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The Actuary The magazine of the Institute & Faculty of Actuaries
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Careers: The international actuary

The role of the actuary and that of the profession is continually evolving – not only within the confines of a specific national border, but increasingly the work itself has had to adapt to reflect diverse economic, political and societal structures globally.

There are many different contexts in which the work of the actuary has evolved. One of the fundamental influences on professional context has been the system of actuarial education developed in, or introduced to, a country1:

>> In Britain, and in countries which derive their institutions from Britain, the actuarial occupation is well organised, with a large extent of self-regulation, and with the education and examination of students firmly under the control of the profession itself. In these countries, the governments have historically delegated considerable authority to the actuarial organisations and to individual actuaries

>> In Continental Europe, actuaries are regulated more by the state than by their own organisations, and education and examination are also under the control of the state-run universities

>> The United States represents something of an intermediate position. The state governments have historically retained more control and [previously2” the actuarial bodies have not been strongly organised nationally. However, the model has grown closer to the British model in recent years.

The question of the definition of a “Profession” is a key part of the “raison d’etre” for actuaries, whether it is within a developed market undergoing “challenging times” or a new market where fully accredited actuaries are hard to find, and organisations could find they are tempted to recruit someone who is “good at maths” instead. The differentiating factor that the actuarial profession possesses, in addition to the extensive and well respected examination structure, is its effective code of conduct and standards of practice that are backed up with an effective and rigorous disciplinary process3. It is this implicit “guarantee” that ensures users of information that applicable standards and best practice are followed.

There are some inherent problems that are restricting growth of the profession however – the small numbers, perceived narrow scope of work and lack of contact with the public for example. The creation of whole new jobs around risk pricing and risk management are opening up traditional sections to “non-Actuaries” and the question remains of how to maintain the brand “actuary” but at the same time expand the profession4.

Currently this is something of a double-edged sword as, although negative events can bring about criticism of those that work as an actuary or risk manager, the increased public awareness of the value of attention to risk management as performed by members of a “Profession” in its precise definition5 can only enhance the opportunities available to actuaries in the future.

One of the challenges facing actuaries in the newer, developing markets is the lack of a critical mass. Actuaries have a strong sense of identity as members of the actuarial community, but many actuaries in nascent markets find themselves somewhat isolated, with only a small handful of other actuaries to share ideas with, who may be competitors or working in a very different environment. This lack of numbers is likely to influence not only individual actuaries working in those environments but the development track in that location of the profession itself6.

So, how does the domain of the overseas actuary differ? A recent global survey of actuaries7 reflects how actuaries are perceived overseas:

“In some markets, actuaries have been leading professionals for decades. In others, the actuary is a relatively new professional. In these emerging markets, actuaries face a particularly large struggle to define their roles, communicate their value and be fully appreciated.”

“European actuaries tend to have more narrowly defined responsibilities, whereas Australians have a wider scope, although in Europe over the past five years there has been a significant increase in the range and understanding of what actuaries do.”

“In Singapore, the scope of the actuary is specifically dictated by law. A respondent in Singapore said the work is very difficult because of all the other things put on his plate”

“In Brazil, where lack of clarity may be the greatest, actuaries can have diminished roles, responsibilities normally associated with actuaries are handed off to accountants, economists or statisticians.”

“In Mexico, actuaries are well respected professionals and have a wide range of responsibilities including some that are stated by the regulatory framework, such as development of premium rates, reserve methodologies, and solvency or dynamic capital adequacy tests. Because of their background, actuaries are found in most areas within an insurance company, from underwriters to general directors and including IT and sales managers”

As an economy develops, its GDP increases and its participation in the global financial infra-structure raises the need for various actuarial tasks – compliance with supervision, developing regulatory structures8, competitive pricing and so on. How these changes are implemented, how the market evolves specifically and for what reason, ultimately provide career challenges and diversity.

However, one of the features of a nascent insurance market is that the insurance industry itself develops faster than the actuarial profession, with rapidly accelerating demand outstripping supply. For example, in India there are approximately 213 fellows of the Society (76 over retirement age, and others outside the country), around 6,200 students and 135 associates. Many of these students (62% in a previous 2004 survey by the author) are not currently in an actuarial job but are desperately trying to pass exams with no support or on-the-job training. The number of people qualifying as fellows in India is currently only about two or three per year.

