OBJECTIVES

1. To understand the concept of Actuarial Science and the role of

Actuaries in Insurance business.
2. To analyze the powers, functions and responsibilities and duties of
actuaries.
3. To study the role of actuaries with reference to life insurance and
general insurance.
4. To examine the current scenario of Actuarial Science in India.

SCOPE
The scope of study of the project extends into both, Life Insurance
and General Insurance and the Role of Actuaries in both these
fields.
It also talks about the role of Appointed Actuary.
It talks about the Portfolio of an Actuary.
The study concentrates majorly on Actuarial Science in India but
also has certain comparisons with the same abroad in certain areas.

LIMITATIONS
The biggest limitation or drawback that rose during the making of
this project was the limited awareness about the topic.
Not only the general public but also many insurance related people
are not aware of this subject.
Also, there are only around 250 Actuaries in India and contacting
them was a major difficulty.
The Actuaries refused to fill in any questionnaire as they are not
allowed to fill in any questionnaire

METHODOLOGY

EXECUTIVE SUMMARY
Most people will know something about the
professions of accountants, doctor sand lawyers. But
tell someone youre an actuary and more than likely
they will look at you blankly never having heard of an
actuary.
The reason for taking this topic is to make everyone
a w a r e o f w o r k o f actuaries, which is most important in
Insurance Company. An actuary really p l a y s a n i m p o r t a n t
role in Insurance. He deals with the business
o f insurance and is responsible for many areas under
the broad category of insurance. He is responsible for
collecting the data to forecast future risks and see how the
predictions will affect various aspects of insurance.
Actuaries also hold a legal responsibility for protecting the
benefits promised by insurance companies. Traditionally
actuaries have been associated with insurance sector but
in present scenario with the economy opening up
actuaries are needed in sectors like non-life insurance,
employee benefits, health insurance, assetmanagement, reinsurance, insurance broking houses and
consulting companies.

INTRODUCTION
Now a days, most of us must have seen, heard and
read about companies which p r o v i d e i n s u r a n c e
cover to policy holders in case of any
e v e n t u a l i t y l i k accidents, hospitalization, household
hazards, thefts or death and still others who look after
investment schemes, employee benefi ts,
ret irement benefi ts and pension schem es. The
policy holders are required to pay a fi xed
amount as installments at regular intervals and they
get this money back in the event of any untoward
incident or upon the maturity of the policy. Have you
ever wondered who decides as to what amount of
money a policy holder should pay as premium or what
sum should be given as pension amount or returns by the
company? Well, this exactly is what an actuary does.
They calculate insurance risks and premiums.
Technically speaking the job of an actuary is to
assess the financial impact of an uncertain future
event. Roughly speaking they look at the financial aspect
of disasters; sarcastically speaking they are financial
astrologers. An actuary has to combine the skills of a
statistician, economist and financier and e m p l o y
techniques of probability, compound
i n t e r e s t , l a w , m a r k e t i n g , management etc to
predict the outcome of future contingencies and
design solutions to lessen the financial severity of such
events. Actuarial profession was formally
established in 1848, with the formation

of Institute of Actuaries, London. In India, traditionally

actuaries were found only in the life-insurance sector
but now with the opening up of the economy they
are wanted by non-life insurance companies, banks,
stock exchanges, private and government agencies
and this are one field where demand exceeds supply.
The Actuarial Society of India (ASI), the only professional
body of Actuaries in India was formed in 1944 and
was admitted as a member of the Internationa l
Actuarial Association (IAA), an umbrella organization
to all actuarial bodies across the world, in 1979. It was
registered in 1982 under registration of Literacy,
Scientific and Charitable Societies Act XIII of 1960.
Its objectives include the advanc ement of Act uarial
professio n in India, providing opportunities
for interaction among members of the profession,
facilitating research, arranging lectures on relevant
subjects and providing facilities and Guidance to
those studying for the professional Actuarial
Examination. The Institute of Actuaries Of India (IAI or
formally ASI) was initially started as an on-examining
body when Actuaries used to get qualifi ed from
Institute of Actuaries or Faculty of Act uaries of
UK. The Institute of Actuaries of India started
conducting Entrance Examinations in India for
students of Institute of Actuaries, UK, in 1975. In 1989,
it started conducting examinations for its Indian
qualifi cation up to Assoc iate ship level, and in
1992, it started conducting F e l l o w s h i p l e v e l
exams. The IAI has been following the UK
p a t t e r n o f examinations since November 2000
with an eye to be a part of global standards set by
the International Actuarial Association (IAA).To b e c o m e
a n a c t u a r y o n e m u s t b e a Fe l l o w o f a

r e c o g n i z e d p r o f e s s i o n a l examining body like the

Actuarial Society of India (ASI), Mumbai or the Institute of
Actuaries, London. The work of an actuary involves a lot
of number crunching and the nature of work is quite
tedious, nevertheless it offers rewards in terms
of intellectual challenge, status, job satisfaction and
earnings. As their judgment is the basis of decision
making for many business activities, their career paths
often lead to upper management and executive positions.

