Risk factor

Year 2001. Giri Biresh Kumar was a final year MStat student in the Indian Statistical Institute (ISI), Kolkata. The insurance sector, by then, had opened its doors to private players, and was considered to be a potential employer. One of Kumar’s professors at ISI pointed this out to him. As Kumar had a strong stats/math background he decided to be an actuary — people who make up the backbone of the insurance business. After completing his studies Kumar joined the Institute of Actuaries of India (IAI) as a student member and became a fellow in five-and-a-half years. Today, he works with actuarial consulting firm Milliman India, earning a little over Rs 40 lakh per annum.

“Actuarial science involves application of mathematical and statistical methods to assess risk in the insurance and finance industries. It includes a number of interrelated subjects, including probability and statistics, finance, and economics,” says Asha Joshi, appointed actuary, Bajaj Allianz General Insurance. “Actuaries are professionals who are qualified in this field. They provide commercial, financial and prudential advice — especially where long-term management and planning are critical factors.”

Traditionally, actuaries work in the fields of finance, investment and risk management, general insurance, life insurance, pension and social security. BPOs and management consultancy firms also employ actuaries.

The scope of work of an actuary is varied and interesting. He or she designs products (the benefits to be paid) for life or general insurance or pension plans; calculates the premium to be charged from policyholders for a product and what reserves a company should set aside for policies it has already sold; decides on investment strategies; analyses the performance of the company in various areas and fixes the bonus to be paid to policyholders. “Actuaries play a pivotal role in the conduct of the insurance business, ranging from product development, product pricing, underwriting, and claims reserving to asset liability management,” says Dr YP Sabharwal, a consulting actuary and the appointed actuary of the Oriental Insurance Company Limited. They can also consider getting into academics.

With the number of players in the insurance field increasing by the day, there is a growing need for qualified actuaries in the country. “There are adequate numbers of actuaries in life insurance and pension (funds), but more are required in general insurance. An appointed actuary could actually work there as a consultant instead of a full-time employee,” advises Sabharwal.

Subhendu Bhattacharyya, an actuarial assistant with the  Life Insurance Corporation of India, feels the shortage of actuaries is “acute”, the reason being the “poor rate of success in the final stages of the exam (conducted by IAI), not to mention the sudden spurt in demand from the private insurers who have set up shop in the country.”

Agrees Kumar. “The membership of IAI has increased significantly over the last seven or eight years, but there are just a few hundred fully-qualified actuaries (those who have passed all the exams and attained fellowship from IAI). With more than 40 companies operating in India and many actuarial BPOs being set up, the number of qualified actuaries is still less than what is required.” The result is, as of date, actuary is a career that offers 100 per cent employment. You will not find a single unemployed qualified actuary in the country.


Author: HT Horizons

Date: 10th March, 2010

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