Elayne Grace

We recognise the Government faces significant fiscal constraints and competing priorities in an uncertain economic environment. Within this context, the Actuaries Institute’s 2026-27 Budget submission highlights five critical areas to strengthen Australia’s long-term economic and social foundations:

1. Increased investment in climate risk adaptation and resilience, recognising the growing fiscal and social exposure from natural disasters and the cost-effectiveness of proactive adaptation measures.
2. Implementation of the National AI Plan and AI Safety Institute to build sovereign capability while managing risks.
3. Reform of private health insurance and broader health systems, including addressing mental health funding fragmentation and NDIS sustainability.
4. Supporting a modernisation of life insurance products to improve consumer outcomes, including a Federal recommitment to a product rationalisation framework and support for stamp duty revisions.
5. Measures to address intergenerational equity, including reforms to housing affordability and the tax system.

The post Climate adaptation, AI safety and health reform critical for Budget: Actuaries Institute  appeared first on AdviserVoice.

Andrew Gale

A new framework published by the Actuaries Institute yesterday could greatly assist millions of Australians to access a broader range of support to improve their financial decision-making and wellbeing.

The Help, Guidance and Advice (HGA) framework would provide a structure under which financial institutions could confidently deliver a wide spectrum of quality and affordable support to their customers.

Experienced non-executive director and chair of the Institute’s HGA Working Group, Andrew Gale, said this would ensure people have access to basic financial facts through to guidance and suggestions on retirement goals, as well as comprehensive personal advice on a range of financial issues.

“Middle Australia stands to benefit most because comprehensive personal advice is out of reach for many, but help, guidance and specific purpose simple advice at pivotal moments would significantly improve their financial wellbeing,” he says.

“Our framework provides the architecture that will enable millions of people of all ages to receive support in different levels of complexity and that fits their individual needs.

“We have a tsunami of retirees coming over the next decade, but many don’t want or need or cannot afford full, comprehensive financial advice. Giving them help and guidance on common issues – such as Age Pension entitlements, and how to think about paying down debt and moving superannuation to a retirement phase account – would allow them to retire with greater confidence.

“Many younger people would also benefit from greater help and guidance – on things like how to consolidate superannuation accounts, better budgeting and the amount and kind of life insurance they should consider.”

The Institute’s paper by the Working Group, Financial Advice Reform and Help, Guidance and Advice, was developed after extensive consultation with superannuation funds, consumer groups, industry and professional bodies.

If implemented, it would significantly expand the capacity of financial advisers, accountants, superannuation funds and digital tools to provide support, including to the estimated 710,000 Australians who are intending to retire in the next five years.

Mr Gale says the HGA framework is needed because existing regulations treat all financial advice as equally complex and fail to distinguish between what is simple guidance compared to comprehensive planning.

“Guidance currently operates in a regulatory grey area between Help and Advice. It provides an important bridge between providing someone with basic financial information and personalised advice. It is widely seen as a scalable and cost-effective mechanism for delivering meaningful support.

“We would like to see greater regulatory and legislative recognition for Guidance so, for example, super funds and their trustees have more certainty in the support they can provide their members.”

“Overall, we believe the emerging Delivering Better Financial Outcomes (DBFO) reforms and legislation represent good reform initiatives. We also believe that further regulatory reform will be required post the DBFO reforms, particularly relating to the acknowledgement and greater utilisation of guidance.”

The Actuaries Institute looks forward to seeing the Delivering Better Financial Outcomes (DBFO) legislation, which is due soon, and critical for increasing access to affordable help, guidance and advice.

Read the paper.

The post Super funds and government urged to adopt new financial advice framework appeared first on AdviserVoice.

The Institute believes many Australian retirees could enjoy higher standards of living if lifetime income products such as annuities played a larger role in the retirement system. When considered among the mix of product solutions for funding retirement, annuities distinctly deliver a guaranteed income stream. They are therefore an effective option for retirees wanting to increase confidence and manage the risk of exhausting their own financial resources during retirement (longevity risk).

Danny Bechara, Chair of the Institute’s Annuity Capital Settings Working Group and Member of the Institute’s Life Insurance Practice Committee, said: “APRA has set a sound pathway for how guaranteed income streams could help more Australians optimise their retirement income while maintaining strong capital settings to protect policyholders’ interests.”