WHAT IS AN ACTUARY?
Most people will know something about the
professio ns of accountants, doctors and lawyers. But
tell someone youre an actuary and more than likely they
will look at you blankly never having heard of an
actuary. If, however, they are aware of the work that
actuaries do, they are likely to be impressed; being an
actuary carries quite a reputation. This is partly due to
the difficult exams, but mostly due to the fact that
actuaries are experts in a field that is renowned for its
complexity and mathematical powers . An actuary deals
with the business of insurance and is responsible for
many are as under the broad category of
insurance. The actuary is an indiv idual who will
analyze important data such as mortality, sickness, injury
and disability rates and u s e t h a t i n f o r m a t i o n t o a i d
those involved with insurance. An actuary is

responsible for collecting the data to forecast

future risks and see how these predictions will affect
various aspects of insurance. Any person with minimum
18 years of age and having a high degree of aptitude for
mathematics and statistic s can take up the
course and become an Actuary.
A person with a high degree of aptitude for
mathematics and statistic s can become an actuary.
The other necessary skills include good communication
skills, ability to use computers and related
technology, business sense, a practica l outlook, a
curious bent of mind, the ability to work on ones own
and also be a team player as the situatio n
demands and to be self motivated.. However an
aspirant should have single minded devotion, total
dedication and a systematic approach towards
problems in order to successfully become an Actuary.

THE ROLE AND RESPONSIBILITIES OF AN

ACTUARY
The daily job duties, which an actuary must
complete, are quite vast and varied. This individual
wears many hats and must be adept with completing
various tasks o n a d a i l y b a s i s . A l t h o u g h
many individuals may be unaware of the
responsibilities, which an actuary takes on in their job
role, the position of actuary is one of an important nature.
One who accepts the role of actuary is responsible for a
multitude of items. They will review statistical

information relating to rates dealing with

mortality, sickness, accidents, disability and retirement.
They will take the information that t h e y o b t a i n f r o m
reviewing statistical data and relay the
information to individuals who need such
items to successfully pursue insurancer e l a t e d interests. The general role of the actuary is to
compile the data that they collect in such a manner that
it helps companies deal with payment and coverage
issues.
SPECIFIC DUTIES OF AN ACTUARY
There are a variety of specific duties, which an actuary
must carry out on a daily basis. The first duty that an
actuary must undertake in their job role is to review a
variety of documents. These documents relate to
statistical information, insurance plans, annuity plans,
pension plans, contracts and company policies. The
overall goal in reviewing these various document is to
construct guidelines for which the companies can follow
with their customers and employees. Once the actuary
has reviewed all of the pertinent documents, the
individual must then construct concise tables
evidencing the results of the int ense document
review. The tables will diagram the statistical
evidence as well as highlight the recommended
route to pursue with regard to disbursements,
premiums and retirement funds. An additional
specific duty of an actuary is to determine company
policy and explain such policy and its aspects to those
who will benefit from it. The actuary may also work on the
policy so that it adequately works to benefit those

affected by the policy.An actuary may also do

consulting work and help various companies with
their statistical needs and company policy
construction. One who is an actuary may work for a
specific corporation or many different companies and
corporations.
Actuaries may also be asked to testify as expert
witnesses in various forms of litigation. Their testimony
most often relates to the lifetime earnings an individual
would have seen based on a variety of factors. One who
fulfi lls the role of an actuary may also have to
testify before public agencies with regard to new
or revised legislation affecting the companies and
corporations, which it works for. This frequently occurs
when a new law is about to be passed or the company
wishes a particular piece of legislation to become
law. The actuary is also the go to individual for
any questions relating to their job responsibilities
asked by the customers of the company. If the questions
are best a n s w e r e d b y t h e a c t u a r y , a n d t h e n
he/she will do so in order to present
straight forward information to the public. An actuary
must also develop mathematical ideas and formulas so
that the proper data can be assessed. The actuary
must use his/her mathematica l abilities to format
equations, which will aid in the resolution of an issue.

