SAM

SAM

SAM is a bind, you think; SAM is resource-intensive; SAM is really a bit of a nuisance. What does the FSB hope to achieve through SAM? Five thoughts. Let’s count down.

#5. Better information. The FSB needs to manage risks, at company and industry level.

#4. Global recognition. South Africa, part of BRICS and the G20, needs other regulators to describe its standards as sufficiently up to scratch.

#3. Quality financial reporting. Since the FSB puts more energy into high-risk firms, the quality of the reporting goes a long way to setting those ‘risk grades’.

#2. Better risk management. Insurer the best way to help your regulator sleep better at night is to show to him that you’re the one lying awake, and that you understand your risks pretty well yourself.

#1. Deep attention. Most importantly, the FSB wants to see deep and uncompromising attention on the heart of the firm, and understands that nobody can do it better than the leaders of the firm itself.

SAM is built on the evidence that most failures come not from outside events but from poor management decisions and actions. It’s about how insurers think about their risks and how they respond to this.

April 4, 2014 / Blog, Rob Rusconi

About the Author

Actuary, researcher and consultant, works in insurance, pensions and social security.

Comments

No comment yet.

Leave a Reply

SAM

“Pension savers have paid too much, for too long. It is time to put the saver first.” The UK government has capped the fees that may be charged to members of so-called “default” retirement funds. That country is introducing a system of auto-enrolment under which employees are required to save for their retirement a total of 7 percent of their salary, to which the government adds a further 1 percent. Members may opt out of this automatic enrolment, but early signs are that many of them are not doing so. Default retirement funds are the entities to which these contributions are to be directed. They need to meet a set of qualifying conditions. In return what amounts to a form of mandate on UK employees, the government has tightened the terms under which these funds may offer services to their members. And that’s where the charge cap comes in. It has been set at an annual limit of 0.75% of assets. This is tight, lower for example than any of South Africa’s actively managed unit trust funds and well below the corresponding charges under an RA in this country. “Over the next 10 years, the new charge cap will transfer £200m from the profits of the pension industry to the pockets of savers.” That’s a lot of money, surely food for thought for our policymakers.