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The Actuary The magazine of the Institute & Faculty of Actuaries

Nos collègues français

he French actuarial profession is somewhat younger than ours. While our Institute dates from 1848, and our Faculty from 1856, the Institut des Actuaires Français (IAF) was founded in 1890. Until recently there were three other French actuarial associations, based in Lyon, Brest, and Strasbourg; these three united in 1994 to form the Fédération Française des Actuaires, which itself merged with the IAF in 2001 to form the Institut des Actuaires that we know today.

Small and feminine
The institute now incorporates all French actuaries. At present there are more than 1,500 qualified members and agrégés (actuaries who have done outstanding relevant scientific research), plus more than 500 associates. These numbers compare with nearly 8,000 fellows of our Faculty and Institute.
Until the late 1970s, the French profession was a select group of specialists, numbering but a few hundred, with only a handful of qualifications each year. Rapid expansion thereafter means that the profession today has a young age profile: more than 70% of actuaries have been ‘promoted’ (received as associates) since 1990. Reflecting this recent growth, the French profession is more feminine than the British; 28% of members are women, as against only 17% of UK fellows. The new combined institute has had two women presidents out of five since its establishment in 2001.
Around 150 new associates enter the profession each year. Since its age structure means that retirements are few, it is clear that the profession is currently growing at a brisk pace, probably in the region of 6% a year.

Training and exams
As in Britain, training is a long process, perhaps even longer in France. The work of training and examination is no longer carried out by the institute itself, but in ten academic institutions whose diplomas are recognised by the institute. Five of these are universities (in Paris, Lyon, Brest, and Strasbourg), two are grandes écoles based in the Paris region, while three other Paris institutions offer training on a part-time basis concurrently with professional work.
The two grandes écoles, known by puzzling acronyms ENSAE (école nationale de la statistique et de l’administration économique) and ESSEC (école supérieure des sciences économiques et commerciales), belong to a class of institutions peculiar to France: élite colleges of higher education which are considered more prestigious than the universities.
Students leaving school with the idea of possibly becoming actuaries will normally spend three years studying for a generalist degree of bachelier, which will have some content relevant to actuaries but will not commit them to that speciality. Thereafter, to continue on the actuarial path, they will spend another two or three years studying for a master’s degree and actuarial diploma, also submitting a mémoire (dissertation or thesis). This leads to promotion (admission as an associate of the institute). A further three years of professional work under the supervision of a qualified actuary are necessary before admission as a fully qualified member of the institute.

Areas of work
Looking at table 1, you will notice a striking contrast between the UK and French professions: the far smaller proportion in France who work in pensions. This reflects the great difference between pension arrangements in the two countries. Pension funds are uncommon in France; their assets amount to only about 6% of GDP, as against around 80% in the UK. French pensions are mainly provided by the various compulsory régimes de retraite, which are unfunded pay-as-you-go schemes.
Most employees of French private sector companies are covered by the three main nationwide and industry-wide schemes: the basic régime and two supplementary régimes, one for executives and one for other employees. Thus, an individual company is not responsible for the pensions of its own former employees; the costs are shared by all companies. A significant benefit is the avoidance of pension transfer problems or loss of rights arising from job changes. This is a system of ‘socialised’ risks and costs, which is often regarded with horror by upholders of anglo-saxon values.
But it has certainly been good for pensioners. ‘Today, the standard of living of retired people is equivalent to that of working people’, observes Jean-Michel Charpin, a top civil servant who is also an honorary member of the French institute, in his 1998 official report The future of our pensions. It is all too clear that this happy state will not continue unless, in future, longer-living people will be willing to work beyond age 60, the usual retirement age for French employees, and will have opportunities to do so.
Few actuaries are employed by the caisses de retraite. Those involved in pensions mostly work either with consultancy firms or with the limited number of French pension funds (institutions de retraite professionnelle or IRP), which cater for employees of some large companies. In August this year, French insurance law was amended to require that the technical reserves of an IRP ‘be calculated each year by an actuary and certified either by the insurer’s accountants or by an independent actuary’. This is one of the first instances of French actuaries being given a specific statutory duty, such as British actuaries have had since the Life Assurance Companies Act of 1870.
Thirty-odd actuaries are members of both French and British professions. Of these, more than half are FIAs or AIAs; the others are qualified or associate members of the French institute who are also affiliates of the British institute. Despite the historical affinities between Scotland and France the Auld Alliance there appear to be, at present, no members of the Faculty in the French institute. It is possible for a French actuary to have a statutory actuarial position in a British life office, provided he or she is an affiliate of the British profession and thus subject to all its requirements.
France has no equivalent of the UK’s Government Actuary. A few years ago the then president of the French institute, François Delavenne, observed that ‘we can only regret the absence of a government actuary who, as in Britain and elsewhere, would be able to provide better measurement of the actuarial implications of government decisions’. However, actuaries are involved in state supervision of all classes of insurance. This is carried out by a group of commissioners (commissaires contrôleurs), high-level civil servants who systematically visit insurance companies to verify their compliance with statutory regulations.

Mortality tables
Historically, French mortality tables have been constructed by the national statistical institute, INSEE, reflecting whole-population experience. For assured lives, tables TH00-02 and TF00-02 (male and female), based on the mortality of the French population over 2000/02, are prescribed by law for use by life offices and are printed in the Code des Assurances. However, it is also possible for an office to use tables based on its own experience, provided these are certified by an independent actuary.
The institute’s president for 2005, Véronique Lamblé, remarked that ‘until now actuaries have been totally absent from the debate concerning the statistics and experience that govern the greater part of their activity’. But here, too, things are changing. The institute is now involved in the production of new tables, which will be approved by the French regulators for the valuation of annuity liabilities.

The future
French actuaries, have in the past played a rather limited role as a small group of mathematical experts, mainly in life, general, and reinsurance. They have had little or no statutory recognition. However, the profession is now growing strongly, acquiring official recognition of its functions, and moving into a broader range of activities. London, Oxford, and Edinburgh will find it interesting to watch its future development.