TRAITS WHICH ALL ACTUARIES SHOULD

POSSESS

There are many benefi cia l trait s, which an

actuary should possess. First and foremost, an
actuary needs to possess wonderful mathematical skills.
Since they will be dealing a great deal with
statist ical equat ions and data, having suc h
mathematical skills will help them to excel in their job
responsibilities.
Good analytical skills are another important trait which an
actuary should possess as it will help them in their
job role. As they will need to ana lyze a variety
of documents, having analytical skills, which are
more than adequate, will greatly benefit them in the
long run.
An actuary is an individual who should possess good
public speaking skills as well. In their daily job
duties, not only will they need to analyze documents
and data but they will also have to report such data
results to company offi cials and members of the
public. Therefore, in order to best get their opinions
and conclusions across in a straightforward, easy to
understand manner, good public speaking skills should be
a prerequisite to taking on the role of actuary.
Creativity is something, which actuaries should possess.
From time to time, they will need to aid company
offi cials in the drafting of company policy and make
changes to the policy. With a little bit of creativity, an
actuary will be able to take the documentation and put
such a spin on it that it is formed into a proper and
valid policy.

One who is an actuary should also have wonderful

research skills. Since many of the documents that they
need to analyze will not just pop into their laps, it is
important that actuaries can do good research and find
out what they need to know with regard to statistics and
pertinent documents in an efficient and expedient
manner.
An actuary should also have good working computer
skills. Since much of their work will involve computers,
it is important that the actuary not only be familiar with
computers but know how to maneuver around with them
as well.
Comprehension skills are also a necessary component for
all actuaries to possess. The actuary is an individual who
in their job role will need to analyze and interpret often
complex documents and laws as well. If one has excellent
comprehension skills they will be able to do their job that
much better.

What is insurance?
We face a lot of risks in our daily lives. Some of
these lead to financial losses. Insurance is a way of
protecting against these financial losses. For
a payment (premium), an insurance company will take
the responsibility of compensating your financial losses.

What is General Insurance?

Insurance other than Life Insurance falls under the category of General
Insurance. General Insurance comprises of insurance of property against
fire, burglary etc. personal insurance such as Accident and Health
Insurance and liability insurance which covers legal liabilities. There are
also other covers such as Errors and Omissions insurance for
professionals, credit insurance etc.

Non-life insurance companies have products that cover property against

fire and allied perils, flood storm and inundation, earthquake and so on.
There are products that cover property against burglary, theft etc. The
non-life companies also offer policies covering machinery against
breakdown, there are policies that cover the hull of ships and so on. A
Marine Cargo policy covers goods in transit including by sea, air and
road. Further, insurance of motor vehicles against damages and theft
forms a major chunk of non-life insurance business.
In respect of insurance of property, it is important
that the cover is taken for the actual value of the
property to avoid being imposed a penalty should
there be a claim. Where a property is undervalued
for the purposes of insurance, the insured will have
to bear a rate able proportion of the loss. For
instance if the value of a property is Rs.100 and it is
insured for Rs.50/-in the event of a loss to the extent of say
Rs.50/-, the maximum claim amount payable would be Rs.25/- (
50% of the loss being borne by the insured for
underinsuring the property by 50% ).This concept is
quite often not understood by most insures.
Personal insurance covers include policies for
Accident, Health etc. Products offering Personal
Accident cover are benefit policies. Health insurance
covers offered by non-life insurers are mainly
hospitalization covers either on reimbursement or
cashless basis. The cashless service is offered to
Third Party Administrators who have arrangements
with various service providers, i.e, hospitals. The
Third Party Administrators also provide service for
reimbursement claims. Sometimes the insurers
themselves process reimbursement claims.
Accident and health insurance policies are available
for individuals as well as groups. A group could be a

group of employees of an organization or holders of

credit cards or deposit holders in a bank etc. Normally
when a group is covered, insurers offer group discounts.
Liability insurance covers such as Motor Third Party
Liability Insurance, Workmens Compensation Policy etc
offer cover against legal liabilities that may arise under
the respective statutes Motor Vehicles Act, The
Workmens Compensation Act etc. Some of the
covers such as the foregoing (Motor Third Party and
Workmens Compensation policy ) are compulsory by
statute. Liability Insurance not compulsory by statute is
also gaining popularity these days. Many industries insure
against Public liability. There are liability covers available
for Products as well.
There are general insurance products that are in the
nature of package policies offering a combination of
the covers mentioned above. For instance, there are
package policies available for householders, shop keepers
and also for professionals such as doctors, chartered
accountants etc. Apart from offering standard covers,
insurers also offer customized or tailor-made ones.
Suitable general Insurance covers are necessary for
every family. It is important to protect ones property,
which one might have acquired from ones hard
earned income. A loss or damage to ones property can
leave one shattered. Losses created by catastrophes such as tsunami,
earthquakes, cyclones etc have left many homeless and
penniless. Such losses can be devastating but
insurance could help mitigate them. Property can
be covered, so also the people against Personal Accident.
A Health Insurance policy can provide fi na ncial

