Actuarial Science : Introduction
You must have seen, heard and read about companies which provide insurance
cover to policy holders in case of any eventuality like accidents, hospitalization,
household hazards, thefts or death and still others who look after investment
schemes, employee benefits, retirement benefits and pension schemes.
The policy holders are required to pay a fixed amount as installments
at regular intervals and they get this money back in the event of any
untoward incident or upon the maturity of the policy. Have you ever
wondered who decides as to what amount of money a policy holder should
pay as premium or what sum should be given as pension amount or returns
by the company?.
Well, this exactly is what an actuary does. They calculate insurance
risks and premiums. Technically speaking the job of an actuary is to
assess the financial impact of an uncertain future event. Roughly speaking
they look at the financial aspect of disasters, sarcastically speaking
they are financial astrologers.
An actuary has to combine the skills of a statistician, economist and
financier and employ techniques of probability, compound interest, law,
marketing, management etc to predict the outcome of future contingencies
and design solutions to lessen the financial severity of such events.
Actuarial profession was formally established in 1848, with the formation
of Institute of Actuaries, London. In India, traditionally actuaries
were found only in the life-insurance sector but now with the opening
up of the economy they are wanted by non-life insurance companies, banks,
stock exchanges, private and government agencies and this is one field
where demand exceeds supply.
The Actuarial Society of India (ASI), the only professional body of
Actuaries in India was formed in 1944 and was admitted as a member of
the International Actuarial Association (IAA), an umbrella organization
to all actuarial bodies across the world, in 1979. It was registered
in 1982 under registration of Literacy, Scientific and Charitable Societies
Act XIII of 1960. Its objectives include the advancement of Actuarial
profession in India, providing opportunities for interaction among members
of the profession, facilitating research, arranging lectures on relevant
subjects and providing facilities and Guidance to those studying for
the professional Actuarial Examination.
The Institute of Actuaries Of India (IAI or formally ASI) was initially
started as a non-examining body when Actuaries used to get qualified from
Institute of Actuaries or Faculty of Actuaries of UK. The Institute of
Actuaries of India started conducting Entrance Examinations in India for
students of Institute of Actuaries, UK, in 1975. In 1989, it started conducting
examinations for its Indian qualification up to Associate ship level,
and in 1992, it started conducting Fellowship level exams. The IAI has
been following the UK pattern of examinations since November 2000 with
an eye to be a part of global standards set by the International Actuarial
Association (IAA).
To become an actuary one must be a Fellow of a recognised professional
examining body like the Actuarial Society of India (ASI), Mumbai or
the Institute of Actuaries, London. The work of an actuary involves
a lot of number crunching and the nature of work is quite tedious, nevertheless
it offers rewards in terms of intellectual challenge, status, job satisfaction
and earnings. As their judgment is the basis of decision making for
many business activities, their career paths often lead to upper management
and executive positions.
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