Introduction

Governance remains a key board responsibility, and the role of the head of actuarial function (HAF) continues to be central to the sound operation of insurers. Insurance regulations require the board to perform an annual assessment of the HAF. Boards should aim for this assessment of the HAF to be compliant, meaningful, and efficient.

This paper outlines how boards can structure an effective HAF performance assessment. It includes a practical scorecard and shows how independent actuarial advisors can support the process.

Why this matters

Regulators globally—including in South Africa through Governance and Operational Standards for Insurers (GOI) 2 and GOI 3—place ultimate responsibility on the board to oversee and assess the effectiveness of its control functions, including the HAF. Yet many boards:

• Do not regularly and adequately review the performance of the HAF.
• Lack actuarial expertise or familiarity with regulatory and professional standards.
• Struggle to differentiate between strong professional performance and mere box-ticking.
• Do not pay sufficient attention to the design and process of their assessment.

A well-structured board assessment helps ensure that the HAF remains independent, competent, well resourced, and empowered to appropriately challenge first line decisions. It also reinforces the expectation that the HAF is there to provide robust professional input, especially where material judgements face inherent uncertainty or where actuarial expertise is needed to balance competing technical and commercial considerations.

These assessments complement the more in-depth, robust peer reviews that the HAF should undergo at least every few years by an independent actuarial peer.

The requirements for assessing the HAF are scattered across several regulatory sources, including GOI 2 (particularly 8.2), GOI 3, GOI 6, relevant Financial Soundness Standard for Insurers (FSIs) (e.g., FSI 2 and FSI 3), and professional standards issued by the Actuarial Society of South Africa, such as Actuarial Practice Notes (APNs) 106, 403, 111, and 404. This fragmented nature makes a consolidated review process all the more important.

What good looks like

Boards already have frameworks for assessing external auditors. The same principles that make those assessments effective apply directly to evaluating the HAF.

Effective boards rely on triangulation—combining the HAF's self-assessment, management feedback (especially CFO and CRO), and their own review of HAF reports, recommendations, and contribution to board discussions.

Good assessments use structured evaluation frameworks that systematically cover the full range of required capabilities: technical competence, regulatory compliance, communication effectiveness, and strategic insight.

Finally, boards should recognise that assessment approaches must be proportional to the nature, scale, and complexity of the organisation. The board of a linked insurer should not assess its HAF the same way as a composite, multi-jurisdictional group would. Simple linked insurers may warrant streamlined reviews, while composite/multi-licence/multi-jurisdiction insurers require deeper scrutiny tailored to their specific risk profile.

The emphasis may also differ between life and non-life business. For example, life insurers may focus on the valuation basis, asset–liability management, and long-term guarantees, whereas non-life insurers may place more weight on reinsurance dependency and underwriting volatility.

Larger, more sophisticated insurers may adopt formal, documented evaluation processes, scorecards, benchmarking, and separate interviews with executives and the HAF. In contrast, smaller organisations may rely on more informal boardroom discussion and basic checklists to meet governance standards proportionately.

Our practical scorecard

We’ve developed a simple, 13-point scorecard that balances compliance and insight. Boards can use this annually, either:

• Individually
  Each board member first completes the scorecard individually, then the ratings are discussed and consensus achieved.
  
  or
• Collectively
  As a group discussion led by the actuarial, risk, or audit committee chair. This can be more time efficient and may be more comfortable for board members with less actuarial background. However, it may not draw in the full range of views.

A corporate secretary or governance officer can collate results. The process should encourage open dialogue and consensus on strengths and areas for improvement.

Scoring definitions:

• 1 = Fatal flaw – Fails to meet key responsibilities. Immediate remediation required.
• 2 = Significant gaps – Does not meet expectations in key areas. Must improve to meet expectations within the following 12 months.
• 3 = Good – Meets expectations with some opportunities to improve.
• 4 = Strong – Exceeds expectations—performs well and shows initiative. Some improvements always possible