Insurance actuaries want foreigners kept out

Venkatachari Jagannathan
31 October 1999

The foreigner versus Indian debate is now taking another turn. This time the debate is raging among members of the Actuarial Society of India. Members have expressed opposition to the Insurance Regulatory Authority's proposal to allow the appointment of foreign actuaries as in prospective private insurance companies. Click here to check out the latest on this subject.

It is learnt that the IRA has sent a note to the ASI, in which it has expressed a doubt about whether the ASI can provide adequate support to the regulatory body in the formulation and implementation of appropriate actuarial regulations and control. It has also asked whether there are enough actuaries with expertise to assume the role of Appointed Actuary with the new insurance companies.

Predictably, the note has irked many ASI members. What, it seems, has really angered some is the thought that foreigners will occupy these key posts in insurance companies.

For the unitiated, actuaries are the professionals who design insurance products, arrive at premium rates after applying statistical tools, taking into account various imponderables that go into understanding risk. Actuaries are also the persons who do actuarial valuation of insurance companies and certify their solvency. Given this, an 'appointed actuary' or chief actuary is a key person in an insurance company. The draft regulations governing appointed actuaries, prepared by the IRA, give a hint of the enormous powers that will be vested with them.

Enormous powers
As per the draft regulations, an appointed actuary shall, inter alia, have access to all information/documents in possession and control of an insurer. He will also have the authority to question any employee or call for documents. The appointed actuary can also attend the board meetings of an insurance company and give his views on matters relating to the organisation's solvency and its ability to meet its obligations to its policy holders.

In addition, he will have the power to report to the IRA and the shareholders at the company's AGM about matters on which the management refused listen to him. And capping it all, insurance companies will not be able to remove appointed actuaries from their positions without prior sanction of the IRA!