Irda out to fix actuary anomalies

The norms governing the appointment of actuaries of both life and non-life insurance companies may be in a recast mode. The sector regulator, Insurance Regulatory and Development Authority (Irda), and the Institute of Actuaries of India (IoA), the body representing the professionals, are currently seized with the matter. Once implemented, this could address the supply gap of actuaries and standardise the professional qualifications required to become an appointed actuary of an insurance company.
The key provision of the proposal is recognition of other countries’ actuarial qualifications on par with Indian parameters. South Africa and the United States would be the first to go off the block if the amended rules kick in. Currently, India has mutual recognition with countries such as Canada, the UK and Australia.
“The measure will provide more headroom to accommodate other fellows to serve for India. There is currently a dearth of qualified actuaries and we believe it will address the supply issue of professionals,” said an actuary with a private insurance firm, preferring to stay anonymous.
Actuaries are business professionals who specialise in offering expert advice on pricing of products, assumption of future profits and valuation of businesses by determining probability of an event based on mathematics and statistics.
The other issue is one of stricter entry rules. Going ahead, all actuaries may now be required to specialise in at least one field like pension, health, motor business and so on, for which they need to clear a qualifying examination. And a maximum of five years could be the limit to comply with the rules.
The industry has been facing a shortage of fully qualified actuaries for quite some time now. The glaring part is the post of member actuary at Irda has been lying rudderless for over a year. After Kannan’s retirement last February, the regulator has been scouting for qualified actuaries to fill the post.
According to market sources, as of now, there are only 129 full actuaries operating in the country, out of which less than 10 may comply with the proposed norms.
Last September, Irda had come up with regulations on their age limits. According to the draft, the age cap for an appointed actuary should be brought down to 65 years from 70. Besides, general insurers are also required to keep full-time appointed actuaries and should do away with the practice of retaining consultants and temporary actuaries. Since nothing much happened on those proposals, the same has been included in the revised draft paper.
It has also been suggested that the regulator allow outsourcing actuarial work to firms like Towers Watson, Mercer, Aon and so on for the general insurance industry in the case of non-availability of skilled talent.

aswathy.rachel@dnaindia.net