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The Actuary The magazine of the Institute & Faculty of Actuaries
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International: A starring role in India

Imagine the first day in a new job where your opinion is sought on reinsurance pricing of a group life scheme. The group membership is large but uncertain. Member ages are unknown; in fact, many cannot be known, as reliable age proof for them does not exist. Analysing industry mortality statistics is difficult for a country with an insured population similar to Europe’s, with a comparable geographic spread in a time of rapidly changing demographics and economic advancement. Declining to quote was not an option. Welcome to India!

Many years ago when I first considered my actuarial path, the problem-solving aspects seemed to set it apart from other professions. My career in London was growing roots and so I chose a move to India at the start of 2008 in search of challenge and adventure. To say I found it in abundance would be an understatement.

Challenges
The challenges are various and plentiful every day; for instance it may be technical pricing research on a bespoke critical illness product that needs careful consideration of long-term effects particular to the predispositions of an Indian population. Diabetes and heart disease are examples.

In a completely different vein, staff retention-related activities are continual issues. Growth of the profession has been rapid, so that demand for actuaries far exceeds supply. The shortage is set to continue. Consequences of frequent personnel changes can be additional training needs, postponements of decisions or strategic changes. In India there is one qualified actuary per seven million people, which is around 1,000 times less than in the UK.

Life insurance industry background
LIC, the government-owned Life Insurance Corporation of India, was established as the sole life insurance company in 1956 by combining 245 existing insurance providers as the industry was nationalised. The industry was liberated 10 years ago so now there is a total of 22 licensed life companies. LIC remains as the majority insurance provider and the top five insurers account for some 90% of the market’s total annual new business volumes.

For the most part, life insurers are joint ventures between Indian financial institutions and foreign insurers. An appealing aspect of the market is its international representation. Examples of international participants are Prudential, Allianz, Sun Life Financial of Canada and Old Mutual. All appointed actuaries must be fellows of the Institute of Actuaries of India. Many also have fellowship status from a mature international market and, of those, a significant number are non-Indian.

Now and the future
The recent global financial crisis has had a slowdown effect on the Indian economy but notably it has been one of only a few economies to have avoided recession. More generally, Asia continues to be the focus for above-average economic growth in the medium to long term.

Currently, foreign ownership of Indian insurers is restricted to 26%. There is a wide expectation of the government increasing this limit to 49% in the coming months. This would lead to greater interest by foreign insurers in entering the market. As a comparison, China currently has around twice as many licensed life companies.

So there are many factors contributing to this market’s stimulating work environment. From a reinsurance perspective, my work extends beyond traditional activities to support valued in a developing market. It is a varied market where products range from the complex and sophisticated to deceptively simple micro-insurance schemes that require thoughtful risk and operational controls.

At the end of the working day
Living in India is not all about work. I have enjoyed opportunities to explore a diverse and beautiful country. Mumbai has introduced me to a mix of interesting people, heady nightlife and delightful regional cuisines.

Many of us have witnessed the look of disappointment after a misheard introduction leads to the realisation of you not being an actor. In contrast, India is a place where insurance is a high-profile industry and being an actuary has a glamour tag unimaginable in the UK. It can’t be long before a mistaken Bollywood hopeful is asked the follow-up question — so which insurer do you work for?

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Jug Parmar is chief actuarial officer at Munich Re India Services, Mumbai