Professional Judgment and its Relevance for Solvency II and IRRD

The amended Solvency II and the IRRD (Insurance Recovery and Resolution Directive) will become applicable as of 30 January 2027. They will extend the scope of actuarial work considerably.
While basic actuarial tasks remain unchanged, additional requirements will need the involvement of actuaries.  The choice of appropriate scenarios for the medium- and long-term analysis of e.g. climate and sustainability risks and macroprudential concerns will constitute a new challenge. The determination of assumptions and methodologies used to model development over time horizons of more than 15 years requires a deep knowledge of undertaking’s business and strategy. Adhering to established professional standards can improve quality and increase the reliability of the outcomes.

Professional judgment by actuaries has been addressed in Actuarial Notes published by the Actuarial Association of Europe (AAE) in 2022 and the International Actuarial Association (IAA) in 2025.  Both documents aim to clarify the difference between expert judgment and the professional judgment exercised by actuaries.

Expert judgment is based on specific training, knowledge, experience and expertise. In addition, professional judgment has to take into account standards of professionalism, including the profession’s Code of Conduct. An actuary is thus bound by standards set by the actuarial profession which encompass also ethical principles.

Besides presenting an overview of these Actuarial Notes, this web session aims to illustrate where professional judgment is required under Solvency II and the IRRD and how it can substantiate management decisions.

• Professional judgment – overview of the Actuarial Notes
• “Current” requirements related to the calculation of technical provisions and the SCR
• Choice and analysis of appropriate scenarios