How to become an Actuary?

Who can become an Actuary?

Anyone with a zest to apply Mathematics and Statistics to solve real-world problems can become an Actuary! But wait, there is more to it – Having an analytical bend of mind and ability to work on different software / tools to play with numbers is what is needed to produce a good actuarial professional!

In today’s ever-changing world, Actuaries are entering non-traditional areas such as energy, climate change, weather forecasting, gaming industry. So a geek who has a love for programming languages can also try his hand at the Actuaries to see if they innovate the profession in any way possible.

In a nutshell, what it takes to be an Actuary is your ability to welcome new tasks at work every day and be productive while dealing with all those challenges.

The only requirement is Mathematics subject at 10+2 level to be able to start your professional Actuarial Journey!

When can you start your journey?

• Right after 12th; choosing an Actuarial Society and starting to give exams from there.
• Along with pursuing your graduation; giving Actuarial exams simultaneously.
• After Graduation; when you want to do a specialized professional course.
• Anytime during your professional life when you want to shift to this profession!

Actuarial Science Profession Institutes: What are they?

You can start your actuarial journey with any of the following institutes :

(There are more institutes also , but we have listed the most common ones in India)

1. Institute and Faculty of Actuaries – UK
2. Institute of Actuaries of India
3. Casualty Actuarial Society.

The admission criteria to these institutes are slightly different from each other and choosing each has its own advantages/disadvantages. You just have to choose which institute suits you the best!

For eg., IAI has an entrance exam called ACET which you have to clear before you can become a member of the body and start giving papers. While there are no such entrance exam criteria in IFoA and you can start giving actuarial exams right away!.

Differences between IAI and IFoA:

Competition:

IAI is seen to have a higher competition than IfoA as the pass percentage of the actuarial exams from IAI is much lower than that of IfoA in general. IfoA generally passes a large number of people as the marking for the exams is quite lenient as compared to IAI.

Jobs:

IfoA is the main hub of actuarial science and is globally recognized as having tie-ups with other global actuarial societies. For a job outside India, IfoA is preferred but for a job in India, it doesn’t matter which society you clear your exams through.

Expenditure:

The IfoA is known to have much higher expenditure than IAI. A one-time membership fee of around 20k, an annual renewal fee and much higher cost of booking each exam are the causes. Whereas the membership for IAI can be taken after clearing a compulsory exam ACET (actuarial common entrance test)and renewal on payment of fees. However, for IfoA, membership can be taken either after clearance an actuarial exam or can be granted directly without any entrance exam if you have 85+ marks in your class 12th.

What are the Costs Involved to become an Actuary?

Actuarial exams are a little costly depending on which institute you choose to pursue this profession from!

Also, there is a risk of not clearing the exam in its first attempt, so you have to be ready for multiple attempts. When we add annual membership renewal payments, cost of study materials for each exam, ACTED Study tutorials and private coaching, the costs involved can be very high as compared to other professions that you might want to pursue.

You must analyze all these factors before entering this profession.

Here you can find an analysis of costs involved in becoming an actuary from IAI and IFoA and comparative advantages of pursuing the course from these two institutes.

What do you have to do qualify to be an Actuary?

To qualify as an Actuary , you have to pass exams or gain exemption from them and earn work based skills.

If you have:

  • studied a university course that has been accredited by the IFoA,
  • have studied a course with a significant amount of Maths included in the content, or
  • have certain professional qualifications,

you may be eligible for exam exemptions.  

There are four parts of Actuarial curriculum (after changes in 2019 to the curriculum, For IAI / IFoA) :

▬ Core Principles

▬Core Practices

▬Specialist Principles

▬Specialist Advanced

Work Based Skills are called Professional and Personal Development.

