10 December 2025
The year 2024 was the fifth consecutive year of insurance companies
submitting actuarial reports under the Actuarial Work Rules (AWR) issued in March
2020. The primary objective of those Rules is to enhance the role and
responsibilities of actuaries in the insurance sector in order to facilitate
informed decision-making by management and to provide greater technical support
to the business as the market sophistication continues to grow in the Kingdom.
Under the above Rules, an
Appointed Actuary is obligated to carry out technical reserving using best
estimates on a quarterly basis, and report to the Senior Management, Board of
Directors and the Insurance Authority (IA) the outcome of those exercises. The
technical reserving exercise is required to be supported by an experience study,
performed at least annually, aimed at deriving certain key assumptions used in
technical reserving. Moreover, in order to support the growing standards of
actuarial practice in the kingdom, the IA conducts an annual survey of
actuarial resources, level of support granted to actuarial candidates pursuing
exams to attain Fellowship qualification, and extent of involvement of in-house
actuarial functions in producing statutory reports on the topics of Technical Provisions,
Experience Studies, and other actuarial areas.
This document encompasses IA’s observations
from its review of the following actuarial reports and survey:
1.
Actuarial Reserving at Year-End 2024 Report (pg. 2-35)
·
1.1 Role of External Auditors (pg. 2-5)
·
1.2 – 1.5 Trends in Health, Motor, P&C, and P&S insurance (pg. 5-26)
·
1.6 – 1.8 Loss Component, Risk Adjustment and Discounting (pg. 26-32)
·
1.9 Adequacy of Actuarial Reserves (pg. 32-34)
·
1.10 Areas for improvement (pg. 34-35)
·
1.11 Actuarial Function Contribution (pg. 35-36)
2.
Experience Studies Report 2024 (pg. 37-47)
3.
Actuarial Resources Survey 2024 (pg. 48-54)
A number of important
observations emerged from our review. We are sharing those observations with
the Company’s management, together with our expectations in respect of those
observations, in anticipation that management will consider each of those
observations and recommendations diligently, internal discussions will be held
at the Board of Directors’ level and with all relevant functions, and
appropriate actions will be taken by management.
Furthermore, similar to last
year, a separate brief document
accompanies this letter that summarizes the IA’s expectations on each topic mentioned
in this letter.