and FCA regulations, and two respondents commented that there appeared to be some duplication between the provisions (P4.1 to P4.6) and the communications requirements (P4.7).

FRC response

97As set out in paragraphs 2.34 to 2.36 of the consultation paper, the FRC proposed to introduce changes to the standard to encourage practitioners to approach their work with a questioning mindset, to consider the use of stresses and scenarios (including those that may be outside the scope of prudential capital requirements) and to communicate whether classes of policyholders include subgroups who are affected differently by the transformation. The majority of those answering the question were supportive of the FRC's proposals.

98The FRC has considered suggestions that the current closed list of activities set out in the insurance transformation section of the TAS 200 scope could be replaced with a more open-ended definition to avoid excluding categories of technical actuarial work to which the provisions may be appropriate. However, a more open-ended definition may then bring additional work into scope to which the provisions of Section 4 are not proportionate. Given there is not broad support for such extension in scope, we have finalised the standard without making changes to the insurance transformations scope.

99The FRC has considered comments that the requirement to consider groups/subgroups in the proposed provision P4.7(a) may prove onerous depending upon the required level of granularity. The FRC's intention is to encourage consideration of whether classes of policyholders are homogeneous, but not to require a disproportionate level of granularity. We consider that the determination of an appropriate level of granularity is a matter of judgement for the practitioner and should reflect their own views on what is material and proportionate for the work. The FRC has not made changes to the standard in this regard.

100The FRC has considered feedback received on specific wordings and has made some changes to simplify or clarify the meaning of some provisions:

to adopt consistent terminology between provisions by referring to 'groups' rather than 'subgroups' in provision P4.7(a) and to 'benefits of different classes of policyholders' rather than 'different classes of policyholders' benefits' in provisions P4.1 and P4.7(b); we have maintained the use of both 'classes' and 'groups' intending that practitioners will consider whether more granular consideration is necessary below any high-level classification of policyholders.
by specifying that only relevant parties need to be taken into account in provision P4.2, acknowledging that the focus of the actuarial work may vary according to its purpose.
to refer to 'material changes in the risks' rather than 'changes in the material risks' in provision P4.4, which we believe gives a clearer focus on material impacts.

101In relation to the proposed provision P4.3, the FRC's intention is for practitioners to consider the sensitivity of the impact of the transformation given credible alternatives to the material assumptions made. In finalising the standard, the FRC has amended the provision, as well as the corresponding communications provision P4.7(b), to clarify that only credible alternative material assumptions need to be considered.

102The FRC considers provision P4.6 necessary to amplify the existing provisions in TAS 100 v2.0 relating to bias in data, assumptions and models, and sufficiency of data specifically for the technical actuarial work in relation to insurance transformations, given the nature of the relationship between an independent expert and the entities engaged in a transformation. The FRC intends that the practitioner will apply proportionality when planning their work in this regard.

103With regard to the role of actuaries during inherited estate reattributions, the FRC considers that the requirement for practitioners to have an appropriate level of relevant knowledge and skill to carry out a piece of work is covered by the Actuaries' Code Competence and Care principle. Further, the PRA and FCA both set out their expectations for an independent expert's knowledge and experience in their Part VII transfer Statement of Policy and Guidance respectively. Additionally, we have sought to encourage independent experts to adopt a questioning mindset by the proposed introduction of provision P4.6. Provision P2.2 of TAS 100 v2.0 also requires practitioners exercising material judgement to consider credible alternative methodologies, models, data and assumptions. The FRC has not made further changes to the standard in this regard.

104The FRC has considered suggestions that the standard should include specific requirements relating to the Consumer Duty Consumer Understanding outcome, particularly in the context of policyholder communications in relation to insurance transformations. The FRC considers that the requirements of TAS 100 v2.0 Principle 7 Communications are sufficient in this regard and have not introduced further provisions.

105The FRC has considered feedback that the proposed provisions duplicate existing regulation, particularly those of the PRA and FCA. The remit of the TASs relates to the technical actuarial work carried out by practitioners including where such work is carried out in order to comply with requirements set in legislation or by other regulations. The FRC does not place obligations on practitioners through the TASs to comply with requirements set by other regulations. The FRC's intention is to complement existing regulations and avoid duplication, noting that the scope of insurance transformations in TAS 200 extends beyond Part VII transfers. Provision P4.7 sets out the communication requirements corresponding, where applicable, to the requirements set out in provisions P4.1 to P4.6. This is in line with structural changes to all the technical actuarial standards to bring out more clearly those provisions related to communications.