You can qualify as an Associate or a Fellow Actuary by following :

ASSOCIATESHIPFELLOWSHIP
To qualify as an Associate , you will be required to clear or gain an exemption from:
·        All core principles
·        All core practices
Minimum of one year personal and professional development
To qualify as a Fellow, you will be required to clear or gain exemptions from:
·        All core principles
·        All core practices
·        Minimum of three year personal and professional development
·        Two specialist principles
·        One specialist advanced

Core Principles

In the Core Principles stage, there are three main modules in Actuarial Syllabus: Actuarial Statistics (CS), Actuarial Mathematics (CM), and Business (CB). All of these modules need to be passed to be able to qualify as an Associate or a Fellow.

CS and CM modules consist of two subjects each. Each subject consists of two examinations. One is a three hour and fifteen minutes paper-based exam and the other is a one hour and forty-five minutes computer-based exam.

CB module in Actuarial Syllabus consists of three subjects. CB1 and CB2 are written examinations of three hours fifteen minutes each, whereas CB3 is an online examination of 2 hours duration.

Divided into three main areas:

  • Actuarial statistics
  • CS1 – Actuarial Statistics
  • It will include 3 hour and 15 minutes paper based assessment to be taken in the examination centre and 1 hour 45 minutes problem based assessment which would be computer based using R programming to be taken at home or in office.Both the elements need to be taken at the same exam sitting.
  • CS2 – Risk Modelling And Survival Analysis
  • It will include 3 hour and 15 minutes paper based assessment to be taken in the examination centre and 1 hour 45 minutes problem based assessment using R programming which would be computer based to be taken at home or in office.Both the elements need to be taken at the same exam sitting.
  • Actuarial Mathematics 
  • CM1 – Actuarial Mathematics
  • It will include 3 hour and 15 minutes paper based assessment to be taken in the examination centre and 1 hour 45 minutes problem based assessment  using excel which would be computer based to be taken at home or in office.Both the elements need to be taken at the same exam sitting.
  • CM2 – Financial Engineering And Loss Reserving
  • It will include 3 hour and 15 minutes paper based assessment to be taken in the examination centre and 1 hour 45 minutes problem based assessment  using excel which would be computer based to be taken at home or in office.Both the elements need to be taken at the same exam sitting.
  • Business
  • CB1- Business Finance
  • It will include 3 hours and 15 minutes paper based assessment.
  • CB2- Business Economics
  • It will include 3 hours and 15 minutes paper based assessment.
  • CB3-Business management
  • It will be online test to be taken at home or in the office.

Core Practices

It will be divided into three areas:

  • Actuarial Practice CP1
  • It includes a 3 hour and 15 minutes paper based assessment to be taken in the examination center**  followed by a planning time of 45 minutes before a 2 hour and 30 minutes paper based assessment to be taken in examination center .The first examination will have short answer requiring questions . After it longer case study type questions will be allotted for which a planning time of 45 minutes will be given and then a writing time of 2 hours and 30 minutes.
  • Modelling Practice CP2
  • It includes two papers- one a 3 hours and 15 minutes problem based assessment to be taken at home or in the office and the second ,another  3 hour and 15 minutes problem based assessment to be taken at home or in office . Both of them need to be taken in the same examination sitting. The first paper covers contents of ca2 while the second one is an additional module based on data analytics.
  • Communication Practices CP3
  • 3 hours paper based assessment to be taken at home or in office using word on computer.

** The IFoA has moved to a system of Online examination amidst Coronavirus Pandemic for all subjects in the September 2020 diet. The details can be found here.

Specialist principles

Each module will be assessed by 3 hour and 15 minutes paper based examination:

SP0 Master’s Thesis Level

SP1 Health And Care

SP2 Life Insurance

SP4 Pensions

SP5 Investment And Finance

SP6 Financial Derivatives

SP7 General Insurance : Reserving

SP8 General Insurance :Pricing

SP9 Enterprise Risk Management

Specialist application

Any one of the following subjects need to be passed to qualify as a fellow:

SA 0 Research dissertation

SA 1 Health and care

SA 2 Life insurance

SA 3 General insurance

SA 4 Pensions

SA 7 Investment And Finance

What are the various domains in which Actuarial professionals work?

