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Actuaries Abroad
India in Transition
by John C. Narvell, CAS Vice President-InternationalMary Frances Miller and I have recently returned from an educational trip to India where we met with the present and future members of the Actuarial Society of India (ASI). Mary Frances, along with CAS Fellows Wendy Tobey and Madan Mittal, presented a two-day seminar on loss reserving techniques to local actuaries and students. We also attended the 5th Global Conference of Actuaries in Delhi where we had the opportunity to meet with the members and leadership of the ASI.
India starts by fulfilling one's expectation for a country that needs ten digits to count its population. From the first street scene encountered, one is immediately and constantly aware of masses of people. And yet this flood of humanity rushes with surprising progress, albeit chaotically, toward its own ordered business future. My favorite image of Delhi captures this perpetual motion of contrasts of the old and the new—next to the open air stall where an old man decapitates a chicken and a hawker will weigh you on a scale in the street, there hangs a sign, "Internet Café—E-mail and Faxes."
The insurance industry in India is no exception to this curious dichotomy of the past and the future. Emerging from almost three decades of monopolistic state-owned insurers reflecting the values of various socialist governments, there are numerous challenges facing the insurance industry. One that has particular relevance to actuaries is the transition from government backing of inadequate prices and rampant cross-subsidies of classes to adequate rate levels and unbiased class rating plans. After a dormant period where actuarial expertise was rendered insignificant, the profession now stands poised to explode because of the burgeoning demand for our skills. Only four years into a market of open competition insuring a population of a billion people, the actuarial profession is being born anew.
Despite a 60-year history, the ASI is an organization in its infancy, rising to the challenge of these new demands after a period of relative dormancy when the insurance industry has been nationalized. The ASI proudly boasts membership of approximately 1,900. A closer inspection of its components reveals 198 Fellows against 1,684 students for a ratio of 8.5 students per Fellow. The comparable ratio in the CAS is a paltry 0.75. The pool of talent available to the profession is remarkably deep, with natural mathematical aptitudes cultivated early in the Indian educational system. The excellence of candidates for the ASI is further enhanced by students who have succeeded at universities that are orders of magnitude more rigorous than those in the American system of college admissions.
It is sobering to consider that none of the talented student members of the ASI are pursuing the syllabus of the only actuarial society in the world that is dedicated to "the body of knowledge of actuarial science applied to property, casualty, and similar risk exposures"—namely the CAS. The ASI has openly embraced our skills and expertise but is reluctant to promote our syllabus. Emerging like a cicada from decades of the protectionism of a nationalistic marketplace, the ASI has a unique appreciation for the value of creating a credential that benefits from international mutual recognition. Fiercely independent, the ASI is determined to control the educational process for its students. The ASI has already introduced a nation-specific exam into its curriculum and is open to accepting the CAS credential for admission, but only if the CAS will extend a similar membership opportunity to ASI members who have studied property/casualty insurance. The ASI has already signed mutual recognition agreements with the U.K. and Australian actuarial societies. The ball is in our court.
The CAS has been requested to present a series of four more seminars over the next year in addition to the two that we have already provided in February 2002 and February 2003. The U.S. Agency for International Development (USAID) has provided funding to cover some of the travel expenses of the CAS volunteers. In addition, CAS members with business interests in India have also volunteered. The CAS is playing an important role in educating the local actuaries and students in property/casualty techniques in a rapidly developing market. We have a unique opportunity to assist the ASI and the Indian regulators in their efforts to ensure that the reemergence of private insurance in India succeeds.
Editor's Note: Congratulations to Kendra Felisky-Watson, our usual columnist, and her growing family. Kendra recently celebrated the birth of her fourth child.