“While current capital settings for annuities are not considered the primary reason for Australia’s annuity market currently being small relative to the size of Australia’s broader retirement income system, greater alignment with comparable regimes and capital standards internationally would support the sector’s capacity to scale with Australia’s ageing population demands,” Mr Bechara said.

In its submission, the Institute recommends:

• moving more towards a principles-based approach by permitting the Appointed Actuary of the insurer to better tailor the approach to the specific annuity portfolio; and
• rewarding insurers that demonstrate sound risk management practices and higher risk controls with commensurate reductions in capital requirements.

The post Actuaries back APRA’s capital initiatives to unlock annuity market potential appeared first on AdviserVoice.

Elayne Grace

The Actuaries Institute welcomes the Federal Budget’s cost-of-living relief and equity measures but believes more investment is still required to supercharge the AI economy and to address climate change.

Please attribute the following comments to Actuaries Institute CEO Elayne Grace:

Cost of living and equity measures

“The Institute welcomes cost of living supports, especially the further increase to Commonwealth Rent Assistance, and reductions to income tax and tertiary education debt.

“As highlighted in the Institute’s report, Not a level playing field, safeguarding income and intergenerational equity is a significant societal issue that is likely to worsen without intentional policy.”

Climate adaptation and transition

“The Institute welcomes the substantial public funding, investment incentives and other forms of support for disaster resilience, climate adaptation and the transition to a clean energy economy.

“But we reiterate a significant uplift in public sector investment is required, as well public-private sector partnerships, to close the adaptation finance gap.

“To manage the uncertainty around climate adaptation and transition, Government should accompany these policy and investment programs with rigorous, highly transparent monitoring frameworks. We need to regularly review the success of adaptation and transition measures and stay agile.”

Artificial Intelligence (AI)

“AI creates immense opportunities to benefit Australian citizens, organisations and society. However, the same technology when implemented poorly or maliciously can cause substantial harms.

“The Institute supports the $40 million funding announced to help Australia prepare for and embrace AI technology. But greater AI investment and clarity around policy is required to supercharge and secure Australia’s digital future.”

Retirement system

“While the Institute welcomes the modest measure to include superannuation in the Government’s Paid Parental Leave scheme announced earlier this year, we call on the Government to consider what changes to superannuation and retirement income tax settings would help put our system on a fairer and more sustainable footing for current and future generations.

“With an ageing society and a large swell of Australians approaching or in retirement, a broad framing is required. A national longevity strategy linking together our health care, aged care, the Age Pension and superannuation systems – and making sure these are all widely accessible – will help more Australians to live with dignity in retirement.”

The post More investment needed to underwrite Australia’s future appeared first on AdviserVoice.

Jessica Chen

The Actuaries Institute strongly supports the Government’s objective to maximise the benefits of genetic testing while ensuring consumers can access affordable life insurance and the life insurance industry is sustainable.

The Institute’s submission, lodged today, to the Government consultation urges key protections to be included as part of any legislative intervention.

Key protections include setting financial limits below which applicants are not required to disclose predictive genetic test results and ensuring the policy incorporates a periodic review mechanism to adapt to the advances in genetics.

Actuary Jessica Chen, Chair of the Institute’s Genetics Working Group, said, “For genetic science to flourish, life insurance regulation must adapt to give consumers confidence that if they take a genetic test they can still access a reasonable amount of life insurance cover.”

“To maintain a level of fairness across all customers, we advise Government to strengthen regulation by legislating a financial limit below which applicants need not disclose genetic test results, and at a level roughly twice that currently determined by industry through self-regulation,” said Ms Chen.

The Institute recommends a financial limit of $1 million for Death cover, $1 million for Total Permanent Disability (TPD) cover, $250,000 for Trauma cover, and $8,000 per month for Disability Income Insurance.

These better reflect contemporary consumer needs.

The Institute notes it will take years for experience under a legislated intervention to fully materialise which is why a cautious approach of higher financial limits is advised.

Any policy changes should be accompanied by education, guidance and support for consumers, genetic counsellors and the wider community.

Read the submission.

The post Consultation on genetic tests in life insurance regulation: Actuaries advise for fair balance appeared first on AdviserVoice.