relief to a perso n undergoing medical treatment

whether due to a disease or an injury.
Industries also need to protect themselves by obtaining
insurance covers to protect their building, machinery,
stocks etc. They need to cover their liabilities as well.
Financiers insist on insurance. So, most industries or
businesses that are financed by banks and other
institutions do obtain covers. But are they obtaining the
right covers? And are they insuring adequately are
questions that need to be given some thought. Also
organisations or industries that are self-financed should
ensure that they are protected by insurance.
Most general insurance covers are annual contracts. However, there few
products that are long-term. It is important for proposers to
read and understand the terms and conditions of a policy
before they enter into an insurance contract. The
proposal form needs to be filled in completely and
correctly by a proposer to ensure that the cover is
adequate and the right one.

Why should one insure ?

One of the main reaso ns one sho uld insure is to
protect ones belo ngings and assets against
financial loss. When one has earned and
accumulated property, protecting it is prudent. The law
also requires us to be insured against some liabilit ies.
That is, in case we sho uld cause a loss to another
person, that person is entitled to compensation. To ensure
that we can aff ord to pay that compensation, the
law requires us to buy liability insurance so that the
responsibility of paying the compensation is transferred
to an insurance company.

Who should buy general insurance?

Anyone who owns an asset can buy insurance to
protect it against losses due to fire or theft and so
on. Each one of us can insure our and our
dependents health and well being through hospitalization
and personal accident policies. To buy a policy the
person should be the one who will bear financial losses
if they occur. This is called insurable interest.

What kinds of policies are there?

Most general insurance policies are annual that is, they
last for one year. Some policies are given for longer
periods like fire insurance for residences and some for
shorter periods like insurance for goods transportation
or for emergency medical treatment during foreign
travel.

How much should I insure for?

The amount you insure for is called the sum
assured. Normally a policy should cover the value of
the asset either the market value while insuring, or the
cost of replacing the asset should it be lost or
destroyed. The premium will depend on the sum
assured.

Can I take two policies and get claims under both of

them?
In case of an indemnity cover (one that seeks to
compensate the actual loss )--for insta nce, a policy
that covers property, if there are two policies
invogue, the loss shall be shared by both the
policies. In no case can an insured get more than the
actual pecuniary loss he or she has incurred. On the
other hand, in respect of benefi t policies like the
Personal Accident policy, where a fixed
compensation is paid, no matter what the actual loss
is , one may obtain more than one policy.
Accident policy, where a fixed compensation is paid,
no matter what the actual loss is , one may obtain more
than one policy.

On what basis is claim paid?

In indemnity policies, the upper limit of a cla im

is the sum assured and this usually applies for the
period of the policy. Certain policies, however, allow
for reinstatement of the Sum Insured by payment of
proportionate premium for the remaining period of
the policy. The actual claim will be the actual
extent of financial loss as validated by documents
like bills. If the property is underinsured, the insured
shall bear a rateable proportion of the loss.
There can be more than one claim in the policy
period but the sum assured is usually the limit
for the policy period unless reinstated. Nowadays
health insurance policies which cover
hospitalization costs have also a cashless settlement
of claims. That is, you dont have to pay for the treatment
at the hospital and then make a claim for reimbursement
of the expenses. The insurance company has a
service provider called the Third Party Administrator
(TPA) health services, who liaises with the hospitals and
directly makes the payment for your treatment as per the
terms of your policy and coverage.

Life Insurance Underwriting

Negative underwriting factors cost you money. We
commissioned this study to determine exactly how
much. If you are not able to change your factors to
save some money, at least you will know what they are
costing you!
Underwriting Factor

Company
2

Premium
$1,330

Total Cholesterol= 285

Weigh= 210

3
3
7
1
6
2
5

$ 730
$1,530
$ 835
$1,285
$ 890
$1,330
$ 815

Family member diagnosed before 60

(heart or cancer)

6
7

$1,290
$ 715

Two driving convictions in three

years

2
3

$1,330
$ 730

Cholesterol Ratio= 7.0

Blood Pressure= 141/90

What is the periodicity of premium

payments?
Most general insurance policies are annual and the premium payment is
in advance. No risk commences unless you have paid the premium. In
some long term policies companies have the facility of collecting
premiums periodically.

Why do different people have different

premiums?
The premium is calculated on the extent and nature of the cover you
want. A higher sum insured means a higher rate of
premium. Similarly a higher risk will be charged a

higher premium. An example of this is that an older

person will have to pay a higher premium for health
insurance for the same sum insured. Sometimes the
risk is higher depending on the location of risk for
example in motor insura nce in area s where
accidents are higher. So the premium will vary according
to the nature and severity of the risk.
If I buy a policy and dont make a claim, it is a loss. So,
why should I buy insurance?
General insurance is not meant to be for savings or
investment returns. It is meant for protection. What you
pay for is the protection against a risk. To approach it
as something from which returns should be obtained is
not the correct approach as there is a price to pay for
protecting a property worth lakhs for a few hundred
rupees.

