Insurers face acute shortage of actuaries

Insurance players often blame Insurance Development Regulatory Authority (Irda) for taking too much time to approve their products. The reason behind this is the dearth of actuaries.

The shortage is so acute that Irda had to hire two actuaries from the Life Insurance Corporation of India to speed up its product approvals.

Although the total membership size of the Actuarial Society of India (ASI) rose from 3,849 in March 2005 to over 5,500 in February 2006, there were only 207 fellow actuaries operating in India on August 31, 2005.

Of these, nearly 100 actuaries are aged more than 60 years, while 151 reside outside India. This leaves only 50 active actuaries in a scenario, where the demand for actuarial services is clearly set to surge.

This demand-supply mismatch assumes greater significance with the entry of knowledge processing outsourcing centres, reinsurers and consulting firms.

ASI President R Kannan said, "On an average, only two students manage to clear the qualifying examination conducted by the ASI on a yearly basis, though the number of applications received is seen to double. It takes about five-seven years for a student to clear the entire set of qualifying examinations."

Against this backdrop, Kannan said, the issues that require immediate attention are the need for conversion of the qualifying process into a full-time course, and levelling the diversity in the curricula and evaluation patterns followed by different universities across India. Currently, ASI sources its course materials from the Institute of Actuaries, London.

The procedure of qualifying examinations followed in India is akin to that practised in the UK and Australia.

Industry observers felt that with the implementation of Basel-II norms and evaluation of operational risks in the domestic banks, the need for actuarial services will rise even evaluation.

The compensation structure of actuaries has also witnessed a 50 per cent growth since 2000-01, and the current annual package received by an actuary is around Rs 15-20 lakh.

The Indian market also poses attractive challenges for foreign reinsurers looking to make a foray into the domestic insurance business, said a senior ASI official.