The Institute of Actuaries of Australia’s 17th General Insurance Seminar has been told that the role of the actuary has never been more important to the future success of the specialist insurance market.

Aon Benfield’s David Maneval addressed the event on the “critical role of actuaries in managing emerging risks for the re/insurance industry”.

He said the profession’s role will evolve to deliver more robust Enterprise Risk Management (ERM) frameworks and will start designing potential scenarios rather than solely performing retrospective statistical analysis, given the events of recent times.

He added: “The last decade has witnessed several large scale emerging risks such as the 9/11 terrorism attack, a global financial crisis and an eruption of the Eyjafjallajökull volcano in Iceland. Asbestos liability is a key example of the impact of claims on the insurance industry, which had not anticipated such costs at the point of underwriting and led to a number of insurer insolvencies.

“On the horizon, new risks are emerging in the shape of regulatory shifts, climate change, inflation, cyber risk, nanotechnologies and pandemics.”

Mr Maneval, Head of Actuarial & ERM in Asia Pacific for Aon BenfieldAnalytics, added: “Managing emerging risks is an opportunity for actuaries to add significant value to the risk management function. Actuaries are critical to embedding the ERM framework and the profession is becoming increasingly experienced in correlation with demand. With risk also comes opportunities, hence the importance of being proactive in building resilience to change and being prepared for emerging risks.”

He explained actuaries “are extremely well placed to develop response strategies using their ERM skills to apply an effective framework”.

He said the role of actuaries is likely to evolve as they were charged with designing prospective scenarios, rather than solely performing statistical analysis.

“In the absence of historical data, expert opinions need to be integrated in the design of specific scenarios; the actuarial role is becoming broader,” he added.

In addition, rating agencies and increasingly regulators are less likely to provide favourable opinions when re/insurers fail to demonstrate emerging risk management processes.