Question 10: Do you agree with the proposed changes to provisions in respect of audit and assurance? If not, please provide further information.

10617 out of 22 respondents answered this question.

107There was general agreement with the proposed changes to provisions in respect of audit and assurance. Respondents representing auditing firms and actuaries regularly acting as auditor's External Expert described the changes as a welcome emphasis on professional scepticism, helpful and reasonable.

108A couple of insurers mentioned that the emphasis on professional scepticism was considered helpful by their internal audit departments but asked for clarification that these provisions apply only to actuaries supporting external audits.

109A couple of audit firms mentioned overlap with the requirements of the auditing standards.

FRC response

110The general agreement with the proposed new provision in relation to audit and assurance supports the FRC's decision to introduce this new provision and the standard has been finalised without further amendment.

111The FRC confirms that the scope of TAS 200 remains unaltered in relation to audit and assurance work and does not apply to actuaries working in internal audit functions, although they may wish to adopt voluntary compliance.

112The FRC notes that the auditing standards do require those engaged in an audit to adopt professional scepticism. The remit of the TASs relates to the technical actuarial work carried out by practitioners. The new provision P5.2 requiring documentation of evidence of professional scepticism is a requirement for documenting justifications supporting judgement exercised in connection with technical actuarial work.

Question 11: Do you agree with the proposed changes to provisions in relation to with-profits discretion? If not, please provide further information.

11315 out of 22 respondents answered this question.

114Three quarters of those who answered the question were in favour of the proposed changes.

115The addition of the word 'material' into the current Provisions 22 and 23 was commented as being helpful.

116Four respondents disagreed with the proposed removal of Provision 21, which requires the documentation of work performed to confirm that the information needs of policyholders have been taken into account when reporting to them on the exercise of discretion.

One of the four commented that the proposal was out of line with the aim of embedding the principles of Consumer Duty into actuaries' work and also that Provision 21 was not sufficiently covered by Provision 6.1(a) of TAS 100 v2.0.
The three other respondents suggested bringing further elements relating to Consumer Duty into TAS 200, including a specific requirement for reports on the exercise of discretion to include information on customer outcomes and compliance with Consumer Duty. It was further suggested that TAS 200 could have a role to play in ensuring transparency of communications and operations through placing certain requirements on actuaries. The respondents also highlighted the role of the actuary in helping support the entity achieve the Consumer Understanding outcome.
One consumer advocate highlighted that SUP 4.3 in the FCA Handbook had not yet been updated to include the wider requirements with regard to consumer understanding and fair value that had been introduced by the FCA's Consumer Duty. They also suggested that the Institute and Faculty of Actuaries could be asked to undertake a thematic review of communications to with-profits policyholders.

FRC response

117The FRC notes the level of support for the changes to the provisions and that the introduction of the word 'material' was considered helpful.

118In considering the respondents' comments to keep TAS 200 Provision 21, the FRC acknowledges that TAS 100 v2.0 P6.1(a) does not prescriptively set out the same need as the existing provision. When reporting to policyholders on the exercise of discretion (under SUP 4.3.16B of the FCA Handbook), the practitioner would have to judge whether the information needs of policyholders have been taken into account, and in accordance with TAS 100 v2.0 P6.1(a) the judgement and their supporting justifications must be documented. The FRC therefore remains convinced that the requirement of Provision 21 in TAS 200 is covered by the requirement to document judgements and their supporting justifications under provision P6.1(a) of TAS 100 v2.0 when read in conjunction with the requirements under SUP 4.3.16B of the FCA Handbook, and considers the removal of the provision in keeping with a principles-based approach to the TASs.

119Through the requirement of provision P6.1(a) of TAS 100 v2.0, practitioners will continue to be required to document the work performed to confirm that the information needs of policyholders have been taken into account when reporting to them on the exercise of discretion. As such the FRC does not consider the removal of Provision 21 to be out of line with the aim of embedding the principles of Consumer Duty into actuaries' work. Please also refer to the FRC's responses to Questions 1 and 2 in relation to the additional points raised in paragraph 116 above.

120The FRC has finalised TAS 200 v2.0 with no further changes.

