One of the pervasive shifts in financial services in the last 30 years has been the subtle transfer of risk from institutions (those with resources and capabilities) to individuals (those who do not). For example, the rise of investment-linked policies and defined contribution schemes to replace and with-profits and defined benefits.
The evolution of Great Risk Transfer is complex and has to do with the rise of market capitalism, financialization, and financial economics.
The IFoA and the actuarial profession, along with regulators and society, have allowed this to happen. It is now time to re-examine what is possible in reversing or changing this trend.
Last week, the Institute and Faculty of Actuaries published the Great Risk Transfer report which addresses this in a practical and focused way
The inspiration for this report originated from John Taylor’s presidential address in June 2019 in Edinburgh. He said,
“…….. ordinary people who were once protected from investment volatility thanks to with-profits and defined benefit schemes no longer have that protection. Pensioners who once had a guaranteed income for life now worry about running out of money. What kind of progress is this?
If serving the public interest means anything, it means we have an obligation to help. We are masters at managing actuarial risks. We need to find ways of helping individuals. “
Read the report and take action from where you are. We can create products that customers want and need. We can create the institutions to provide these products.
The Great Risk Transfer shines light on all these possibilities.
The time for courage and action is now.