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What is an Actuary in Insurance and their Roles & Responsibilities?

Insurance actuary lists itself under the lesser-known jobs that are highly important for the proper functioning of an insurance company. They are expert people who are appointed to carry out certain crucial roles and responsibilities which saves the company from suffering any kind of financial loss.Â
In this article, we have discussed the meaning, roles, and types of insurance actuaries, which build a significant part of the Indian insurance industry.Â
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Table of Contents
What is an Actuary in Insurance?
An actuary is a professional who specialises in the field of analysing financial risks by implementing statistical, financial and mathematical theories. In insurance, actuaries aid in assessing risks which helps companies in the estimation of premiums for their policies. Â Â
They are given the responsibility to analyse the financial risks by evaluating the mathematical, statistical and financial theories. Moreover, they also help in premium estimation.
How Do Insurance Actuaries Work?
The Insurance actuaries divide the financial risks majorly between two groups: High-risk and low-risk individuals. High-risk people are more prone towards raising claims than low-risk people. Hence, separating them in this manner helps to balance out the liabilities and maintain proper business.Â
Types of Insurance Actuaries
Insurance actuaries specialise in different areas of the insurance industry and they are:
Role of the Actuary in Insurance
The main work of insurance actuaries is to gather all the financial statistics and mathematical theories which helps the concerned insurance companies to anticipate and analyse the risks. Apart from this, the actuaries also perform the following tasks:
Pricing
The current market values and data are analysed by actuaries to formulate policies and fix reasonable prices.
Capital Modeling
The actuary projects the policyholder's liabilities and assets to evaluate its solvency and future monetary requirements.
Investment Portfolio
They evaluate the investments in bonds, funds and stocks.
Risk Management
The actuaries have to assess the assets and procure valuable advice for the agents and customers whether the company is able to secure them or not.
Who Can be Appointed as Actuaries for Insurance Companies?
As per the Appointed Actuary regulations put forth by the Insurance Regulatory and Development Authority of India, any insurer or insurance company should mandatorily appoint an actuary to manage financial risks and uncertainty of the insurance business.
To be appointed as an actuary with any insurance company, an individual has to fulfil the following criteria, as put forth under regulations:
He/she should be a resident of India.
Should be a fellow member as per the Actuaries Act, 2006.
In the case of life insurance
He/she should have passed a specialisation subject related to life insurance. Currently, specialisation refers to a Specialist Application subject as put forth by the Institute of Actuaries in India.
A prospective candidate should have at least 3 years of post-fellowship experience pertaining to the annual statutory value of life insurers.
A minimum of 10 years’ experience in the life insurance industry, out of which, at least 5 years should be that of the post-fellowship experience.
In the case of general insurance
He/she should have passed a specialisation subject related to general insurance. As per the Institute of Actuaries in India, currently, specialisation refers to a Specialist Application subject.
He/she should have at least 1 year of post-fellowship experience pertaining to the annual statutory value of a general insurer.
A minimum of 7 years’ experience in the general insurance industry, out of which, at least 2 years should be that of the post-fellowship experience.
In the case of health insurance
- He/she should have passed a specialisation subject related to health or general insurance. Similar to the above two categories, as per the Institute of Actuaries of India, currently, specialisation refers to the Specialist Application subject.
- He/she should have at least 1 year of post-fellowship experience pertaining to the annual statutory value of a health or general insurer.
- A minimum of 7 years of experience in the general or health insurance industry, out of which, there must be at least 2 years of post-fellowship experience.
Apart from these, an individual can be eligible for the position of Appointed Actuary with any insurance company if they comply with the following criteria:
- Should be an employee of an insurance company.
- Is not already appointed as an actuary with any other insurance company in India.
- Is not over the age of 65 years.
- Possesses a Certificate of Practice from the Institute of Actuaries in India.
- Has not committed any professional breach or is not guilty of any other misconduct.
Individuals satisfying the above criteria can be appointed as an actuary for insurance companies by the IRDA.
Is There an Association of Actuaries in India?
Yes, the Institute of Actuaries in India is a professional body for actuaries in India. Formed in the year 1944, the Actuarial Society of India (ASI) was converted into the body corporate of the Institute of Actuaries in India under the virtue of the Actuaries Act, 2006.
Objectives of ASI
- To propagate the advancement of actuaries in India.
- Facilitating research on the subject relevant to actuarial sciences.
- Opening avenues to promote communication between different members of the profession.
- Providing the necessary guidance for those studying actuarial sciences in India.
The Actuarial Society of India is also one of the founding members of the International Actuarial Association, which is the organisation for all actuarial bodies across the world.
How Can One Become a Member of the Institute of Actuaries in India?
To become a member of the Institute of Actuaries in India (IAI), an individual has to belong to any of the categories mentioned below:
Are Actuaries Required for both Life and General Insurance Companies?
Yes, actuaries are crucial for both life and general insurance companies. Few companies appoint full-time actuaries while others hire the consulting services of actuarial firms.
Actuaries are an indispensable part of any insurance company. They play a key role in determining the policies put forth by these companies.
Insurance actuaries hold a very important position in an insurance company and help in making very crucial decisions that are profitable for the company. There are various types of actuaries in insurance who are hired by various insurance companies owing to their competence and work experience to provide the best service to their customers.