Question 12: Do you agree that technical actuarial work to support pricing frameworks should remain in scope of TAS 200? If not, please provide further details.

12120 out of 22 respondents answered this question.

122The majority of respondents who answered the question agreed with the proposal that technical actuarial work to support pricing frameworks should remain in scope of TAS 200, with some respondents emphasising that it is important for pricing frameworks to remain in scope, particularly with Consumer Duty requirements.

123Several respondents commented on areas where there are difficulties in pricing frameworks being included in the scope of the TASs. They agreed with the concerns noted in the consultation paper regarding general insurance pricing work. This included respondents who agreed with pricing frameworks remaining in scope. The difficulties covered the following circumstances:

Work is carried out in multi-disciplinary teams.
Some pricing environments are dynamic with time-critical deadlines which makes compliance challenging at times.

124Two respondents disagreed with pricing frameworks remaining in scope of the TASs in principle, citing that actuaries are at a disadvantage to non-actuaries such as data scientists who do not have to comply with actuaries' standards and are cheaper.

125A quarter of respondents commented that they would like further guidance on the application of the TASs in the context of pricing.

FRC response

126There is broad support from the written responses for technical actuarial work to support pricing frameworks to remain in scope of TAS 200. Stakeholders who contributed comments during outreach but did not respond in writing also recognised the need for pricing frameworks to remain in scope. As stated in the consultation paper, the FRC considers that the provision P1.1 which refers to regulatory obligations relating to customer outcomes, along with the assumption provisions P1.2, P1.3 and P1.4 are relevant to technical actuarial work to support pricing frameworks.

127In response to the comments regarding the difficulties of applying TAS 200, the FRC encourages practitioners to consider the FRC's Guidance on Proportionality as referenced in paragraph 1.6 of TAS 200 v2.0. The FRC also encourages practitioners to consider the FRC's Guidance on Technical Actuarial Work and Geographic Scope which sets out further details on responsibilities when working in multi-disciplinary teams along with an illustrative scenario.

128In stakeholder outreach, some participants noted that TAS 100 v2.0 works well when carrying out technical actuarial work in the context of general insurance pricing and allows for proportionality. Respondents commented that they found existing examples and guidance helpful in applying TAS 100 v2.0.

129The FRC notes that some respondents have requested more guidance on how to apply the TASs in the context of a pricing environment. Based on the comments around difficulties in applying the TASs in general (i.e. TAS 100, rather than specifically TAS 200) in the context of technical actuarial work to support pricing frameworks, this would suggest that the existing guidance as set out in paragraph 127 may not be sufficiently focused on this type of work. The FRC will therefore review the existing guidance and the need for further support for practitioners on the interpretation and compliance of the TASs in this type of work and is keen to involve our relevant stakeholders in this process.

130Given the broad support and the relevance of the new provisions to pricing frameworks, the FRC has finalised the standard with technical actuarial work to support pricing frameworks to remain in scope as set out in the exposure draft.

Question 13: Do you agree with our impact assessment? Please give reasons for your response.

13116 out of 22 respondents answered this question.

132Two thirds of respondents who answered the question agreed with the impact assessment.

133Four respondents were of the view that complying with the new provisions will be more onerous than implied by the impact assessment. Reasons provided were:

P1.1 could add significantly to the work of practitioners in certain areas such as the Actuarial Function or general insurance pricing if the actuaries need to assess whether the insurer is compliant with Consumer Duty requirements or take actions to ensure compliance across the insurer.
Where the intended user has instructed the practitioner to perform a piece of work which explicitly excludes considerations of Consumer Duty, P1.1 will still require the practitioner to carry out work to make considerations in relation to Consumer Duty.
P1.2 and P1.4 could be regarded as significant additional requirements as drafted in the exposure draft given practical challenges in complying with the provisions.
Where the practitioner is carrying out a small-scale project, it would be onerous or impractical to comply with P1.2 and P1.4 because the information is not available or very different to get hold of.
For relatively small tasks or simple insurance transformation work, the consideration of subgroups of policyholders under P4.1/ P4.7(a) may be viewed as particularly onerous.

134One respondent expressed the view that the benefits had been downplayed and wanted to highlight the potential benefits of actuaries providing robust challenge to firms on the compliance of Consumer Duty.

FRC response

135There is broad support for the impact assessment published as part of the consultation.

