Actuaries use their mathematical and modeling skills to measure risk
Most people have no idea what an actuary actually does in a professional capacity. Derek Cribb, chief executive, Institute and Faculty of Actuaries (IFOA), UK clears up the mystery.
What is an actuary? With the industries becoming more and more global, what role do actuaries have in the midst of these changes?
Actuaries are risk experts. They use their mathematical and modeling skills to help measure the probability and risk of future events, juggling complex data and making sense of it to inform business decisions. Useful to many industries where a single decision can have a major financial impact, this creates a great demand for actuaries' skills throughout the financial sector, particularly in insurance, investment, pensions and increasingly in risk management. Every area of business is subject to risks so an actuarial career offers many options. In India, we’ve found three general areas where there is most demand. Traditional actuarial roles in the insurance industry, working for multinational insurance companies and actuarial consulting firms servicing their needs in their outsourcing setups. There is also scope in non-traditional areas such as risk management and information technology.
As the amendments to the Insurance Act, 1938 has come into effect from December 2014, many companies are gearing up to take a leap forward, at this time when the country is emerging as an actuarial hub, what are your plans in India?
The World Bank has recently written to all insurance supervisors promoting the IFoA's new qualification, the Certified Actuarial Analyst as a way to improve skills within insurance, we see India as the leading country to take up this qualification given the impact of the Act. Our research of the employment market, both in India and around the globe, suggests that those who hold a professional actuarial qualification can often command a salary premium because of their regulatory framework.
In India, as in many countries around the globe, there is an increase in demand for skilled actuaries as multinationals grow and expand their businesses into new territory. The changes to the Insurance Act only serve to support this growing demand. Working in partnership with the Institute of Actuaries of India, is looking to help meet this demand through all our qualification routes; Fellowship, Associate and Certified Actuarial Analyst.
In the UK the skill set of an actuary is being recognised across many disciplines, do you agree? Which actuarial fields are the most popular in the UK and why?
Yes, I agree, the actuarial skill set is recognised in the UK, not only in the traditional fields of life insurance, general insurance and pensions, but also in other areas such as healthcare finance and investment, risk management. The diversity of the industries within which our members work demonstrates the value that is placed on the actuarial skill set by business. The fastest growth we are seeing right now is in General Insurance, this forms the second largest of our student groups and will become the largest in a few years. One of the benefits of the IFoA's exam structure is that students can wait until they near qualification before they finalise their specialisation, and that after qualifying their expertise commands a premium in the global marketplace.
What does your institute's curriculum constitute?
One of the most recent innovations to our offering is the development of the Certified Actuarial Analyst (CAA). For those who may not aspire to become a full associate or fellow, but who are working in environments where a technical solid understanding of actuarial skills would be of enormous benefit. The CAA is both a qualification and membership grade the first actuarial membership qualification at this level in the world.
What does CAA include? How does it benefit the actuarial profession globally?
The qualification takes two to three years to complete and students can study and sit exams around the world while continuing to work full time. It is designed to provide an internationally recognised professional qualification, proven technical and professional skills. Once someone has qualified as a CAA, they will be equipped with key analytical skills that will enable them to advance their career. It is designed to equip individuals with a diverse set of technical skills, and prepare them for a different career path, than that of the fellowship route.
What do you mean when you say different career path?
If candidates complete the CAA and then decide that they would like to become a fully qualified actuary, it will be possible for them to go on to study for Associate and then Fellowship of the IFoA. This will be available in the next two to three years, as a part of the IFoA’s education strategy review and in time for when we anticipate demand will arise from the first fully qualified CAAs. This route to becoming an actuary is not short will take longer than those that progress directly along the Fellowship path, however it will permit the candidate to assess their career options at fixed steps while attaining a valued qualification and letters after their name at an earlier stage. We expect to see many CAAs in roles in IT, data analytics and general management as well as in the core actuarial function.