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The Actuary The magazine of the Institute & Faculty of Actuaries
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International: Kenya

The Actuarial Society of Kenya (TASK) was launched in 2005. It brings together qualified and trainee actuaries in professional, educational and research organisations with an aim of promoting the actuarial profession in Kenya and East Africa. Sundeep Raichura is the founding and immediate past chairman.

TASK performs its role through its governing council and committees and works to a three-year strategic plan. Its vision statement is “to position the actuarial profession in Kenya and the region as the leading profession in the areas of modelling and management of financial risks and contingent events”.

The society fulfilled its ambition to become a full member of the International Actuarial Association at the International Congress of Actuaries in Cape Town in 2010. With Kenya there are less than ten qualified actuaries, including associates of both the Institute and Faculty of Actuaries and the Society of Actuaries. There are over 300 students registered with the Institute and Faculty of Actuaries, although not all of them are in actuarial practice. There are further students who have graduated from local universities with actuarial science degrees and more actuaries of Kenyan origin working abroad.

Many students have given up on actuarial examinations and have taken up other qualifications such as the CFA charter. A lack of actuarial employment opportunities and the difficulty and length of the actuarial qualification process are cited as reasons.

The local universities have actuarial programmes that enrol hundreds of students. Among them, the University of Nairobi’s programme is the most established, which started in 2000. Jomo Kenyatta University of Agriculture and Technology (2002), Maseno University (2006) and Strathmore University (2010) also have programmes. TASK is also liaising with the Actuarial Society of South Africa to look at adopting the new South African education strategy and obtaining accreditation for the local university actuarial science programmes.

Some of the local qualified actuaries teach at the universities and participate in course reviews and examination marking. Actuarial members are predominantly employed by life insurers and consulting firms. Some are employed by banks, investment companies and healthcare organisations. The few consulting firms in the country mainly practise in the pensions field.

Statutory roles in pensions and insurance
Insurance

An actuary is currently defined as FIA or FFA or other as approved by the Regulator.
>> Actuarial certification of long-term insurance premium rates
>> Annual statutory actuarial valuations of life funds
>> Independent actuary report on mergers and acquisitions. There is no statutory actuarial role for non-life or healthcare currently.

Pensions
An actuary is defined as fellow member of recognised international actuarial body.
>> Triennial actuarial valuations of defined benefit schemes n Minimum funding actuarial valuations (no prescribed basis) and statutory remedial plans
>> Actuarial certifications of amendments affecting financial health
>> Actuarial evaluation on winding up
>> Actuarial certifications of transfer values and commutation terms
>> Initial statutory requirement for actuarial reviews of defined contribution (DC) schemes dropped in 2004
>> Regulations on scheme conversions being prepared.

There are some provisions in income tax rules on treatment of actuarial surpluses and deficits. TASK is seeking recognition under the insurance and pensions legislation.

Industry players
Most companies transact life insurance and are composite insurers. The pension sector comprises unfunded pay-as-you-go Public Service Superannuation, National Social Security Fund (DC) and occupational schemes. Legislation has focused on enhancing protection of members’ benefits and improving governance of schemes. Public service schemes are being re-engineered.

There is a trend towards DC schemes and there are particular concerns regarding contribution rates, distribution and equity of allocation of returns to member accounts, conservative investment strategies and member communication.

Challenges
While there are many services that actuaries can offer, most life insurance companies will only call upon actuaries to undertake yearly actuarial valuations and certify rates for new life products. There is a perceived high cost of actuarial services.

The trend towards DC schemes limits the traditional defined benefit actuarial role. The capacity of the market to absorb actuarial science graduates in traditional fields has led to frustration and disillusionment of actuarial graduates. Wider fields are not penetrated and they are a hard sell, although some individuals have done well in banks, investment houses and information technology.

Other challenges faced are:

>> Effective implementation of actuarial recommendations
>> Actuarial education, resource and capacity constraints and lack of accreditation
>> Competition from other courses or qualifications
>> Mentoring and training of students.

TASK organises an annual actuarial convention in Nairobi and is promoting research by university students and actuaries. TASK worked closely with Actuaries Without Frontiers to organise a two-week forum on enterprise risk management in Nairobi in late 2009. TASK is also working with the regulators and insurance companies to come up with a formalised internship programme so that actuarial trainees benefit from relevant experience during their holiday attachments.

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Kenya stats and facts
Land mass
580,367 square kilometres
Population 40,046,566 ( July 2010)
GDP £20.054bn

Source: CIA
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With thanks to Sundeep Raichura for the overview of the Kenyan actuarial profession and industry information. Sundeep, a qualified actuary, is managing director for Alexander Forbes Financial Services (E.A) Ltd and was instrumental in the formation of TASK