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The Actuary The magazine of the Institute & Faculty of Actuaries

Taking up a challenge

When India is mentioned, the first things that spring to mind for most people are poverty, slums, and begging. After that some think about the political dispute with Pakistan, perhaps the religious disagreements. Maybe after these things, people consider the romance of the Taj Mahal, only one of many truly amazing monuments and ancient sites in the country.
Many in the UK will have read of the boom in call centres and head office outsourcing, much of it relocated from Britain. There are also rumours of a number of multinational life insurance companies extending this outsourcing model to encompass actuarial modelling, valuations, and reporting. So what is the reality of living and working in India and are the opportunities worth taking?

Facts and figures
An enormous country with huge diversity, this rapidly developing sub-continent is, in reality, many different countries in one. The world’s most populous democracy has recently elected a new government; the architect of India’s economic reforms is now the prime minister, with the stated aim of taking some of the new prosperity out to the rural areas. The new prime minister, Manmohan Singh, is Sikh, and this signifies a shift from a predominantly Hindu religious-based government to a more secular administration.
India has a population of more than 1bn and rising. It has the fifth-largest income in the world, taking into account purchasing power parity. The Indian gross domestic product (GDP) growth rate is over 6% pa on average for the last decade and the savings rate is around 26% of GDP. Life insurance was introduced to India in 1818; the Life Insurance Corporation of India was formed in 1956 and had a monopoly until the opening up of the market in 1999. The regulatory body, the IRDA, was also formed at that time. Despite foreign insurance companies being limited to a maximum 26% share in any joint venture, it is still one of the highest potential insurance markets in the world perhaps equalled only by China.
This all adds up to exceptional opportunities for ambitious actuaries to have a significant effect on the development of their employer, the actuarial profession, the insurance industry, and society in general. India has a very active actuarial society, the Actuarial Society of India (ASI), with many students sitting UK Faculty or Institute exams in addition to the ASI exams. On the regulatory side, the appointed actuary system is in place and all products must be approved by the regulator. Students require training and mentoring, as they need to be shown how to apply their new actuarial knowledge to real-world problems. They need to learn how to work as part of a team with the rest of the company, including marketing, agency, and alternative distribution departments, to come up with innovative products that will appeal to different sections of the population.

Actual versus expected
So far the picture sounds appealing: an opening market, a huge population, and a growing appetite for insurance, particularly savings-linked products. However, many people are put off by stories of children knocking constantly on car windows, of dirt and squalor. Certainly, this is not Singapore, but the reality of modern India is that there are large shopping centres, you can go to Marks & Spencer for your essentials, and there are supermarkets. Most expatriates have a car and driver. Yes, from time to time someone may knock on the car window when you are stopped in a traffic jam (probably once a day depending on where you are), but ignore them and they go away. It’s no different to the people living on the streets of London. In addition it is normal, inexpensive, and expected for people to have a full-time maid and driver, often also a cook, 24-hour security guards, and a gardener (if you choose to live in a house instead of an apartment).
In addition to the glamour of Bollywood, Mumbai is particularly known for its poverty and pollution. However, on a recent visit the sky was blue and you could see for miles, a far cry from the haze you see in most cities of the world on a warm day. In the middle of the city is a white sandy beach, the lifestyle is an outdoors one, with great weather for most of the year; the expatriate communities are strong and extremely welcoming. The sights to see are unbelievable and day-to-day living, after housing and your car is deducted, is extremely cheap by international standards. With taxation lower than the UK and salaries (at least at the more senior levels) on a par if not higher, plus a range of benefits, there is an opportunity to save far greater amounts than is possible living in the UK. As for holidays, you have a huge range of possibilities from the Taj Mahal in Agra and the ancient city of Delhi, to the beaches of Goa. There is no doubt, India has a lot to offer.

The catch?
So, if it is all that great, why doesn’t everyone want to go there? Well, the traffic is bad, but so is London traffic. The trains and internal flights are good, but forget the buses, and there is no underground system yet. You can’t just go round the corner to Ikea and pick up a bookcase (but watch this space: Ikea is in China, so it is probably only a matter of time). You usually have to get things made which takes time and probably a dozen pieces of paper, but you can get decent coffee. The bureaucracy in India is frustrating no matter what you want to do it will take time, in work and everyday life. Paying people to encourage things to happen or not happen is part of life. There is no doubt the culture is vastly different, but most people speak English, which does make life somewhat easier. Expatriates seem to love it or hate it, with even the majority who love it feeling the need to take ‘sanity breaks’ at least once a year.
You need to be ambitious, patient, and have an open mind to succeed in India. For those that do take on this challenge, the difficulty is returning to a job in the UK. This is not because of a lack of employers happy to recruit someone who has international experience quite the opposite. The problem comes as people get used to broad job scopes, high-level strategic roles where your day-to-day decisions have a fundamental effect on the company, and a high level of autonomy, although there is usually support from a regional office a five- or six-hour flight away. Where do you go from India? The answer varies from person to person, but the skills and experience gained in such an environment will always be in demand throughout the world. Insurance company chief financial officers in Asia tend to be aged in their late 30s to mid-40s. Chief executive officers are in a similar age range and, almost without exception, they have developing market experience. Increasingly actuaries are taking on these broad financial and managerial positions. Where else, outside Asia, are such opportunities available?