136Where respondents gave the view that complying with the new provisions could be onerous, the written feedback and stakeholder outreach have suggested there has been a misinterpretation of the policy intent in terms of the scope of the new provisions, or a misinterpretation of how the provision should be applied in particular in respect to proportionality.

137As per the FRC response to Question 1 in paragraph 18, the FRC does not place obligations on practitioners through the TASs to comply with requirements set by other regulations, such as the FCA's Consumer Duty. The remit of the TASs relates to the technical actuarial work carried out by practitioners including where such work is carried out in order to comply with requirements set in legislation or by other regulations.

138As per the FRC response to Question 1 in paragraph 14, where the intended user has instructed the practitioner to perform a piece of work which explicitly excludes considerations of Consumer Duty, the FRC considers that practitioners should use their judgement to determine whether the scope of the work is appropriate to the needs of the intended user and whether the resulting actuarial information would be reliable. The FRC does not consider P1.1 requires practitioners to carry out work which is not necessary.

139The FRC encourages practitioners to consider the FRC's Guidance on Proportionality as referenced in paragraph 1.6 of TAS 200 v2.0 when applying TAS 200, for example in carrying out small-scale projects and small/simple insurance transformation work.

140As set out in the FRC responses to the previous questions, following consultation, the FRC has made amendments in finalising TAS 200 v2.0 to clarify the FRC's expectation in areas where respondents were concerned there would be a requirement for a disproportionate amount of work but where this was not the policy intention.

141Given the above, the FRC considers that the Impact Assessment as set out in the consultation paper remains appropriate.

Impact assessment

Benefits

1The majority of the changes to TAS 200 relate to:

changes in light of the introduction of the FCA's Consumer Duty principle;
removal of a number of provisions where they are adequately covered in TAS 100 v2.0;
revision to provisions to rectify known gaps in the quality of technical actuarial work relating to insurance transformations, audit, and assumptions setting.

2The benefits of the changes are: improvement in the quality of technical actuarial work, principally through better risk identification, consideration of assumptions and communication to users.

3In particular:

The changes in relation to the FCA's Consumer Duty principle promote high quality technical actuarial work which would support intended users (e.g. insurers) to act to deliver good outcomes for retail consumers.
The changes encourage practitioners engaged in insurance transformations to adopt a questioning mindset resulting in higher quality actuarial information to the stakeholders involved in the transformation, including the FCA/PRA, the court, as well as policyholders, reinsurers and others affected by the scheme.
The changes encourage practitioners engaged in audit to document the exercise of professional scepticism which will result in higher quality in audits of insurers.

4A better alignment of TAS 200 with TAS 100 v2.0 and the removal of now redundant requirements will benefit the users of the standard, namely the practitioners who are required to comply with the standard by efficiency gains in applying a more streamlined and fit for purpose standard.

One-off costs

5It is recognised that there will be an element of one-off cost associated with reading the revised TAS 200 and updating processes and procedures. However, as the number of provisions applicable to each area of work within scope is small, the FRC considers that the updates required to processes and procedures will not be significant.

6It is recognised that the extension of scope to include technical actuarial work supporting insurance transactions or the tasks of the Actuarial Function will generate some one-off costs. However, those areas of work are already in scope of TAS 100 and the FRC considers the cost of adapting existing procedures to incorporate the small number of TAS 200 provisions that will be applicable to those areas of work will not be significant. Further, the FRC's stakeholder outreach indicates that many practitioners supporting the tasks of the Actuarial Function already consider their work to fall within the scope of TAS 200 as the underlying areas of work are within scope.

Ongoing costs

7While a small number of further provisions have been added into the standard, this is balanced by removal of 13 out of 23 existing provisions that overlap with TAS 100 v2.0 and it is not considered that there is an overall expansion of requirements.

8One of the key changes to TAS 200 is being introduced in response to the introduction of the FCA's Consumer Duty principle. The FCA expects that the application of the principle will be embedded in insurance companies' policies and practices. The FRC considers that the new TAS 200 provision relating to Consumer Duty will not create an additional burden for practitioners over and above the costs of implementing the Consumer Duty principle itself.

9While the scope of the standard has been extended to include technical actuarial work supporting insurance transactions or the tasks of the Actuarial Function, technical actuarial work in those areas is already in scope of TAS 100. Additionally, as mentioned above, many practitioners supporting the tasks of the Actuarial Function already consider their work to fall within the scope of TAS 200.The FRC does not consider that the provisions, which it is considered reflect current good practice, will result in significant additional work for practitioners.

