With a population of 67 million, the United Kingdom has 16,000 actuaries. The United States has 37,000 actuaries for a 329 million population while Canada has 5,500 such professionals for a 37 million population.
What about India with a population of 1.3 billion? Only 460.
The actual demand for fully qualified actuarial sciences professionals in India is more than three times the supply. However, a lack of awareness of the career opportunities and students dropping out midway has led to the low number.
At the Global Conference of Actuaries, IRDAI Chairman Subhash Khuntia said that there are many capable individuals who can qualify to become a full-time qualify. He added that there is a need to popularise this profession.
Who is an actuary?
An actuary is responsible to predict how today’s risk will pan out in the future. Actuaries are the core of the insurance business since they are involved in pricing of the policies in proportion to the risks.
Actuaries calculate the pricing depending on the mortality tables apart from using finance modelling and risk analysis tools.
It is not just in insurance. Actuaries are designated as chief risk officers in other financial sector organisations. For large business decisions like handing out a loan, the chief risk officer’s nod is required.
Who can be an actuary?
To be a qualified actuary, an individual needs to be accredited by a body like the Institute of Actuaries of India. This is done after a prospective candidate clears all 15 papers in actuarial science and gets a fellowship.
However, since there is a dearth of fully-qualified actuaries, insurers also appoint individuals who have passed 10 papers as an associate in the actuarial department. Every insurer is mandated to have a full-time appointed actuary who is assisted by a team to price the risk.
In the actuarial courses offered by institutes, students mandatorily work as interns in the actuary department of a company, while studying the course.
Considered one of the toughest examination in the country, drop-out rates from courses across institutes is as high as 30 percent.
However, Sunil Sharma, President of the Institute of Actuaries of India and Chief Actuary at Kotak Life Insurance, said that there is no question of dilution of the selection criteria and that certain minimum standards have to be maintained.
However, what is still not widely known is that actuaries are paid excellent salaries since they form the base structure of insurers' core activities. Further, there are good job opportunities available not just in the insurance industry as well as allied companies in the banking and financial services sector.
The starting salary of an actuary could be Rs 7 lakh which can go up to Rs 30 lakh with the number of years of work experience.
Over and above this, the implementation of solvency or the minimum capital requirement by insurance regulations is also the job of an actuary. With risk-based capital regime on the anvil, it is estimated that there will be a 30-40 percent increase in number of actuarial positions required by insurers.
There are some insurers who offer jobs after a candidate clears two to three papers of the professional examination. But they are offered a permanent position only after passing the other papers. Quantitative methods, mathematics and statistics are essential part of the examination.Insurance institutes are also looking to attract students from technical domains like engineering. This is because such students already have a strong base of Mathematics and would find it easier to pass the examinations.