Chennai: The concept of peer review is gaining acceptance among professionals. In the insurance field, the Actuarial Society of India (ASI) has issued a guidance note on actuarial peer review in life and reinsurance companies.

According to the note, ASI recommends that internal or external peer review should be a standard element of professional practice for all annual valuations carried out by an appointed actuary of a life or reinsurer.

The object of peer review/actuarial audit is to see whether the appointed actuary has performed his work in conformity with the professional conduct standards, guidance notes and regulatory/statutory requirements.

According to ASI, the actuarial audit is a validation process after the appointed actuary has signed the relevant documents. The audit could be done by an external/internal actuary or by a team of actuaries.

The ASI welcomes the application of peer review in other areas if an appointed actuary wishes so. Similarly, it is for the appointed actuary to determine whether internal or external peer review is appropriate.

ASI says the appointed actuary should have the freedom to choose the internal peer reviewer who is a professionally qualified actuary with sufficient experience and independence. The peer reviewer can delegate some part of his work but the ultimate responsibility lies with him.

According to ASI, the appointed actuary should state in his report whether the work has been subject of peer review.

If an insurer does not have a capable actuary to do the peer review work then the appointed actuary could arrange for external peer review. Differences between the peer reviewer and the appointed actuary should be resolved before the latter makes his final report. In case of a serious difference, the peer reviewer should state that in his report.

ASI says the peer review report need not be submitted to the Insurance Regulatory and Development Authority (IRDA). In exceptional circumstances, IRDA can summon the peer review report.