Traditionally, actuarial professionals are employed in insurance companies and consultancies to support crucial tasks in –
• Life Insurance business
• Health Insurance business
• Pensions industry
• General Insurance business

Here they perform tasks such as pricing new products that various companies launch, reviewing the pricing strategy of existing products, preparing premium charts for the company as per the level of risk that a policyholder carries, reserving a set amount of money aside to pay for liabilities of the company as and when they arise., preparing financial reports assessing the health of solvency of various products/pension funds by carrying out their valuations and reporting the same to companies, regulators.

Their work responsibility also involves communicating the results of their findings to the Stakeholders and to explain to the concerned authorities in the company why they should execute a particular decision as recommended by the actuarial team.
The actuarial teams are small in each company as there are specific tasks that these teams perform. So a small team is capable of handling most of the work of the company due to their expertise.

There are 34 Non-life insurers out of which 5 are standalone health insurers, 24 Life Insurers, One National Reinsurer (General Insurance Corporation, GIC-Re) in India as of now.

Other than traditional areas, actuaries also work in the following domains :

Risk analysis and consulting
• Investment analysis
• Strategical planning
Climate Change
• Banking: to analyze its investment portfolio.

Which companies hire Actuaries?

If you are an actuarial professional, you can be employers by either of the following :

►Core Insurers such as Bharti Axa Life insurance, DHFL Pramerica, Aviva Life Insurance, Iffco Tokio General Insurance etc.

►Reinsurers such as GIC Re, Munich Re, Swiss Re.

►Consultancies such as WNS, Aon, EXL, Willis Towers Watson etc.

►Big 4 Audit firms such as Deloitte, PWC, KPMG, EY also employ actuarial professionals to hire their expertise in providing services to their clients.

How much do Actuaries earn?

• As an entry-level intern/analyst , you can expect to earn somewhere between 3-6 lakhs in India based on your skills/ number of exams cleared / domain in which you are working and the company for which you are working!
• Your package increases as your experience increases and you add more and more to your skills.
• Companies also add to your package / give you a bonus of certain amount as you clear each additional Actuarial exam. The amount depends from Company to Company.
• A newly qualified actuary in India doesn’t earn any less than 15 lac – 20 lac per annum.
• However, you can always earn more based on your skillset, competencies and professional experiences.

A candidate can expect to have a decent entry level job in actuarial profile after the clearance of 4-5 CT papers. However, people with lesser or more number of papers may also get a job.

How long does it take to be a Qualified Actuary?

On an average, 8-10 years! But you can always pace up or pace down as per your own long term commitments to grow in this profession.

What are the various industries in which Actuarial Professionals work ?

Actuaries are employed traditionally in Insurance industry (Life, Health and General) , Financial Services (Pensions , Investment analysis) and they are now moving to wider fields such as Risk Consulting and mitigation strategies , Climate Change Analytics etc.

How much do Actuaries earn?

An entry level actuarial candidate can expect to earn somewhere between 3-6 lacs in India. The earnings increase with an increase in experience , number of papers cleared. A newly qualified actuary in India earns no less than 20 lac annually. The earnings vary as per your level of expertise , domain in which you are working and whether you are into core insurance or consulting business.

Can Actuaries start their own practice?

Yes, Actuarial Entrepreneurship is in growing stages in India. You can start providing your own consultation to companies as and when you network strong enough to attract clients. Some of the Actuarial Entrepreneurship companies are:
Pramarth – Founded by Mr. Mahidhara Davanagere in 2014.
KP Actuaries and Consultants – Founded by Khushwant Pahwa in 2013.

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Anmol Kaur
Anmol Kaur is an actuarial graduate working as a Business Analyst(Actuarial) in a leading MNC. With a quest to learn more, she is looking forward to become a fellow of both The UK Actuarial Society (IFoA) and Insurance Institute of India (III) which she believes will provide her an edge over her actuarial career in India.

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