15 February 2026
The
year 2025 was the sixth consecutive year of insurance companies submitting
actuarial reports under the Actuarial Work Rules (AWR) issued in March 2020.
The primary objective of these 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
pricing of risks, at least annually and more frequently if business environment
so demands, and report to the Senior Management, Board of Directors and the
Insurance Authority (IA) the outcome of those exercises. The pricing exercises are
required to be carried out for Health, Motor and Protection & Savings
insurance at a minimum; the IA (or the Company management) may also require the
Appointed Actuary to carry out a similar exercise for other lines of business.
Depending
upon the appropriateness of the assumptions used, range of rating factors
considered, allowance made for any regulatory changes, and credibility assigned
to a client’s own claim experience, the competitive position of an insurance
company is likely to be significantly dependent on the Appointed Actuary’s
recommended technical prices.
The
regulations also give discretion to a Company management to deviate from the
technical prices recommended by its Appointed Actuary, provided there are
adequate controls in place in the form of i) an underwriting authority matrix
that specifies the deviation limit by role, ii) a requirement for the
underwriter to document justification for deviation from the technical rate,
and iii) quarterly reporting by the Appointed Actuary to the Board of Directors
on the expected financial impact of deviating from the technical prices.
This
document encompasses the IA’s observations from its review of the
following actuarial pricing reports:
·
Health Actuarial Pricing Report (pages 3-22)
·
Motor Actuarial Pricing Report (pages 23-41)
·
Protection and Savings Actuarial Pricing Report (pages 42-56)
A
number of important observations emerged from our review. We are sharing these
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 IA expectations 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 regarding the actuarial pricing exercises
going forward.