The Institute of Actuaries of Australia A.C.N 000 423 656 TRANSACTIONS 1997 This 1997 edition is the last of the Transactions of the Institute of Actuaries of Australia to appear. As from 1998, papers presented to the Institute will appear in a new publication, the Australian Actuarial Journa( also published by the Institute of Actuaries of Australia. ISSN 1033-0763 © 1998 The Institute of Actuaries of Australia T J Matthews, MA,FIA,FIAA,ASA President of The Institute of Actuaries of Australia THE INSTITUTE OF ACTUARIES OF AUSTRALIA Level 7, Challis House, 4 Martin Place Sydney NSW 2000 (Tel: 02 9233 3466) FOUNDED 1897 INCORPORATED 1963 COUNCIL & OFFICERS 1996-97 President TREVOR JOHN MATTHEWS MA,FIA,ASA (1992) Senior Vice President Vice President JOHN ROY TROWBRIDGE, RICHARD SAMPSON MITCHELL, BSc,BE,BA,FIA (1993) FIA,ASA (1994) Immediate Past President GEOFFREY FRANK BURGESS, BA,FIA (1990) Council (1994) PETER MICHAEL CARROLL, BA (1996) JAMES BENEDICT CLARIDGE, BEe (1996) ANTHONY MAXWELL COLEMAN, BA, MBA, FIA (1995) KAREN ELIZABETH DORAN, BEe ( 1994) RICHARD MORT FITZHERBERT, BSc,FIA,ASIA (1995) ADRIAN MARK GOULD, FIA (1994) MARTIN MICHAEL JILOVSKY, BSc,FIA,FNZSA (1996) DAVID MONTGOMERY KNOX, BA,PhD,FIA (1995) RICHARD HUGH STEWART LYON, MA,ASA (1995) FRANK MATTHEW MciNERNEY, BA (Hons),FIA (1994) STEPHEN MARK PARTRIDGE, BSc,MBA,FIA,ASA,ASIA (1996) CATHERINE ANNE NANCE, BSc,BA (1995) JENNIFER SUSAN SPARKS, BSc (Hons) (1996) DAVID MALCOLM TORRANCE, BA Secretary & Treasurer JOCK RANKIN (From 1 January 1997) Editors of Transactions JACOB DAVID HARDY,BSc(Hons),BA,FIA CLARE STELLA BELLIS, BA,MA,FIA The year in brackets is the year of election to Council. PAST PRESIDENTS The Actuarial Society of New South Wales 1897-1918 The Actuarial Society of Australasia 1919-1959 The Actuarial Society of Australia and New Zealand 1960-1962 The Institute of Actuaries of Australia and New Zealand 1963-1976 The Institute of Actuaries of Australia 1977 on President Year W R Dovey, FFA,AIA 1897 D Carment, FIA,FFA,FAS 1898 E M Moors, MA,FIA 1899 R Teece, FIA,FFA,FAS,FSS 1900 W R Day, FIA 1901 T W Bremner, FFA,AIA 1902 R D Miller, FFA 1903 G F Diamond, AlA 1904 R Teece, FIA,FFA,FAS,FSS 1905 D Carment, FIA,FFA,FAS 1906 A C Hollingworth, AlA 1907 E M Moors, MA,FIA 1908 A Jobson, AlA 1909 C A Elliott, FIA 1910 W R Day, FIA 1911 W R Day, FIA 1912 G F Diamond, AlA 1913 R Thodey, FIA 1914 D Carment, FIA,FFA,FAS 1915 B Latham, AlA 1916 A W Sneddon, FIA 1917 J J Kelly, FIA 1918 A C Hollingworth, AlA 1919 A M Laughton, FIA,FFA 1920 M C Alder, AlA 1921 H M Jackson, FIA 1922 T W Bremner, FFA,AIA 1923 C H Wickens, FIA,FSS 1924 R D Miller, FFA 1925 J S Wilson, FIA 1926 B Latham, AlA 1927 F C McPhail, AlA 1928 C A Elliott, FIA 1929 H M Jackson, FIA 1930 AT Traversi, FIA 1931 P D Touzel, AlA 1932 H Vaughan, FIA 1933 PAST PRESIDENTS J J Lohan, AlA 1934 L S Polden, FIA 1935 A C Bradbury, FIA 1936 F F Innes, FIA 1937 0 Gawler, FIA 1938 G E Moore, AlA 1939 