Mr Musulin is an actuary with more than 40 years’ experience specialising in natural perils, catastrophe risk modelling, public policy development and sustainability, and has assisted industry and government with improving their resilience and understanding of climate change. He is the lead spokesperson for the Australian Actuaries Climate Index^[1] and was the lead author of the Actuaries Institute research paper ‘Property Insurance Affordability: Challenges and Potential Solutions’^[2].

He was the inaugural convener of the Institute’s Climate Change Working Group and has authored several Institute publications, including ‘Home insurance affordability and socio-economic equity in a changing climate’ (2022)^[3], ‘Home insurance affordability update’ (2023)[^[4], ‘Climate Risk Disclosure – financial institutions feel the heat’ (2017)^[5] and ‘Can actuaries really afford to ignore climate change?’ (2014)^[6]. Mr Paddam was also a contributing author to the IPCC AR6 Working Group II Report, has advised the Insurance Council of Australia on evaluating adaptation and resilience measures (2022)^[7] and presented a TEDx talk on climate change and banks and insurers (2022)^[8].

Actuaries Institute President Naomi Edwards said the Institute has long recognised climate change as an important public policy issue, and both Mr Musulin and Mr Paddam have been at the forefront of helping solve the challenge.

“Both Rade and Sharanjit’s contributions have spanned policy development, resilient community building, and disaster recovery funding and have benefited developed and developing nations. They have exemplified how actuaries can use data for good to lead, innovate, and influence change on a global scale and shown the professional commitment actuaries bring to helping solve complex issues.”

The Actuary of the Year award has previously been given to an individual actuary, but the nominations committee agreed that both individuals have been highly influential in the climate change and sustainability space.

Both Principals at Finity Consulting, Mr Musulin and Mr Paddam have volunteered with the Institute for many years and contributed to numerous submissions to government, regulatory bodies, and independent inquiries on climate-related matters. Mr Paddam and Mr Musulin have both received the Institute’s Distinguished Service Award in 2020 and 2022, respectively.

Mr Musulin said: “No individual profession is going to solve the climate challenge alone, but what actuaries add is an understanding of uncertainty and risk. We are trained in thinking about complex systems, and our unique skillset means we have a responsibility to help people understand how these challenges are going to impact their lives.”

Mr Paddam said: “Climate change is a here and now problem, but it is going to manifest over time and affect people in different ways. As actuaries, we look at different groups of people and how they weather those stresses. Our job is to provide long-term thinking to make practical decisions that will build a more sustainable and resilient future for all.”

——–

Notes
[1] https://www.actuaries.asn.au/public-policy-and-media/our-thought-leadership/climate-and-sustainability-thought-leadership
[2] https://actuaries.asn.au/Library/Opinion/2020/GIRESEARCHPAPER.pdf
[3] https://www.actuaries.asn.au/public-policy-and-media/thought-leadership/green-papers/home-insurance-affordability-and-socioeconomic-equity-in-a-changing-climate
[4] https://www.actuaries.asn.au/public-policy-and-media/thought-leadership/green-papers/home-insurance-affordability-update-and-funding-costs-for-floods/
[5] https://www.actuaries.asn.au/public-policy-and-media/thought-leadership/the-dialogue/climate-risk-disclosure-financial-institutions-feel-the-heat
[6] https://www.actuaries.asn.au/Library/Events/GIS/2014/GIS2014EganEtAlClimateChangePres.pdf
[7] https://insurancecouncil.com.au/wp-content/uploads/2022/02/R_ICA_Resilience_Final_220218.pdf
[8] https://www.youtube.com/watch?v=qXHGifdYlQA

The post Australian actuaries recognised for their contributions to climate policy and solutions appeared first on AdviserVoice.

Elayne Grace

The Australian Human Rights Commission (AHRC) and the Actuaries Institute (Institute) said while artificial intelligence (AI) promises faster and smarter decision making, safeguards are needed to prevent potential discrimination.

A Guidance Resource issued today and prepared jointly by the AHRC and the Institute is designed to help actuaries and insurers to comply with the federal anti-discrimination legislation when AI is used in pricing or underwriting insurance products.

“This collaboration demonstrates the complex nature of the issues facing society, and the need for a multi-disciplinary approach, particularly where data and technology are used to shape the provision of fundamental services such as insurance,” says Elayne Grace, Chief Executive of the Actuaries Institute.

