For a 7-figure salary, be an actuary

Once upon a time an actuary was synonymous with the insurance industry. At a stretch, they could be found in pension funds. But with the boom in the financial sector, the profile of an actuary has undergone a metamorphosis. Now, graduation or Master's degree in mathematics or statistics, combined with a certificate from Acturial Society of India, can get you seven-figure salaries as actuaries with investment funds, knowledge process outsourcing or business process outsourcing firms.

Who is an actuary? An actuary is a financial expert who applies mathematical and statistical methods for assessment of financial and contingency-related risks. He also scientifically evaluates financial products in insurance, retirement and areas related to benefits and investment.

Growth rate. According to R. Kannan, president, Actuarial Society of India, the opening up of the insurance sector in the country has pushed up the demand for qualified and senior actuarial students. "About 2,000 candidates enroll with the ASI as students every year. But the total number of actuaries available in India is only about 225. Of these there are just 40 people in the 20-60 age group," says Kannan. "On the other hand, each of the 15 life insurance and 15 non-life insurance companies needs at least two to three qualified actuaries."

While there is no concrete forecast on what the demand for actuaries will be, E Balaji, COO, Ma Foi Management Consultants, a human resource consulting and recruitment firm that signed up about 40 actuaries for a single BPO client in end-2005, says that there is generally a 20-25 per cent shortfall in supply.

R Krishnamurthy, managing director (distribution consulting), Watson Wyatt Insurance Consulting, agrees that insurance liberalisation has exposed a big gap in the demand and supply ratio of actuaries. "When the Life Insurance Corporation of India was the monopoly player and general insurance was subject to a tariff regime, opportunities were limited and there was no incentive to qualify as actuaries," he says. "Now there is a demand for freshly qualified actuaries, especially in the employee benefit sector. Till now, this sector was largely handled by chartered accountants, but changes will call for professional actuarial valuation."

At the moment, qualified actuaries find the going good. Consider Anil Singh, 37. He started out as an actuarial trainee with LIC in 1991, soon after completing his Master's in Statistics from Lucknow University. While working with LIC, he studied with the ASI and, in 1995, became an ASI associate. After a break, Singh qualified as an actuarial fellow in 1999. Subsequently, he worked with a couple of private sector insurance companies as a senior actuarial analyst and is now the chief actuary with Bajaj Allianz Life Insurance, taking home an annual pay packet of Rs 40 lakh (Rs 4 million).

Driving force. The growth in the Indian financial market is the major reason for the spurt in the demand for actuaries. Apart from the traditional areas of life and general insurance, pension and reinsurance, actuaries are now needed to play the roles of consultants, investment advisers and risk managers as well. A number of banks are planning joint ventures to set up insurance companies in 2007, which is likely to raise the number of life insurance companies from 16 to more than 20. The number of general insurance companies is also expected to increase from 12 to around 15.

The health insurance sector is also expected to get a big dose of growth. V Jaganathan, managing director of Star Health Insurance, says there is huge potential for the sector in a populous country like India. Apollo Hospital, for instance, is close to establishing a health insurance company.  Reforms in pension funds, whenever they happen, are also expected to add to the demand.

India has the potential to emerge as a key actuarial back office in the BPO sector as well. A few companies are already in the business of low-level calculations. Once the supply pool expands, India can take up more complex and more lucrative back office work, says Krishnamurthy.

What does it take? Membership in the ASI - the only body in India that qualifies actuaries - has almost doubled in the past year. "In comparison to the previous year, membership rose by 53 per cent to 5,925 in the year ending March 2006," says A G D Wagle, secretary general, ASI.

Student members have to be graduates in a major subject in mathematical sciences, such as mathematics, statistics, econometrics, engineering or actuarial sciences. In addition to an admission fee and an annual subscription fee, Wagle says, they have to pay Rs 54,500 by way of examination fees (Rs 19,300) and study material charges (Rs 35,200). Exams are conducted twice a year, in May-June and October-November.

Internationally recognised fellowships are granted on passing examinations at various stages. At one time, fellowships took up to eight years, but now they can be completed in five to six years, says Singh.

At present, says Kannan, there are about 40 senior actuarial students about to qualify as fellows of ASI. "We are planning a special training programme for them, so that the supply can be augmented immediately," he adds. The society is also debating whether to grant accreditation to universities and management institutes that award Master's degrees in Actuarial Science.

 One huge plus point of actuarial studies is that it can be pursued alongside a full-time job. So, while an MBA from a top business school will call for two years of intensive studying, an ASI fellowship can be completed over six years of a working life. While one does not need to be an actuarial employee to appear for the exams, work experience is considered an advantage for a couple of subjects.

Is there a catch? According to qualified actuaries, the rigour of studies and exams while doing a full-time job is the reason why so few make it. "The profession requires a lot of time and effort," says Azim Mittani, chief actuary, ICICI Prudential Life Insurance. Statistics bear out the fact. According to November 2004 figures, only 592 of 2,110 students, or 28 per cent, cleared the exams. In the UK and Australia, the figures are 56 and 51 per cent, respectively.

But if you like to play with numbers, including your salary, and have the capacity to work hard, there's nothing to stop you from leaping into this field which itself is growing in leaps and bounds.