A greater involvement of dedicated actuarial resources in the early stages of Government’s policymaking process could reduce unintended consequences in the introduction of new regulations or base legislation.
Addressing more than 1 000 actuaries gathered in Cape Town for the 2012 Actuarial Society of South Africa Convention, Themba Gamedze, the Society’s President, called on actuaries to consider a career in the public sector.
According to Gamedze once created a Government Actuarial Department could grow into a dynamic facility of national significance that would become increasingly accessible to all those areas of regulation and policymaking that may require it.
He said it was important to differentiate between the role of actuaries providing external consultancy services to Government departments and actuaries who are Government employees providing consistent and contextualised internal advice to those departments.
“We are not dealing at all here with a question of whether we have one or the other. There is definitely plenty of room for both and in an ideal world I see any input made by external actuarial consultants being commissioned, assessed and implemented by actuaries employed fully by the State.”
Gamedze pointed out that currently the Financial Services Board (FSB) and the Department of Health were the main employers of actuaries.
“What is missing completely though in the context of overall financial regulation is the deployment of actuaries in respect of the regulation of banks at the Reserve Bank. There is a growing consensus in the profession that this should be reconsidered.”
He added that actuarial services would become increasingly relevant at the Reserve Bank as Government implemented the new Twin Peaks Regulatory regime that separates the supervision of market conduct from market stability.
“I have no doubt at all that the training we undergo places our profession in a very good position to support the delivery of appropriate regulatory oversight over both of these peaks that underpin the maintenance of a sound financial sector.”
He also noted surprisingly limited actuarial involvement in the high number of significant public sector managed financial services such as the Government Employees Pension Fund (GEPF), the Public Investment Corporation (PIC), SASRIA (a specialised political risks reinsurance underwriter), the Road Accident Fund (RAF), the Government Employees Medical Scheme (GEMS), the Unemployment Insurance Fund (UIF) and Post Bank.
“A deeper involvement of actuaries in the operations of these entities would contribute greatly towards their strengthening and the extent to which they would be able to achieve their noble aims,” said Gamedze.
He pointed out that the involvement of actuaries in the area of scenario modelling could generate a lot of value for overall policymaking and planning processes within Government departments.
“While our modelling skills are in principle capable of fairly wide application, I am thinking more specifically about the challenges involved in mega-projects such as understanding the financial consequences of competing options in the detailed design of National Health Insurance (NHI) or the different choices that could be considered in the context of Retirement and Social Security Reform,” said Gamedze.
“It is therefore with this hope of seeing the actuarial profession more intimately involved in the critical work of supporting the development of specific areas of national policy that I make these comments.”
Calling on actuaries to get more involved in public/private partnership initiatives, Gamedze said: “I think that in terms of partnering effectively with government we are barely scratching the surface of our ability to address the structural challenges we face as a country and identifying the opportunities implied by those challenges.”