Appendix 1 – Amendments to exposure draft

Provision	Issue	Change
P1.1	Practitioners may not have full knowledge of factors arising from regulatory obligations relating to customer outcomes.	Added 'in so far as the practitioner might reasonably be expected to know about these factors at the time of carrying out the work....'
P1.1	Wording of exposure draft regarding materiality could be misinterpreted.	Reworded to refer to 'material factors' with a list of suggested material factors rather than 'material impacts'
P1.1	Practitioners may not have full knowledge of factors arising from regulatory obligations relating to customer outcomes.	Removed the explicit mention of 'actions that may be taken by the entity' and referred to 'planned or likely changes to premiums,...'
P1.2	Wording of exposure draft could be misinterpreted as requiring consideration of all assumptions.	Reworded so that practitioners should consider 'whether assumptions material to the technical actuarial work are consistent with those....' rather than 'the consistency of assumptions with those...'
P1.2	Practitioners may not have access to relevant information relating to assumptions used for other purposes.	Added 'where the practitioner might reasonably be expected to have access to such information.'
P1.2	Wording of exposure draft could be misinterpreted as requiring consideration of all other purposes, whether relevant or not.	Added 'relevant' to 'other purposes'
P1.3	Wording of exposure draft could be misinterpreted as requiring the pattern of actual experience vs assumed to be assessed for all assumptions, irrespective of materiality.	Added 'For material assumptions,' at the start
P1.3	Wording of exposure draft could be misinterpreted as requiring consideration of assumptions used in all previous exercises, irrespective of purpose.	Added 'for the same purpose' to describe 'previous exercises'
P1.4	Wording of exposure draft could be misinterpreted as requiring consideration of all assumptions.	Added 'material' to 'assumptions'
P1.4	Wording of exposure draft could be misinterpreted as requiring consideration of all assumptions.	Added 'relevant' to 'other purposes'
P1.4	Unnecessary extra words as repetition to P1.2	Deleted the list of examples of such purposes
P4.1 & P4.7(b)	Inconsistent wording between provisions	Reworded to refer to 'the benefits of different classes of policyholders' rather than 'different classes of policyholders' benefits'
P4.2	Wording of exposure draft did not clearly recognise that the work may be carried out for different purposes.	Added 'relevant' to 'different parties'
P4.2	Wording of exposure draft contained errors.	Corrected spelling and punctuation
P4.3 & P4.7(b)	Wording of exposure draft might have led to more analysis than is required	Added 'credible' to 'alternative material assumptions'.
P4.4 & 4.7(c)	Wording of exposure draft could be misinterpreted	Reworded to give a clearer focus on material impacts
P4.7(a)	Inconsistent wording between provisions	Changed wording from 'sub-groups' to 'groups'

Appendix 2 – List of respondents to consultation

The FRC received 22 written responses relating to TAS 200, 17 of which were not confidential and have been published on the FRC website. The respondents who provided non-confidential responses are as follows:

Category of respondent	Respondents	Number
Insurance firms	Aviva plc Zurich (UK Life) L&G	3
Professional and industry bodies	Institute & Faculty of Actuaries General Insurance Pricing Research Group ABI Lloyd's Market Association	3
Consultancies and professional services firms	PricewaterhouseCoopers LLP Lane Clark & Peacock LLP SDA Actuaries LLP WTW Insurance Consulting and Technology Mazars LLP Barnett Waddingham LLP Ernst & Young LLP Deloitte LLP	8
Government bodies	Government Actuary's Department	1
Consumer advocates	Dominic Lindley Financial Inclusion Centre	2
Total		17

Financial Reporting Council 8th Floor 125 London Wall London EC2Y 5AS +44 (0)20 7492 2300

www.frc.org.uk

The Financial Conduct Authority (FCA) has introduced a new Consumer Duty principle (Principle 12) to the FCA Handbook that requires firms to act to deliver good outcomes for retail customers. ↩

File

Name TAS 200 Feedback Statement and Impact Assessment

Publication date 19 September 2024

Type Feedback paper

Format PDF, 335.1 KB

Download original

TAS 200 Feedback Statement and Impact Assessment

File

Is this page useful?