How will the demand for actuaries in this and other developing regions be satisfied? Many of the international insurers transfer a senior actuary to establish and run a team and then hand over to the local actuary. Ambitious recently qualified actuaries are able to secure roles that are often more senior than their peers elsewhere. This is true in many countries with a new and rapidly developing actuarial profession. It is not unknown for an actuary in China or India to become a CFO or chief actuary within five years of attaining their fellowship.

There are some subtle differences in the attractiveness of different roles however. For example, in India the role of appointed actuary is not one that is coveted – it is often seen as a political position, without the ability to fully participate in strategic decisions. In China, pricing roles are heavily regulated, with onerous personal responsibility liability, and therefore less desirable.

One perception often voiced is that the products sold in “new markets” are fairly unsophisticated; however, this is not always the case. For example, the rapid maturity and growth of the Indian market has enabled the development of products using leading edge techniques, often surpassing those found in more ‘developed’ markets. This means that actuaries are deeply involved in all facets of the business, from strategy and marketing to presentation of a new product to the direct sales force – even if that audience numbers over 6,000!

In contrast, the tools and techniques being used in some other developing markets can be less sophisticated than elsewhere. The actuarial teams are often very small, carrying out very wide-ranging work and, although working hard to catch up, the pace of growth is so rapid that to stay up to date with new techniques is a daunting task.

Interesting and rewarding work for actuaries can be found in both developing and developed markets. Each brings its own challenges and satisfactions, from the reward of contributing to the development of a robust insurance market in emerging economies to the opportunity to look at things from a different viewpoint in markets that are superficially similar, but in many ways very different from one’s own. The adventurous ex-pat actuary has a lot to discover.

Lesley Traverso is managing partner, international, for global international recruitment firm, DW Simpson. This is an abbreviated version of a paper presented at the New Zealand Society of Actuaries Conference, November 2008

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Footnotes
1 Bellis, C The origins and meaning of "professionalism" for Actuaries Actuarial Studies and Demography research paper series, No. 011/97 Macquarie University November 1997

2 Author’s insertion to reflect that the referred paper was written in 1997

3 Gutterman, S 2002 The evolving role of the Actuary in the Financial reporting of Insurance

4 Bolnick, H J 2000 To sustain a vital and vibrant actuarial profession.

5 "....a disciplined group of individuals who adhere to high ethical standards and uphold themselves to, and are accepted by, the public as possessing special knowledge and skills in a widely recognised, organised body of learning derived from education and training at a high level, and who are prepared to exercise this knowledge and these skills in the interests of others."

6 For more investigation into predicting actuarial demand see Gribble, J D, 2006 Actuarial Supply and Demand, Traverso, L, 2006 So, How Many Actuaries does India Need? and Traverso, L 2007 Creating an Actuarial Profession in the Middle East Region.

7 Shreve, J.L. van der Hejde, M. 2008 International survey of actuarial issues and practices Milliman May 2008

8 Cooke, J.A. and Skipper, H.D. 2008 An Evaluation of US Insurance Regulation in a Competitive World Insurance Market

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Bibliography
Bellis, C; The origins and meaning of “professionalism” for actuaries. Actuarial Studies and Demography research paper series, No. 011/97 Macquarie University November 1997

Bolnick, H J, 2000; To sustain a vital and vibrant actuarial profession, North American Actuarial Journal Volume 3, number 4

Cooke, J A and Skipper, H D; 2008; An evaluation of US insurance regulation in a competitive world insurance market. From download: http://europe.milliman.com/expertise/pdfs/actuarial-and-consulting-services-6-19-08.pdf

Gribble, J D; 2006; Actuarial supply and demand. Presentation for IAA International Congress Paris 2006

Gutterman, S; 2002; The evolving role of the actuary in the financial reporting of insurance. North American Actuarial Journal, Volume 6 No. 2.

Lester R; 2005; ‘Actuary of the Year Speech to the IAA’, December 2005, see www.siteresources.worldbank.org/FINANCIALSECTOR

Shreve, J L, van der Hejde, M; 2008; International survey of actuarial issues and practices. Milliman 2008

Traverso, L; 2006; So, how many actuaries does India need? Presented at the Global Conference of Actuaries, Mumbai 2006

Traverso, L; 2007; Creating an Actuarial Profession in the Middle East Region. Presented at 1st CEO Insurance Summit, Jordan 2007

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