Expert ‘actuaries’ who assess insurance risk getting younger

CHENNAI - Once considered the exclusive preserve of venerable middle-aged executives, the office actuaries — experts who scientifically review the risks in the life and non-life insurance business — is getting younger by the year.

“Earlier, Indian actuaries in the age bracket of around 45 years were hired to head the offices,” said G.L.N. Sarma, the managing director of Hannover Re Consulting Services India, speaking about these experts who assess the financial impact of future events.

“But in the recent times the age of recruits for the top post has come down to around 35 years,” Sarma, who in 2007 was himself named actuary at Bharti Axa Life Insurance at the age of 36, told IANS.

As per Insurance Regulatory and Development Authority’s (IRDA) regulations, every life and non-life insurer should have an appointed actuary. While life insurers should have a permanent official, non-life companies can have a part timer.

Currently, there are 24 non-life insurance companies in India, six of which are state-run, and 23 life insurers, one of which is owned by the government — Life Insurance Corp.

Against this, there are just 216 qualified actuaries who are members of the Institute of Actuatries of India and practise within the country, 76 of whom are under the age of 40. In addition, there are 46 other fellows in all age group who are overseas.

R. Kannan, member-actuary, at the regulatory authority, said only four non-life insures have full-time appointed actuaries and others have part-timers, many of them over 70 years of age. But the situation is changing now.

Some of the recent additions to the growing young-appointed or chief actuaries club are Tania Chakrabarti at the Royal Sundaram Alliance General Insurance Company, Sharon D’ Costa at the SBI General Insurance and Abhay Tewari at Edelweiss Tokio Life Insurance.

In terms of pay packets, appointed actuaries are highly paid professionals commanding an annual price of around Rs.5-7 million on the life side and slightly lower in the general insurance sector. Expat actuaries command premium price.

Further, appointed actuaries are IRDA’s representatives in the insurance companies and hence can’t be hired or fired without the regulator’s consent. One of the youngest in the insurance industry is 30-year-old science graduate Sharon D’Costa of SBI General.

“I found actuarial science interesting and decided to pursue the course and complete it in five years,” D’Costa told IANS.

On the other hand, 35-year-old Tania Chakrabarti, who holds a master’s in quantitative economics from Indian Statistical Institute, Kolkata, and working with the Murugappa group, found actuarial science a logical progression.

Clearing the exams in 2009, she became the appointed actuary of Royal Sundaram Alliance General Insurance Company in June 2010. Some of the other young actuaries are Anil Kumar Singh of Bajaj Allianz Life and Ashley Edward Rebello of HDFC Standard Life.

According to the institute, it takes at least four years to complete the course as some subjects are practical-oriented, needing actual work experience.

With not many new life insurers on the Indian horizon and the existing ones downsizing their actuarial departments, the non-life insurance sector is now turning lucrative for the young actuaries, say industry officials.

“Non-life companies are becoming more aware of the value that full time actuaries with a strong actuarial department can bring to the organisation in product development, pricing, financial planning and portfolio performance analysis,” Chakrabarti said.

“IRDA has over the last few years strengthened the statutory reporting requirement from appointed actuaries in non-life industry bringing it closer to that of life segment. It will become increasingly difficult for a part-time actuary to cope with the pressures.”

Ajay Bimbhet, managing director of Royal Sundaram, agreed and said there is the need for greater statutory reporting, and scrapping of state-determined pricing in the motor and commercial business; only a full-time actuary can improve profitability.

“Non-life offers more challenge to actuaries as the products have to be priced based on risks. The market is more evolving now and there are more regulatory requirements,” SBI General’s D’Costa added.

According to the Institute of Actuaries of India (IAI) - the professional body for actuaries - 87 of the 170 actuaries in India as on March 31, 2010, are in the age bracket of 26-45 years.

(V. Jagannathan can be reached at v.jagannathan@ians.in and biz@ians.in)

–Indo Asian News Service