“With AI increasingly being used by businesses to make decisions that may affect people’s basic rights, it is essential that we have rigorous protections in place to ensure the integrity of our anti-discrimination laws,” said Lorraine Finlay, Human Rights Commissioner.

“But without adequate safeguards, there is the possibility that algorithmic bias might cause people to suffer discrimination due to characteristics such as age, race, disability, or sex,” Ms Finlay said.

“This Guidance Resource, prepared in conjunction with the Actuaries Institute, provides practical guidance for insurers on complying with the various federal anti-discrimination laws when using AI,” Ms Finlay added.

The guidance was developed after a 2021 report by the AHRC that looked at the human rights impacts of new and emerging technologies, including AI-informed decision making.

One of the recommendations of that report was that a set of guidelines be developed for use by government and non-government organisations on complying with federal antidiscrimination laws when AI has been used in decision making.

The Actuaries Institute, the peak professional body representing the actuarial profession, strongly supported this recommendation and approached the AHRC with an offer to collaborate.

A survey of Actuaries Institute members this year found at least 70% indicated the need for further guidance to comply in the emerging area/wider use of AI.

Ms Grace said there was an urgent need for guidance to assist actuaries in the exercise of their professional duties, noting this Resource should also provide comfort to consumers that their rights were being protected.

“Australia’s anti-discrimination laws are long standing but there is limited guidance and case law available to practitioners,” Ms Grace said. “The complexity arising from differing antidiscrimination legislation in Australia at the federal, State and Territory levels, compounds the challenges facing Actuaries, and may reflect an opportunity for reform.”

Ms Grace said several intersecting megatrends made the lack of guidance more problematic for actuaries. These trends include the explosive growth of ‘big data’, increased use and power of artificial intelligence and algorithmic decision-making and growing and changing consumer awareness and expectations about what is ‘fair’.

“Actuaries seek to responsibly leverage the potential benefits of these digital megatrends for the consumer, society and business. To do so with confidence, however, requires authoritative guidance to make the law clear.”

Actuary Chris Dolman, who led the Institute’s contribution to the preparation of the Guidance Resource as a representative of the Data Science Practice Committee, said it lists some strategies for insurers in relation to data used by AI systems to address algorithmic bias and avoid discriminatory outcomes.

Mr Dolman said this includes rigorous design, regular testing and monitoring of AI systems. It also provides several practical tips for insurers to help minimise the risks of a successful discrimination claim arising from the use of AI for pricing risk.

“In the insurance context, AI may be used in a wide range of different ways, including in relation to pricing, underwriting, marketing, customer service, including claims management, or internal operations,” he said.

“This Guidance Resource focuses on the use of AI in pricing and underwriting decisions, as these decisions are already likely to use AI and by their nature will have a financial impact which may be significant for an individual. Such decisions may also be more likely to give rise to discrimination complaints from customers. However, many of the general principles outlined may also apply to the use of AI-informed decision making in other contexts,” Mr Dolman said.

Read the full paper.

The post Artificial intelligence and anti-discrimination: Major new publication appeared first on AdviserVoice.

Annette King

The Federal Government’s revised 2022-23 Budget, delivered tonight by Treasurer Jim Chalmers, contains fiscally responsible measures which are essential at a time when the nation’s growth trajectory confronts severe domestic and global challenges, the Actuaries Institute said.

The Institute believes the Budget acknowledges myriad challenges including rising prices due to inflation, an extremely large public debt burden and significant funding demands across the domestic economy including the NDIS, aged care, infrastructure, education and healthcare.

“Standout features we commend in this budget are the further strengthening of commitment to address climate change to improve resilience, support for greater access to housing, and setting the stage for the move to well-being budgets in future,” said Annette King, Actuaries Institute President.

“While possible reassessment of tax cuts has been deferred, overall, the Budget has a commitment to fairness and equity that are guiding principles for the Institute when we assess major public policy developments,” Ms King said. “It is especially pleasing to see the broadening of focus beyond economic and fiscal outcomes to also consider outcomes in housing, education, social programs, the environment, and health and disability.”

Amid forecasts of a nearing global recession, the Budget papers show that Australia’s economic performance remains impressive, with growth of 3¼% expected this financial year before slowing to 1½% next year. Unemployment remains low at 4½% through to 2023/24.