D Drybrough, MA,FFA 1940 C Gostelow, FIA 1941 E H Templeton, FIA 1942 L W Offord, FIA 1943 H G Walker, BCE,FIA 1944 W J Cooksey, BSc,FFA 1945 W J Falconer, FFA 1946 H Vaughan, FIA 1947 J B Fletcher, MA,FFA 1948 W J Dowd, BA, FIA 1949 L Shotlander, MA,AIA 1950 L G Oxby, FIA 1951 A M Parker, FIA,FSS 1952 PC Wickens, MA,LLM,FIA 1953 G B Palmer, FIA 1954 A H Pollard, MSc,MSc(Econ),PhD,FIA 1955 S J R Chatten, FIA 1956 G R Kensit, MA,FIA,FSS 1957 R B Levey, FIA 1958 K J Hedley, BCom,FFA,FSS,FIS,ASA 1959 V H Arnold, FIA,ASA 1960 A W R Wheatley,FIA,ASA 1961 G C Lane, FIA,ASA 1962 E H Templeton, FIA 1963 F Ross, BA,FIA 1964 H V Napier, FIA 1965 L J Cohn, FFA,ASA 1966 S W Caffin, FIA,FSS,ASA 1967 B Whittle, FFA 1968 J M Anderson, FIA,ASA 1969 C J Stevens, FIA 1970 F J Young, FIA 1971 M J Werner, FFA,ASA 1972 R M Craig, FIA 1973 J G Rutherford, FIA 1974 R F McDonald, FFA 1975 R C Palmer, FIA,ASA 1976 B R Paul, FIA 1977 R G McCrossin, FIA 1978 G L Melville, BA,FIA,ASA 1979 A E M Geddes, BA,BCom,FIA,ASA,AASA 1980 PAST PRESIDENTS D J Kimber, FIA 1981 W K Roberts, FIA 1982 0 F Roach, MA,FIA 1983 J Graham, FFA,MAAA,ASA,ASIA 1984 T C Jenkins, FIA 1985 B C Amond, FIA,ASA 1986 J H Pollard, BSc,PhD,FIA,FSS,FASSA 1987 G B K Trahair, FIA,ASA 1988 J R Hunter, FFA,FNZSA 1989 J F M Ross, FFA,AIA 1990 C M Prime, BSc,FIA,Diplaw,ASA 1991 R J Atfield, FIA 1992 R W Champion, FFA 1993 R G Glading, BSc,FIA,ASA 1994 S P Miles, BA,FIA,ASA,ASIA 1995 G F Burgess, BA,FIA 1996 CONTENTS Presentation of an Institute Gold Medal to Doctor G C Taylor 10 Presidential Address --T J Matthews 13 Submission to the Australian Financial System Inquiry on the 101 Measurement of Capital Adequacy for Financial Product Providers -- A M Coleman and D Shuttleworth The Relative Capital Requirements Imposed for Providers 125 of Capital Guaranteed Retirement Savings Accounts --C W Thorburn Life Office Demutualisation in Australia -- G W Slater 145 Friendly Societies -- Where to now? -- S McGing and J C Polic 225 Meeting the Challenge of Specialist Education -- Education 317 Management Committee. Uses of SIS (Superannuation Investment Simulations) 385 --C R Grenfell 1997 Report of the Disability Committee 489 Official Record of the Centenary Convention of the Institute of 577 Actuaries of Australia Programme of Events 578 Address by the Deputy Prime Minister, the Hon. T Fischer 581 President's Opening Address: T J Matthews 586 Photographs of Convention Events 591 List of Papers and Authors 593 Discussion of Plenary Session 1 596 Discussion of Plenary Session 2 613 Discussion of Plenary Session 3 626 Discussion of President's Plenary Session 634 List of Participants 651 Commemorative Gifts presented to the Institute of Actuaries 659 of Australia on the occasion of its Centenary 10 Dr Greg Taylor receiving the Institute of Actuaries of Australia's first ever Gold Medal, from Trevor Matthews at the ASTIN and AFIR banquet. GOLD MEDAL. AW TO AUGUST 1997 The Gold Medal Award.