INAUGURATION CEREMONY OF CHINA ASSOCIATION OF ACTUARIES AND RISK MANAGEMENT INTERNATIONAL SEMINAR Opening remarks from Yves Guérard, Secretary General, International Actuarial Association Chairman Wu Dingfu, President Wei Yingning Honoured guests and dear colleagues, I feel privileged as Secretary General of the International Actuarial Association to participate in this inauguration ceremony of the China Association of Actuaries and welcome the new Association to the actuarial world. But more importantly we look forward to welcoming the CAA as a member of the IAA to join the 58 full member associations comprising 45 000 fully qualified actuaries distributed over 100 countries all around the world, in addition to 23 associate members and 3 institutional members. The IAA will provide all the necessary support to assist the CAA in the process of completing the membership requirements. A target is always stimulating, thus I will suggest that working together diligently the CAA could become a full member at the IAA Council meeting that will take place in Cyprus in early November 2008, six months from now. However the CAA could exercise the option of joining earlier as an associate member, a simpler process that could even be put on the 1
agenda of the next Council meeting to be held in Quebec City, Canada, on June 14 th 2008 about a month from now. This is indeed a great day for both your Association and for the IAA and its member associations which over many years have accompanied and supported the development of the actuarial profession in China. The IAA participated in the Actuarial Annual Conferences in 2007, 2006, 2004 and 2003 and co-sponsored very successful International Actuarial Forums in Xiamen in 2002 and in Xian in 2004. It has also been a co-sponsor of two Non-Life Seminars with a third being planned for June 2008. I have been a frequent visitor to China and personally represented the Association in Chengdu for the 4 th Conference and more recently for the 8 th Conference in Hangzhou; from both of them I keep very nice souvenirs of stimulating meetings and warm hospitality. The CAA would be joining an international association born in 1895 (1 year before the modern Olympics) and which will celebrate next month 10 years of growth since its restructure as an association of local professional associations. What makes the IAA unique is that the local associations are not subsidiaries of the International Actuarial Association, but are self-governing independent professional organisations that sit and vote at the Council which governs the IAA. Thus, it is the member associations that collectively own the IAA, a non-profit-making and non-political Non- Governmental Organisation that is on the Roster of the Economic and Social Council of the United Nations (UN) and on the Special List of the International Labour Organization (ILO). There are 3 2
Institutional Members of the IAA: the International Association of Insurance Supervisors (IAIS), the International Social Security Association (ISSA), and the International Accounting Standards Board (IASB). Last year the IAA started a major review of its strategic planning. A new mission statement has been adopted by Council which reads: The mission of the IAA, as the worldwide organization of actuarial associations, is: -to promote professionalism, develop education standards and encourage research, with the active involvement of its Member Associations and Sections, in order to address changing needs; and -to represent the actuarial profession and promote its role, reputation and recognition in the international domain. The need for actuarial services varies among developing, emerging, transitional and developed economies. One size does not fit all! The population of the world is growing, aging and migrating. There are significant economic, demographic and environmental factors at work. Nonetheless, all actuaries operate in a broad framework of global economic and social development and take seriously their responsibility to the public. They recognize that their unique blend of skills can enormously benefit the well-being of the whole of society when applied to serve the public interest. 3
Part of it is financial protecting the solvency and sustainability of both private sector and state entities through financial soundness and reserve adequacy criteria. Part of it is social protection developing and maintaining systems of old-age income support and health care for people of all ages. Part of it is risk management assessing risk and identifying ways of managing risk. Banking and other financial sectors are converging and new products and business innovations are taking place. In many countries, the financial sustainability of key programs is at stake due to demographic and economic changes. Actuaries possess significant expertise in analyzing and modelling the financial implications of risks. They also play a role in regulation and supervision and further contribute in enhancing public policy decisions by making sure their voice is heard whenever relevant. It is through its Committees and Sections that the IAA helps enhance the efficiency of its member associations in developing and optimizing the use of the pool of scientific knowledge of the global actuarial profession. By leveraging the combined capacity of its member associations, it can more efficiently serve the public interest and facilitate the expansion of the intellectual capital of the actuarial profession and thus the scope, quality, and availability of actuarial services. The full member associations appoint the representatives who are voting members of the 15 or so Committees that serve the profession, define the syllabus and education requirements, propose standards and prepare briefs and public statements for international regulatory bodies like the IAIS, the IASB, and the OECD. As you join 4
the IAA your Association will be called upon to participate and contribute to the global effort. Our Statutes include a Principle of Subsidiarity whereby the IAA focuses on strategies and programs which require international cooperation or direction. The IAA could not represent the global profession and provide the level of services that is necessary at a cost per capita as low as C$ 14 per year if a large part of the work was not done at the level of the member associations. Maybe because of their small numbers, the actuaries have been motivated to efficiently pool their resources and are truly organized on a global basis in a way that optimizes the synergy within the actuarial profession. I would like to mention just a few ongoing activities that the IAA is coordinating for the benefit of its members: In 2004 the IAA published A Global Framework for Insurer Solvency Assessment. A revised updated edition incorporating feed back from users is being prepared and should be published in 2009. In 2006, the IAA started a major initiative to develop an International Actuarial Education Program (IAEP). This program is intended to assist member associations in providing high-level actuarial education and to open new opportunities for students around the world by providing access to that education. Risk management has widened to Enterprise Risk Management, a new concept of examining the various risks of entities as a whole. The IAA s ERM strategy aims to further and establish 5
the position of the actuarial profession as the pre-eminent profession in the field of enterprise risk management. Work is ongoing on the concept of an internationally recognized qualification as risk specialist. in 2008 we will publish an Education Monograph on the Topic of Stochastic Processes and Modelling in Financial Reporting and Capital Assessment IFRS is becoming the basis of GAAP in most major jurisdictions outside North America and implies principlebased standards, as opposed to rules-based standards (e.g. US GAAP). The IAA has published in 2005 and 2007 nine Insurance Practice Standards to guide its members in implementing convergence. The IAA establishes, maintains and promotes high standards of education and professionalism for actuaries worldwide, but it is the member associations that conduct the examinations or accredit the exams or university courses that are the basis for the professional qualification. They also manage the Continuing Professional Development process and adopt and enforce the standards, codes of conduct and discipline requirements. Actuaries cannot as individuals directly become members of the International Actuarial Association. Thus within the global profession a qualified actuary is a person recognized as a fully qualified member of a local actuarial association that has complied with the requirements for full membership in the IAA comprising education, code of professional conduct, formal discipline process, an acceptable process for the adoption of standards of practice and soon Continuing Professional Development 6
criteria. Virtually all fully qualified actuaries belong to the IAA through its member associations and are thus subject to enforceable professional standards. In relation to many areas of actuarial practice, the development of one standard which covers the possible (legal) implications in all countries would not be possible to achieve in practice and the same is true for the enforcement of a code of ethics and for country specific qualifications. The IAA could not reliably deliver high quality services world wide without the support of strong local associations in each jurisdiction to provide an adequate professional environment for practicing actuaries. Hence, autonomy and authority also entail responsibilities for the local or national associations. The rapid development of financial markets in China will present its own variety of challenges that your actuaries individually could not tackle without the support of a strong local association. The future of the profession in China is in your hands but you have access to the collective resources of the global actuarial profession. I am confident that you can respond creatively to these challenges and that together we will succeed in developing the appropriate synergy to support your progress. On behalf of the President of the IAA, David Hartman and my colleagues from the Council, I wish a long and fruitful life to the China Association of Actuaries. 7