With companies and management firms entering the fray to hire actuarial students, the demand-supply gap is wideningRising competition, market volatility and major corporate accounting scandals have opened the doors for actuarial graduates beyond the insurance sector. With more and more companies forming a beeline to hire students armed with the most recent knowledge of the market and products to secure their own future, actuaries is increasingly having an edge in the job market.Shweta Dixit, chairperson MBA, Actuarial Science at NMIMS University, agrees. The demand for the actuarial science course is so high that the 30 seats on offer are filled up comfortably, every year. The demand-supply gap for actuaries also ensures placements for all passouts, although NMIMS provides a first-level course.
“Companies outside the insurance sector also have actuarial departments. That is why, we have companies like Larsen & Tuobro and consultancies like Ernst & Young hiring students with actuarial background,” says Dixit. While the starting salary package for pure actuaries is Rs 8 lakh, for statistical analytics for beginners are hired at Rs 11 lakh. An actuary deals with the financial impact of risk and uncertainties of the future, making them an essential part of the insurance industry. They help in evaluating various risks in life, health and pension plans over long periods of time. For instance, for products like annuities, they have to take a call on the rate of interest, say, 20 years down the line. Accordingly, they advise insurers to invest on certain instruments to generate profitable returns. Similarly, these professionals use statistical tools for businesses and clients to minimise the cost of risk in the future.
Since the opening up of the insurance sector in 1999, the demand for actuaries has risen exponentially. At present, there are 47 insurance players – 23 in life and 24 in the general segment – while there are only 250 fully-qualified actuaries or fellow members, with only 200 based in India.Each insurance company has around 30 people working in the actuary department. “There are two to three fellow members per company in India. In the United Kingdom, one fellow member heads each vertical of the department, that is, roughly 10-12 fellows per company,” says Sunil Sharma, head (actuarial) ICICI Prudential Life Insurance. However, the situation is more alarming because several such professionals are close to retirement. An actuary department has many sections: product development, risk management, business planning, evaluation and report, just like a US GAAP report.
Industry experts say there are a number of reasons why the supply has not grown to match the demand. For one, few pass the exams. According to the Institute of Actuaries, 1,144 students appeared for the CT1 exam (Financial Maths) in November last year, but only 313 passed. For CT2 (Finance and Financial Reporting), 140 of the 576 applicants passed the exams. Only 65 and 103 of the 297 and 490 students, who appeared for the CT4 and CT5 exams, respectively, passed were successful. Liyaqat Khan, president, Institute of Actuaries says though were 650-700 student members in 2000, most members were inactive because they did not appear for the qualifying exam. In the last decade, the number of active members has risen to 12,000. “Every year, the institute produces 25-30 Fellows and this number is much better than what it used to be earlier,” says Khan.
Echoing similar views Dixit says: “After the CT level, many get into business intelligence, that is, business procurement, product branding, as they have very good knowledge of products.” Another hurdle that comes in the way of actuary aspirants is the duration of the course — while the standard time should be anything between five and seven years to become a fellow member, most candidates take almost ten years for the same. “The time taken to clear these exams is more than it takes to become a doctor. Abroad, you can clear the exams in up to four years,” adds Khan. However, by the time a student completes the specialised technical (ST) series, he/she gets a management level job and the remuneration is also very attractive. “A person, who has just become a fellow member gets around Rs 30 lakh whereas an experienced fellow can earn over Rs 1 crore,” says Sharma.
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