Treasurer Chalmers said government debt has risen sharply, with further pressure on the domestic economy due to high domestic and global interest rates. Inflation is expected to peak at 7¾% later this year and then gradually ease to 3½% through 2023-2024.

Referring to longer term structural issues, Actuaries Institute Chief Executive Elayne Grace, said: “The Government will need to tackle economic and social pressures arising from the ageing population, demands on the health, disability and education systems, and concerns about intergenerational wealth distribution including from superannuation and retirement benefits now available from the tax system.”

“The Institute strongly welcomes the Government’s increased statements of commitment to reducing greenhouse gas emissions and investment to help achieve that goal,” Ms Grace said. “In particular, the Institute commends the support for greater take up of electric vehicles, the Powering Australia Plan, and infrastructure around the Climate Change Authority, Safeguard Mechanism and Annual Climate Change Statement to Parliament.

“She said these Budget measures set Australia on a solid path to achieving its global commitments and help reduce the worst risks of a changing climate. “We know that vulnerable Australians are especially exposed to these risks through, for example, the most affordable housing being in the most climate exposed areas,” Ms Grace said.

“The frequency of extreme weather events and natural disasters across the country in recent years highlights the need for collaborative and urgent action to improve resilience.”

The Institute also welcomes the Government’s policies around housing, and in particular to further encourage downsizing through changes to the assets and income tests and super fund investment in affordable housing. Importantly, these measures will help address housing supply issues. The Institute notes because super funds must act in members’ best financial interests, it is a high bar for funds to invest in affordable housing. However, with the continued projected growth of the superannuation sector and economic role it plays as sophisticated investors, it is important to find win-win solutions to address Australia’s most pressing challenges. The Institute looks forward to seeing the policy details as they develop and strongly supports the foreshadowed consultation with industry stakeholders.

The post Labor’s first budget is fiscally responsible amid severe domestic and global challenges appeared first on AdviserVoice.

Elayne Grace

The Actuaries Institute this month celebrates 125 years of guiding government, business and the wider community through insight, independent advice, and rigorous data analysis.

From a small group of like-minded individuals in 1897 to the diverse, successful organisation it is today, the Institute has always focussed on what data can predict about the future.

“Today is the age of the actuary because it is the age of data,” Actuaries Institute President Annette King said. “And our relevance continues to increase as artificial intelligence, machine learning and data science change the world we live in. Actuaries will be there to harness, integrate and question that data; to ensure it is used wisely and well – and for good.”

Elayne Grace, Chief Executive Officer of the Actuaries Institute, said the Institute had served the public interest since it began – from underpinning financial institutions like life insurance companies and friendly societies to the varied services actuaries now offer across insurance, superannuation, and consulting but also in areas of public policy such as climate change, intergenerational equity, data ethics and cyber security.

“When we began, we protected Australians from an uncertain future. Our professionalism, our independence, and our ability to wrest the truth from data helped people and organisations to plan and adapt,” Ms Grace said. “Our essence has not changed, but everything else has and we have continued to evolve with it.”

Australian actuaries work in a wide range of disciplines – insurance, superannuation, banks, data science, government, risk, climate change, energy, health, fintech, finance and investment. They are strategy-focused leaders who work with the exploding world of data and data management techniques to balance stakeholder interests, manage risk, optimise outcomes, price products and solve complex business and social problems.

Increasingly, they drive public policy. “Actuaries’ rigorous skills work in public policy because we combine them with a tradition of independence and an ethical framework that has always been built on a sense of equity,” Ms King said.

The Institute now boasts 5500 members, 50% under 35 years of age and 25% working in Asia, having started with 17 members in 1897. The member base is 34% female and 66 % male, but with increasingly strong female representation at the highest levels.

Annette King is the eighth female president; the first was Catherine Prime, appointed in 1991, and there have been 5 in the past 10 years. Hoa Bui was the seventh female and first Asia-born president when appointed in 2020. The Institute currently has a female CEO (Elayne Grace), with the first CEO being Catherine Beall in 1999.

Professor Alfred Pollard established the first Actuarial Studies degree at Macquarie University in 1968 and now seven Australian and one New Zealand university offer actuarial training accredited by the Institute. More than 700 members volunteer their time on the Institute’s committees, task forces and working groups – to shape the profession and engage with industry, government, academia, and the media.