If there are problems with claims what can I do?

First you should write to the company and give them sufficient time to
respond suitably. If they dont respond, or it is not a response
satisfactory to you, then you can approach the appropriate judical
channel. For complaints relating to personal insurance covers upto a
value of Rs.20 lakh, you may approach the Insurance Ombudsman in
your area.
(HERE ANNOUNCE THE CONTRACT INFORMATION OF THE
OMBUDSMAN).
The Ombudsman has a technical team that will go into the merits of your
case and give an award. If you are unhappy with the outcome with the
Ombudsman you still have recourse to consumer courts.

We extended a previous study of life insurance quote sites. Note the

difference in premium for the same factor. Also, one company may have
the high premium for one factor and the low premium for another. See
the complete study.

ELIGIBILITY
The Actuarial Society of India and Institute of Actuaries, UK are
professional examining bodies which conduct certificate,
associate ship level and fellowship level examinations and on
passing these examinations candidates become eligible to be
admitted as an Associate Member of the society and can use
AASI against their name as a registered actuary. On passing all the

subjects up to and including 400 series and upon satisfying the other
criteria specified for the purpose, candidates become eligible to be
admitted as fellow member of the Society and can use FASI against
his/her name as a recognised fellow.
A member of universities are offering graduate and postgraduate courses
in actuarial science. Mere completion of such courses does not make one
eligible to practice as an actuary, but such courses give students better
conceptual clarity and training by experts in a classroom environment
which makes them better equipped than if they directly write papers of
ASI through self study. To qualify as an Actuary, a candidate has to pass
all examinations in the prescribed subjects conducted by the
professional examining body such as the Actuarial Society
of India and the Institute of Actuaries, UK.

THE ACTUARIAL SOCIETY OF INDIA

The Actuarial Society of India was established in 1944 and registered as
a Society in 1982 under Act XXI of 1860 registration of Literacy,
Scientific and Charitable Societies. The society is a founder of the
International Forum of Actuarial Associations.

OBJECTS
To provide a Central Organisation for the members of the actuarial
profession in India for the purpose of elevating the attainment and
status and for promoting the general efficiency of all who are engaged
in occupations connected with the pursuits of an actuary;
To extend and improve the data and methods of the Science which
has its origin in the application of the doctrine of probabilities to the
affairs of life and to consider all monetary questions involving,
separately or in combination, the mathematical doctrine of
probabilities and the principles of interest;
To plan, promote and provide for interaction amongst the
members, to arrange facilities for the reading of papers, the
delivery of lectures, the discussion of topics and for the
acquisition and dissemination by other means of useful
information and knowledge connected with Actuarial Science
and other allied subjects with special reference to Indian
conditions;
To promote or to conduct work or research of interest to Actuarial
Science or to the practice of the Actuary;
To prescribe syllabus of studies and hold examinations in subjects
pertaining to principles and practice of Actuarial Science with
particular refer of adequate standard can be tested and to award
certificates, diplomas and other distinctions to successful
candidates;
To promote or to conduct work or research of interest to Actuarial
Science or to the practice of the Actuary.
To disseminate information on Actuarial Science and other allied
subjects b y u n d e r t a k i n g a n d p r o v i d i n g f o r p u b l i c a t i o n
o f j o u r n a l s , r e p o r t s , pamphlets, research papers, books and
other literature;
To form and maintain either by itself or in collaboration with
some other Organization or organizations a library or libraries for
use by members of the Society;
To confer honorary awards and other distinctions;

 To institute and award scholarships, prizes, medals and certificates;

To maintain liaison with Universities and other educational and
professional bodies in India or abroad for the purpose of promoting
the objects of the society;
To maintain contact and co-operate with other institutions in
any part of the world having objects wholly or partly similar
to those of the Society including by way of payment of
subscription, enrollment as a member thereof, and generally in
such a manner as may be conductive to the furtherance of the
common objects as the Society may deem necessary.
To discuss and comment on the actuaria l aspects of
public, social and economic and financ ial questions
which from time to time may be the subject of public interest;
To consider the actuarial aspects of legislation, existing and proposed,
and to take such action as is considered desirable;
To arrange for the compilation and publication of statistical
data and of actuarial tables based thereon;
To raise funds by subscriptions from the members of the
Society and to accept donations and bequests for all or any of
the purposes of the Society; and
Generally do all such things as from time to time may be necessary
to elevate the status and procure advancement of the interest of the
profession.

