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Mr. Keyur Parekh
Mr. Keyur is a Bcom graduate from the famous R. A. Poddar College. He is an Actuary and a Chartered Accountant. He cleared his CA in 2010 and his Actuary in 2013. He is one of the youngest Actuary our country has ever had. Currently he is working with Reliance Life Insurance and before this he was an employee at Prudential Process Management Services. We got a chance to have a short conversation with him which will surely be of great use to all the budding actuaries in our nation.
Tell us something about Actuaries?
Actuaries are people who deal with financial uncertainties of the future. It would involve all the avenues having financial uncertainties globally. For Example: Insurance Companies, Healthcare, Investments etc. In India, Actuaries are more into Life Insurance, General Insurance and Pensions. In short all avenues that involve Risk Management.
Can you tell readers what actuaries do?
An actuary is a business professional who deals with the future financial impact of risk and uncertainty. Often we work with data from the past to measure, analyze, and understand what has happened. More often, this is just a starting point for projecting what will happen in the future, and what the financial consequences could be. “The future” can be one year, as in the case of determining the cost of auto insurance, or many years when we are working out the premiums necessary to properly fund the Pension Plan (CPP). Actuaries apply their extensive toolkit to other areas as well: life insurance, enterprise risk management, investments, banking, environmental firms, and many government social programs like Employment Insurance and workers’ compensation.
What skills should a student possess to take up the Actuarial course?
Actuarial Science should be taken up by students who have very good Mathematical and Numerical skills and who are actually interested in quantifying impacts of risks and uncertainty. Anyone who loves Number crunching can do this course however, numbers is not the only thing actuaries work on. Courses in calculus, financial mathematics, probability, and statistics will set the stage for actuarial mathematics and concepts like financial economics, life contingencies, and more advanced topics. One will be able to see the usefulness of actuarial science, whether it is used to calculate a car loan payment right up to a life expectancy! Some universities will even tap into applied notions of life insurance, investments, pensions, and property and casualty insurance, exposing the technical aspects and the legal environments that surround them.
There is a notion that Actuary is among the toughest courses in the world. Do you agree to it?
Not really, it’s a Notion which has been spread by students who have taken up the course after having a weak conceptual base in mathematics and statistics. It is like if you ask a science graduate to do taxation work, he will feel it is the toughest job on earth. But if the right type of students enter the course, it is not that difficult. But yes, a lot of hard work is required.
Do you agree that there is a gap between the theoretical studies and the practical world?
That is correct for most of the career options but in actuary there is a little difference. Actuarial Science is a very conceptual course. Actuaries apply what they learn, so there is not a huge gap. But yaa there are certain Practical challenges which are faced by a person when he joins the practical world. No book will teach you the way to get around these challenges, only experience can teach you that. Eg. Theoretical studies will say “Collect the Data and do some analysis on it” – Doesn’t that sound too easy? but while working the most difficult task is collection of data. No book teaches you the challenges involved in collecting the data.
What kind of work does an Actuary actually do?
Apart from Risk Management and all, the work which we do is very field specific. Let’s talk about life insurance as that is the field where I work. Actuaries in the field of Life Insurance are mostly concerned about:
1.) Pricing the Products – which is the premiums to be charged from policyholders
2.) Valuation of the policies – which is the amount to be kept aside today to meet future claims
3.) Other roles – Valuation of the business and other support roles like developing computer models
In general insurance, the major areas of work are similar but the market dynamics like competition, product characteristics and regulatory requirements are different. General insurance is mainly a one year renewable business with a very wide range of products, whereas Life Insurance is a longer term business with lesser variety of products.
Explain the role of an Actuary as a Risk Manager.
He would go beyond just numbers and be concerned more about the qualitative aspects of risk. He would answer questions such as What are the inherent risk in business? How should the business work? What kind of customer should a business approach? Eg. If you issue a new policy, there are too many legal norms in the policy. What types of risks can occur keeping in mind those kind of legal norms? Such functions are performed by an actuary as a risk manager.
Are internships necessary for students? Are they available currently?
Yes, they are extremely necessary and they are available in the market too. Normally companies keep interns for 6 months. A 1-2 months internship is useless as in that time all we can do is teach an intern what to do and what not to. An internship is the major plus point a student can have when he is searching for a job. Internships teach you a lot of things that a book can never teach you. It shows you how does the practical world function.
Should a student attempt the UK or the Indian exams?
Well, generally speaking, it does not matter a lot. UK exams are comparatively very expensive. If your concepts are clear then it does not matter which exams do you appear. There are some universities in the UK which are affiliated with the UK institute and have a graduation course which exempts you from giving certain actuarial papers. Till date I haven’t seen any distinct advantage by doing such graduation courses.
Any course you would like to share that can work as a charm with Actuary?
Yes, there is a course from III (Indian institute of Insurance). Actuary is a more into numbers and that course is more about the insurance business in the context of Indian Regulations. What are the different distribution channels? What are the legal aspects of Insurance business. What are the Financial Reporting requirements etc. If you want to understand the insurance business In India as a whole, then this course will be tremendously helpful.
What do you think about the current scope of actuary outside India?
Hong-Kong and Singapore have great demand but the main problem what we face there is the language barrier. The barrier is a big one in HongKong whereas a much smaller one in Singapore. There is demand for actuaries in South Africa also.
How much a does a fresher student and a qualified actuary earn on an average?
Actuaries is amongst the higher paying professions worldwide and this is true with India as well. Although the salary scales for a fresher are not the best, the salary growth is high with paper passes and experience. However one should not really enter a profession because of money as every profession has its peaks and troughs.
Any tips you would like to give to the students who want to pursue actuary? How did you end up in an offbeat , unusual and interesting career such as this?
To me Actuaries is a Self-Study course. Study material provided by the institute is sufficient and self explanatory. Quite a few Forums are available on the internet which are specially managed by the SOA (Society of Actuary). One can easily go and solve their doubts through experts help. Just remember, Read, Understand and then apply. Actuary is a very interesting field, anyone who likes number crunching and dealing with Financial Uncertainty should surely do it. Best of luck.