External actuarial function holder: sharp, strategic, and committed

Could you tell us about your background?

“After studying Econometrics in Groningen, I started my career at Univé. I spent 14 years there working in the field of reinsurance. I began as an analyst, then became a team manager within the department, and eventually financial and risk manager of Univé Her, the reinsurance entity that had become an independent company. You can imagine I’ve seen all sides of reinsurance. What still fascinates me is how, through global risk distribution linked to reinsurance, a major hurricane in the US can also have a financial impact on an insurer in the Netherlands.

After my time at Univé, I spent five years at DNB as a supervisor for medium-sized insurers, where I gained valuable insights into the challenges and dynamics faced by different types of insurance companies. In my role, I conducted supervisory meetings with insurers and was responsible for the so-called “baseline supervision”. This involves assessing, based on specific themes, whether an insurer complies with all Solvency II  regulations, and identifying and discussing any shortcomings with the insurer. In more complex cases or for specialist topics, you can fall back on the expertise of colleagues at DNB, for instance, when it comes to assessing IT risks. What I missed in that role, however, was the opportunity to advise insurers directly,  to truly help them move forward with practical solutions. I found that opportunity at Arcturus, where I now use my knowledge, understanding of supervision, and practical mindset to support insurers more proactively.”

You’re a Partner at Arcturus. What is your role, and how do you work together as a team?

LTR: Patrick Dannenburg, Melchior Mattens, Michiel van Dellen, Rachel Bonsel

You work as an external actuarial function holder, what does that role involve?

“I currently hold this position for five insurers, three on a structural basis and two on a temporary basis. In the actuarial function or ‘second line actuary’, my responsibilities include reviewing, advising, and reporting. I assess whether the technical provisions have been calculated correctly, advise on the underwriting and pricing policies, and evaluate the reinsurance arrangements. I report my findings to the executive board and the supervisory board of the insurer. Under Solvency II, the actuarial function plays a key role, both in terms of technical content and governance. It’s a role that suits me perfectly.”

What makes Arcturus such a popular provider of second-line actuarial services for non-life insurers?

What are the benefits of outsourcing the actuarial function (AF)?

“In my view, these are the key advantages:

• Independence and objectivity: An external actuarial function holder can operate with greater distance, enhancing independence and reducing the risk of ‘blind spots’.
• Tailored service: The engagement is flexible and can be easily scaled up or down as needed.
• Access to specialised knowledge: Insurers benefit from up-to-date and strong technical expertise in areas such as Solvency II, risk management, and current market developments. The external actuarial function holder also brings best practices and valuable comparisons gained through experience with other organisations.
• Cost efficiency: Insurers only pay for the time and expertise they require, which is more cost-effective than employing a full-time senior actuary.
• Continuity assurance: In case of absence or turnover, there is replacement and continuity of this key role because experienced AF colleagues can be deployed from Arcturus.

I’ve noticed that our clients genuinely appreciate these benefits. Continuity, of course, is particularly important. Soon, a colleague will be going on maternity leave, and I will be able to step in immediately for several of her clients, with no loss of time or knowledge.”

The actuarial function provides an opinion on the outgoing reinsurance portfolio, can you explain what that involves?

“That’s correct. The AF issues an annual opinion on the quality of the reinsurance portfolio. We assess whether the portfolio meets the requirements of Solvency II, and more importantly, whether it effectively covers the insurer’s risks. For example, we look at whether the reinsured limits are adequate, whether sufficient reinstatements are included so that contracts continue to provide coverage in extreme events, and how creditworthy the involved reinsurers are. We also examine the potential impact on the balance sheet and the Solvency Capital Requirement (SCR). If an insurer relies too heavily on a single counterparty or lacks diversification, we raise this as a concern. Our opinion is provided in writing and discussed with the board.”

What are the key trends in the reinsurance market? And how do you help insurers address them?

“If I had to highlight a few that are currently most urgent, they would be: high inflation and its impact on motor (injury) claims, the expected increase in climate-related risks (both in terms of damage and reputation), and the threats of war alongside broader geopolitical instability. We assist our clients by thinking through potential extreme scenarios with them and assessing how their reinsurance arrangements hold up under such conditions.”

1. Inflation and claim severity

“We experience a significant rise in claim costs, driven by inflation, higher labour costs, and often more expensive parts required to repair insured assets. Many reinsurers are therefore putting pressure on insurers to increase their own retention. Not every insurer wants or can carry that risk. We help clients model the impact: how much additional risk do they take on with higher retention, and are their customer premiums still adequately cost-covering? This is particularly relevant for motor insurance, where both claim frequency and average claim amounts have increased recently.”

2. Climate risks: damage and reputation

“Climate change not only causes more frequent and severe damage,  such as hailstorms and localized flooding, but also raises reputational issues. For example, if a reinsurer covers polluting diesel vehicles, they must partly include those emissions in their own CSRD reporting. This could mean they become more cautious in this area in the future. ESG considerations are increasingly influencing portfolio decisions of both insurers and reinsurers.”

3. War risks and capital market instability

“Many reinsurers invest large portions of their reserves. Due to war threats and geopolitical instability, returns are under pressure and the risk of market volatility has increased. Insurers need to take this into account: do these increased stock market risks still fit within their own risk appetite, and what does this mean for reinsurance pricing? We help insurers weigh these factors in their reinsurance and investment strategies. For instance, an insurer might consider reducing investments in US equities to lower their foreign exchange exposure to the dollar, aligning it better with their risk tolerance.”

Under Solvency II, ‘Events Not in Data’ (ENIDs) are included in the calculations. How do you help clients identify and model these non-historical but realistic risks?

“We primarily support clients with ENIDs through scenario modelling and knowledge sessions. Together, we explore which external risks, such as threats of war or climate extremes, fall outside their historical data but could still impact future profitability, balance sheet risks, the ORSA, or required reinsurance coverage.

When these risks are material, we model scenarios and quantify their potential effects on provisions and solvency. This makes the risks tangible, even for board members. Additionally, we share market insights through knowledge sessions to raise awareness and learn together with clients about emerging risks and new understandings.”

You’re an avid marathon runner. Do you see parallels with your work?