ROLE OF ACTUARIES IN INSURANCE

Actuaries are experts who perform actuarial analysis of insurance rates,
rating procedures, rating plans and schedules of insurance companies.
These are professionals who are experienced in reviewing and analyzing
insurance operations, reserves and underwriting procedures and provide
technical assistance regarding actuarial matters to policy examiners and
other technical staff. In other words they are the people who ascertain in

advance the uncertain events that could take place in future and come to
a financial conclusion.
Actuaries are involved in pricing, product design, financial management
and corporate planning. They use their professional expertise in solving
complication financial problems by combining their theoretical as well
as practical knowledge.
Actuaries also hold a legal responsibility for protecting the benefits
promised by insurance companies. Their role demands the highest
standards of personal integrity and application of professional skills.
Actuaries balance their role in business management with responsibility
for safeguarding the financial interests of the public.

APPOINTED ACTUARIES:
Procedure for Appointment of an Appointed Actuary:
1. An insurer registered to carry on insurance business in India shall,
subject to sub-regulation, appoint an actuary, who shall be known
as the Appointed Actuary for the purpose of the Act.

2. A person shall be eligible to be appointed as an appointed actuary

for an insurer, if he or she shall be----a. ordinarily resident in India;
b. a Fellow Member of the Actuarial Society of India;
c. an employee of the life insurer, in case of life insurance business;
d. an employee of the insurer or a consulting actuary, in case of
general insurance business;
e. a person who has not committed any breach of professional
conduct;
f. a person against whom no disciplinary action by the Actuarial
Society of India or any other actuarial professional body is
pending;
g. not an appointed actuary of other insurer;
h. a person who possesses a Certificate of Practice issued by the
Actuarial Society of India; and
i. not over the age of seventy years.
3. An insurer shall seek the approval of the Authority for the
appointment of appointed actuary, submitting the application in Form
IRDA-AA-1.
4. The Authority shall, within thirty days from the date of receipt
of application, either accept or reject the same. Provided that
before the rejecting the application, the Authority shall give an
opportunity of being heard to the insurer.
5. If an insurer does not receive approval within thirty days of the
receipt of such application by the Authority, the insurer shall deem
that the approval has been granted by the Authority.
6. An insurer , who is unable to appoint an appointed actuary in
accordance with sub-regulation (2), shall make an application to the
Authority in writing for relaxation of one or more conditions
mentioned in sub-regulation (2).

7. The authority, on receipt of the application referred to in subregulation (6), communicate its decision to the insurer within thirty
days of receipt of such application.
8. The appointment of an appointed actuary shall take effect from the
date of approval by the authority.

CESSATION OF APPOINTMENT OF APPOINTED

ACTUARY.
1. An appointed actuary shall cease to be so, if he or she has been given
notice of withdrawal of approval by the Authority on the following
grounds;
a) that he or she ceases to be eligible in accordance with subregulation (2) of regulation (3), or

b) That he or she has, in the opinion of the Authority, failed to

perform adequately and properly the duties and obligations of an
appointed actuary under these regulations.
2. The authority shall give an appointed actuary a reasonable opportunity
of being heard, if he or she has been given a notice of withdrawal of
approval by it.
3. If a person ceases to be an appointed actuary of an insurer otherwise
than on the grounds mentioned in sub-regulation (1), the insurer and the
appointed actuary shall intimate the Authority the reasons therefore
within fifteen days of such a cessation.

POWERS OF APPOINTED ACTUARY:

1. An appointed actuary shall have access to all information or
documents in possession, or under control, of the insurer if such access
is necessary for the proper and effective performance of the functions
and duties of the appointed actuary.

2. The appointed actuary may seek any information for the purpose of
sub-regulation (1) of this regulation from any officer or employee of the
insurer.
3. The appointed actuary shall be entitled,-a. to attend all meetings of the management including the directors of the
insurer,
b. to speak and discuss on any matter, at such meeting,-i. that relates to the actuarial advice given to the directors;
ii. that may affect the solvency of the insurer;
iii. that may affect the ability of the insurer to meet the reasonable
expectations of policyholders or;
iv. on which actuarial advice is necessary;
c. to attend,--i. any meeting of the shareholders or the policyholders of the insurer, or
ii. any other meeting of the members of the insurer at which the insurers
annual accounts or financial statements are to be considered or at which
any matter in connection with the appointed actuarys duties is
discussed.