“Wherever you stand in this profession, you stand on the shoulders of giants,” said Ms King, “the presidents, councillors, volunteers, and countless others who led a profession that continues to help shape Australia. We are who we are today because of their work and their traditions of excellence, integrity, curiosity, innovation – and courage.”

The Institute will be hosting the International Congress of Actuaries, a global meeting of the brightest actuarial minds, in Sydney next May/June. The five-day ICA2023 will bring together 500 speakers from more than 50 countries to discuss data analytics and AI, climate change, cyber risk, the rise and rise of Asian financial services, the impact of IFRS 17, the age of the consumer and many other topics.

The post Actuaries Institute celebrates 125 years, focus remains on assessing future trends appeared first on AdviserVoice.

Annette King

The Actuaries Institute has issued a detailed report urging government, businesses, and insurers to collaboratively address significant insurance gaps in protection against cyber attacks that have already cost the Australian economy billions of dollars.

In its Green Paper, Cyber Risk and the Role of Insurance, the Actuaries Institute analysed the vulnerability of organisations, from SMEs to large corporates, and the role of cyber insurance in setting best practice standards for cyber resilience as part of a robust risk management framework.

“For cyber insurance to influence best practice in a major way, there are several gaps that need to be addressed by government, business and insurers,” said the report’s lead author Win-Li Toh, a principal at analytics and actuarial consultancy Taylor Fry.

“Adding to these challenges are escalating cyber losses that have reduced insurer appetite for this class, significant shortage of capacity to provide the levels of protection needed across the market, and premium hikes in the double/triple digits over the past two years,” she said.

Actuaries Institute President Annette King said the Green Paper identifies pathways for key stakeholders in the Australian economy to prevent further significant damage from cyber attacks.

“Sitting back and doing nothing shouldn’t be an option when cyber attacks cost the Australian economy $33 billion last financial year,” Ms King says, noting the Green Paper’s recommendations including scenario planning and a joint approach towards training and skills development.

“The issues may be complex, yet it is clear that protection is vital for economic resilience given the headline-making losses we too often read about here and around the world.”

In its assessment of economic losses, the Green Paper notes that only 20 per cent of small to medium enterprises (SMEs) have cyber insurance compared with 35 per cent to 70 per cent for larger organisations. In 2021, 75 per cent of ransomware attacks were on companies with fewer than 1,000 people.

In addressing these issues, Ms Toh said: “importantly, good cyber hygiene and security – not insurance – are the first line of defence.” She noted government entities are a long way off baseline standards of cyber security and many businesses are also behind in their resilience against rapidly shifting risks.

“A vibrant cyber insurance market will do more than provide financial recompense for risks that break through the first line of defence. It can also strengthen that first line, by offering clear signals and incentives to business – in the form of eligibility, pricing and sharing of insights – on best-practice standards,” she said.

Key gaps in achieving this best-practice approach include:

• a severe shortage of qualified cyber security personnel
• limited understanding of the role of cyber insurance among Boards
• limited education on cyber risks among SMEs
• achieving sufficient capacity and profitability in the market
• managing accumulation risks.

On a global basis, Ms Toh said cyber risk is growing at unprecedented levels, with ransomware attacks more than tripling in two years.

“The accessibility of Ransomware as a Service (malware products), combined with the development of crypto currencies enabling untraceable payments has super-charged the growth of cyber attacks.

“This has brought more organisations of different types and sizes under the widening net of cyber criminals to the point where it is now clear that no firm is immune. This is why a vibrant and resilient risk management framework and infrastructure for cyber risk is crucial, of which insurance is one part,” she said.

The Green Paper also notes that with no geographical boundaries, a computer virus can spread quickly around the world and results in many companies making a claim under their cyber insurance policy. “This is the accumulation risk challenge for an insurer – the potential for a single event to trigger losses across business lines and global borders,” said Ms Toh.

Another issue is the difficulty in defining Acts of cyber War (or terrorism) that are excluded from insurance policies, with Lloyd’s recently giving directions to underwriters towards excluding liability for losses arising from any state-backed cyber attack.

Ms Toh said, “finding the right balance between guidance, education, mitigation, cover and regulation, will be central in creating a robust risk management framework for cyber risk and cyber insurance.”

Read the report.

The post Collaboration needed to prevent multi-billion dollar losses from cyber attacks appeared first on AdviserVoice.