SMF20 and SMF23: The Insurance Senior Manager Functions Explained

The Senior Managers and Certification Regime applies to insurers as well as to FCA-regulated firms, but insurers have their own set of Senior Management Functions reflecting how the sector is governed. Two of the most specialist are SMF20, the Chief Actuary, and SMF23, the Chief Underwriting Officer. Both are technically demanding, credential-heavy appointments, and both carry the personal regulatory accountability that defines a Senior Management Function. This article explains what each function is, when a PRA-regulated insurer needs it, and how to approach the search.

Exec Capital runs SMF20 Chief Actuary and SMF23 Chief Underwriting Officer searches for insurers, reinsurers and Lloyd’s managing agents as retained, research-led mandates led personally by the founder.

The Insurance SM&CR in Context

Insurers are dual-regulated: the PRA is responsible for their prudential soundness and the FCA for their conduct. The insurance SM&CR therefore includes PRA-designated functions that have no equivalent at a solo-regulated investment firm — the Chief Actuary and the Chief Underwriting Officer among them. These functions reflect the specific risks an insurer runs: the adequacy of its technical provisions and capital, and the quality of the underwriting on which its solvency ultimately rests.

Like every Senior Management Function, the insurance SMFs are held by approved persons who must be assessed as fit and proper, hold a Statement of Responsibilities, and are subject to the Conduct Rules and the Duty of Responsibility. For how the insurance functions sit within the wider SM&CR picture, SMF Capital’s complete guide to the SMF designations maps the governing, required and specialist functions across both FCA and PRA-regulated firms.

SMF20: The Chief Actuary

SMF20 is the Chief Actuary function. It is a PRA-designated Senior Management Function required at Solvency II firms and large non-directive insurers, held by the individual with overall responsibility for the firm’s actuarial function. The Chief Actuary owns the calculation of technical provisions, expresses an opinion on the firm’s underwriting policy and reinsurance arrangements, and contributes to the effective implementation of the risk management system. It is one of the most technically demanding appointments an insurer makes.

A related but distinct function, SMF20a, is the With-Profits Actuary, required at firms writing with-profits business. The Chief Actuary is almost always a Fellow of the Institute and Faculty of Actuaries with extensive post-qualification experience in the relevant line of business — general insurance, life, reinsurance or the firm’s specific market. The pool is defined and finite, and the strongest candidates are usually in post, which makes a research-led, confidential approach essential.

The Chief Actuary works closely with the firm’s risk function, and SMF20 appointments frequently sit alongside a Chief Risk Officer (SMF4) search given how closely the actuarial and risk functions interlock at a regulated insurer. SMF Capital’s guide to the SMF20 Chief Actuary function covers the function in depth.

SMF23: The Chief Underwriting Officer

SMF23 is the Chief Underwriting Officer function — a PRA Senior Management Function held by the individual with responsibility for the firm’s underwriting strategy and the management of its underwriting risk. The Chief Underwriting Officer sets and owns the firm’s underwriting approach: risk selection, pricing discipline, portfolio management and the appetite within which the firm writes business. Underwriting quality is the foundation of an insurer’s solvency, which is why the function carries Senior Management Function accountability.

A point of frequent confusion is worth clearing up: SMF23 is the Chief Underwriting Officer. There is a separate function, SMF23a, which is the Underwriting Risk Oversight function specific to Lloyd’s managing agents. The two are not interchangeable — a firm appointing a Chief Underwriting Officer is appointing an SMF23 holder, while SMF23a is the distinct Lloyd’s-market oversight function. Getting the designation right matters for the Statement of Responsibilities and the regulatory application.

Chief Underwriting Officer candidates combine deep underwriting expertise in the relevant class of business with the leadership standing to own the function and the regulatory credibility to hold a Senior Management Function. As with the Chief Actuary, the pool is specialist and defined, and the strongest candidates are reached directly rather than through advertising. SMF Capital’s guide to the SMF23 Chief Underwriting Officer function sets out the function and the SMF23a distinction in full.

When an Insurer Needs Each Function

Whether a firm needs SMF20, SMF23 or both depends on its regulatory classification, its business and the structure of its senior team. A Solvency II insurer or a large non-directive firm will ordinarily require a Chief Actuary. An insurer or reinsurer writing material volumes of business will ordinarily have a Chief Underwriting Officer holding SMF23. Lloyd’s managing agents have the additional SMF23a underwriting risk oversight function to account for. The precise requirement is confirmed against the firm’s PRA classification at briefing.

• SMF20 Chief Actuary: Fellows of the Institute and Faculty of Actuaries with post-qualification experience in the relevant class of business and command of technical provisions, reserving and capital modelling under Solvency II;
• SMF23 Chief Underwriting Officer: senior underwriting leaders with deep class-of-business expertise, a track record of owning underwriting strategy and risk, and the standing to hold the function;
• For either: the regulatory credibility to be assessed as fit and proper for a PRA Senior Management Function;
• The judgement and temperament to discharge the Duty of Responsibility for a function on which the firm’s solvency rests.

Both functions sit within the insurer’s wider regulated leadership team, which typically includes a chief executive (SMF1), a chief finance function (SMF2), a Chief Risk Officer and the compliance and financial-crime functions. Where an insurer is also appointing conduct-side functions, the compliance oversight (SMF16) and MLRO (SMF17) functions complete the picture.

How to Run the Search

Both the Chief Actuary and Chief Underwriting Officer searches are specialist, credential-defined exercises into a finite pool. They reward a research-led, confidential approach over advertising, and a search partner who understands both the insurance market and the regulatory weight of the function. The brief should establish the firm’s Solvency II status, its class of business and the maturity of its existing actuarial, underwriting and risk functions from the outset.

Exec Capital runs these as retained searches. Briefing covers the firm’s regulatory classification, business mix and the scope of the function; research maps qualified candidates with the relevant class-of-business and leadership experience; approach and assessment test both technical credibility and readiness to hold a Senior Management Function; and the shortlist carries assessment commentary. We support the firm through interviews, offer and the PRA approval and Statement of Responsibilities process. Where the appointment sits on an authorisation or year-end timetable, our urgent SMF appointment service applies.

Frequently Asked Questions

What is the difference between SMF23 and SMF23a?

SMF23 is the Chief Underwriting Officer function — responsibility for the firm’s underwriting strategy and underwriting risk. SMF23a is the Underwriting Risk Oversight function specific to Lloyd’s managing agents. A firm appointing a Chief Underwriting Officer is appointing an SMF23 holder; SMF23a is a distinct Lloyd’s-market function. The right designation depends on the firm and the role.

Does every insurer need an SMF20 Chief Actuary?

The Chief Actuary function is required at Solvency II firms and large non-directive insurers. Whether a specific firm requires it depends on its regulatory classification, which is confirmed at briefing. Firms writing with-profits business also require the separate SMF20a With-Profits Actuary function.

Can the Chief Actuary and Chief Underwriting Officer be the same person?

In practice, no — they are distinct functions requiring distinct expertise, and the actuarial and underwriting functions are deliberately separate at a well-governed insurer. A firm needing both appoints two individuals, each approved and accountable for their own function.

Sources and Further Reading

• FCA — Senior Managers and Certification Regime
• FCA — SM&CR: Guide for insurers
• Bank of England / PRA — prudential regulation of insurers
• Institute and Faculty of Actuaries