DUTIES AND OBLIGATIONS

In particular and without prejudice to the generality of the foregoing
matters, and in the interests of the insurance industry and the
policyholders , the duties and obligations of an appointed actuary of an
insurer shall include

1. rendering actuarial advice to the management of the insurer, in

particular in the areas of product design and pricing, insurance contract
wording, investments and reinsurance.
2. ensuring the solvency of the insurer at all times.
3. complying with the provisions of the section 64V of the Act in regard
to certification of the assets and liabilities that have been valued in the
manner required under the said section.;
4. complying with the provisions of the sections 64VA of the act in
regard to maintenance of required solvency margin in the manner
required under the section;
e. drawing the attention of management of the insurer, to any matter on
which he or she thinks that action is required to be taken by the insurer
to avoid
(i) any contravention of the Act; or
(ii) prejudice to the interests of policyholders;
5. complying with the Authoritys directions from time to time;
6. in the case of the insurer carrying on life insurance business;-(i) to certify the actuarial report and abstract and other returns as
required under section 13 of the Act;
(ii) to comply with the provision of section 21 of the Act in regard to
further information required by the Authority;
(iii) to comply with the provisions of section 40-B of the Act in regard
to the bases of premium;
(iv) to comply with the provisions of the section 112 of the Act in
regard to recommendation of interim bonus or bonuses payable by the
life insurer to policyholders whose policies mature for payment by
reason of death or otherwise during the inter-valuation period;
(v) to ensure that all the requisite records have been made available to
him or her for the purpose of conducting actuarial valuation of liabilities
and assets of the insurer;
(vi) to ensure that the premium rates of the insurance products are fair.
(vii) to certify that the mathematical reserves have been determined
taking into account the guidance notes issued by the Actuarial Society of
India and any directions given by the Authority;

(viii) to ensure that the policyholder reasonable expectations have been

considered in the matter of valuation of liabilities and distribution of
surplus to the participating policyholders who are entitled for a share of
surplus;
(ix) to submit the actuarial advice in the interests of the insurance
industry and the policyholders.
7. in the case of the insurer carrying on general insurance business to
ensure,-(i) that the rates are fair in respect of those contracts that are governed
by the insurers in-house tariff.
(ii) that the actuarial principles, in the determination of liabilities, have
been used in the calculation of reserves for incurred but not reported
claims (IBNR) and other reserves where actuarial advice is sought by the
Authority;
8. informing the Authority in writing of his or her opinion within a
reasonable time, whether,-(i) the insurer has contravened the Act or any other Acts.
(ii) the contravention is of such a nature that it may affect significantly
the interests of the owners or beneficiaries of policies issued by the
insurer.
(iii) the directors of the insurer have failed to take such action as is
reasonably necessary to enable him to exercise his or her duties and
obligations under this regulation.
(iv) an officer or employee of the insurer has engaged in conduct
calculated to prevent him or her exercising his or her duties and
obligations under this regulation.

ABSOLUTE PRIVILEGE OF APPOINTED

ACTUARY
(1) An appointed actuary shall enjoy absolute privilege to make any
statement, oral or writers, for the purpose of the performance of his

functions as appointed actuary. This is in addition to any other privilege

conferred upon an appointed actuary under any other Regulations.
(2) Any provision of the letter of appointment of the appointed actuary,
which restricts or prevents his duties, obligation and privileges under
these regulations, shall be of no effect.
Applicability to reinsurance business
These regulation shall apply to reinsurers carrying on reinsurance
business in India.

GROWTH RATE
According to R. Kannan, President, Actuarial Society of India, the
opening up of 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 or 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 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 Masters 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 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).

NEW AVENUES
Low supply, high demand :
There are only 225 actuaries in India, Industry feels there is 2025% shortfall.
Larger profile :
Apart from the traditional areas of life and general insurance,
pension and re-insurance, actuaries now act as consultants,
investment advisers and risk managers as well.
Hands on:
ASI fellowship can be completed in 5-6 years time. Actuarial
studies can be pursued alongside a full-time job.
Money magic:
With about 6years of experience, a fellowship and work at a senior
position, you can earn Rs.50 lakh a year.

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 from to 16 or 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 lowlevel calculations. Once the supply pool expands, India can take up more
complex and more lucrative back office work, says Krishnamurthy.

JOB PROSPECTS & CAREER OPTIONS

Traditionally actuaries have been associated with insurance sector but in
present scenario with the economy opening up actuaries are needed in
sectors like non-life insurance, employee benefits, health insurance,
asset management, reinsurance, insurance broking houses and consulting
companies.
The job of an actuary involves formulating policies and calculating the
premium to be charged. For this they assemble and analyse data to
estimate the probability of such eventualities as death, sickness, injury,
disability and property loss and formulate a sum which is advantageous
to the customer as well as the company. In areas where employee
benefits and retirement/ pension schemes are dealt, the actuaries have to
calculate the amount of money to be paid as contribution to pension fund
in order to generate a certain income level post-retirement. Actuaries in
administrative positions have to explain technical matters to executives,
government officials, shareholders, policyholders. Actuaries working in
tandem with government/ government agencies are responsible for
designing social security and Medicare plans. Many of these
professionals work as independent consultants providing actuarial advice
to clients for a fee. Some also provide investment advice. Actuaries have
scope for career growth not only in India but also in countries like USA,
UK, Canada and Australia where they already have the necessary
infrastructure and support system available.

Some of the potential employers are :

Life Insurance
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

AMP Sanmar Life Insurance Co Ltd;

Allianz Bajaj Life Insurance Co Ltd;
Birla Sun Life (Distributor Co Ltd)
Aviva Life Insurance Co Ltd;
HDFC Standard Life Insurance Co Ltd;
ICICI Prudential Life Insurance Co Ltd;
Om Kotak Mahindra Life Insurance Co Ltd;
ING Vysya Life Insurance Co Ltd;
Max New York Life Insurance Co Ltd;
Met Life Insurance Co Ltd;
SBI Life Insurance Co Ltd;
TATA AIG Life Insurance Co Ltd;
Life Insurance Corporation of India

Non- Life Insurance

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Bajaj Allianz;
HDFC Chubb GIC Ltd;
ICICI Lombard General Insurance Co Ltd;
IFFCO-TOKIO General Insurance Co Ltd;
Reliance GIF;
Royal Sundaram GIC;
Cholamandalm GIC;
TATA AIG;
Oriented Insurance;
United India Insurance;
National Insurance Co;

12. General Insurance Corporation;

13. New India Assurance Company
Actuarial Apprentices with LIC
The Life Insurance Corporation of India takes in candidates who are
Graduates/ Postgraduates with Mathematics and Statistics as main
subjects with 60% or more marks in aggregate and coming in the agegroup 18-25 years. The selection is based on a written test conducted by
LIC which consists of two papers. Paper I includes Essay Writing (Hindi
or English) and Paper II comprising of Mathematics or Statistics or
Actuarial Science. Candidates who have passed one or more
examination of the ASI or Institute of Actuaries (London) or those
having PG Diploma in Actuarial Science with more than 50% marks in
aggregate are exempted from appearing for the exams.

REMUNERATION
If you can survive the grilling tests, there is a payoff- the median
annual salary for an actuary is handsome. Actuaries are globally in
demand and can command hefty pay packets, salaries and perks. No
wonder then that this profession has been rated among the best jobs in
the US.
In India the trend is slowly picking up. Stipend for an actuary trainee
per month in India is around Rs. 25,000 per month. Insurance companies
and consulting firms give merit to experience and qualifications with
salary packets ranging from 8 lacs per annum for beginners to around 40
lacs per annum for those in senior positions. In UK a qualified actuary
can earn 20 lacs per annum.

CONCLUSION
An actuary is an individual who has many duties and responsibilities
concomitant to their position. If one in this job role has excellent
analytical, comprehension , mathematical and public speaking skills,
they will most likely be individuals who excel at their job and produce
the highest quality work product possible. If one has all of these
aforementioned skills, the position of actuary may be the perfect one to
fill.
An actuary is the technical expert on life insurance matters studying the
morality of the insuring public, evaluating the financial condition of the
insurer, determining the policies to be offered and the premium to be
charged, determining the policies to follow in underwriting an
investments of its funds, deciding on the bonus that can be declared on
the participating policies and so on. A ggod actuary is a good economist,
a good statistician and a good security analyst.
Every well-managed insurance company will have an actuary to
continuously study its operations and advice the management on the
appropriateness of their policies. The periodical valuation of a life
insurance company, required to be conducted as per the provisions of the
Insurance Act, is the responsibility of the actuary. The premium
proposed to be charged by the insurer, has to be certified by the actuary
before they are submitted for the approval of the IRDA.

BOOKS:
Principles of Insurance
Practice of Life Assurance
Practice of General Insurance
Regulations of Insurance Business
Life Assurance Underwriting
Health Insurance
Foundation of Actuarial Science
General Insurance Underwriting
Fire Insurance Underwriting
Consequential Loss Insurance (Fire)
Fire Insurance Claim
Fire & Consequential Loss Insurance
Fire Insurance Coverage
Fire Rating & Underwriting

Marine Insurance Claims

Marine Insurance
Agricultural Insurance
Motor Insurance
Liability Insurance
Engineering Insurance
Reinsurance Management
Miscellaneous Insurance
Liability & Engineering Insurance
Group Insurance & Retirement Benefit Schemes
Law & Economics of Insurance
Insurance Salesmanship