To answer the question “Why not to do Actuarial science?” we need to first really look at what we mean by “doing actuarial science”. “Doing actuarial science” implies that you clear all examinations and undertake the mandatory experience to qualify as a Fellow of an Actuarial Institute (read as, Institute of Actuaries of India, since we are really going to focus on issues relating to the Indian context). A person needs to qualify 15 very tough papers relating to statistics, finance and insurance, all requiring a solid background in calculus.

To clear the exams for Actuarial science, it takes a minimum of 5 to 8 years, even though you can attempt 6 exams (or 12 exams, if you also sit for exams from the UK institute) per year. The path to achieving the degree is more like pursuing a PhD, rather than going for a short term qualification.

Having gone through such hardship, a person certainly deserves a career that is one of the highest paid jobs in the world with the best of corporate environments to work in. This is something that has been long used to lure students to pursue a career in the actuarial profession.

This marketing effort concentrated on and achieved the target of putting student memberships on a high growth trajectory, focusing on the short term benefits that they could reap. Some of it was also helped by industry demand in the initial years. To get the right perspective lets delve a bit into figuring out the trends in industry demand in India and the membership figures of Institute of Actuaries of India. We may refer to the following graphs for the same.

(Source: Derived from Membership Statistics, Institute of Actuaries of India. http://www.actuariesindia.org/subMenu.aspx?id=28&val=Membership_Statistics)

Job Market Trends for Actuarial science

Where are candidates with Actuarial science qualification required and in what numbers? In India, there are three major types of recruiters for actuarial practices –

  1. Insurance companies,
  2. Pensions and benefits consultancies, and
  3. KPOs (Knowledge Process Outsourcing) companies.

The first 2 segments require a very small team to be headed by 1 or 2 actuaries. KPO’s have been the bulk recruiters over the last decade or so, as they were getting a lot of work from the developed nations. The actuarial practices of these KPOs started gaining momentum around the early 2000’s.

During this period they worked frantically searching for those who had heard of actuarial science and it was a bounty if they found someone who had cleared one or a few papers. This demand spiked up the entry level remunerations and also gave steam to the marketing tactics being used to promote actuarial science.

With basic teams in place, the demand for actuarial science students was there but on a decline, before the world was hit by a recession in 2008, forcing these KPOs to rethink on their process and streamline them to cut costs. The solution that they came up with was to transfer a lot of work to softwares, to the extent, that the entry level people required to work on these softwares would be Graduates who may not have even heard of the term “actuarial science”.

This led to cost cutting in two fashions –

  1. The number of people required to handle reduced, and
  2. The skills required at the entry level also went out of the “actuarial student” hemisphere to the hands of a plain simple graduate.

Suddenly the job descriptions for the fresher positions changed – from students who had cleared a few papers to Graduates who may not have even heard of the term Actuarial Science. And therefore, students who had cleared a few more papers than most (say 6-8) were now branded as “over-qualified” for the job.

They could not be taken onboard at the entry level as they had performed very well in the actuarial papers, and they could not be sent into a higher role as they did not have the required experience. It turned out to be a scenario, where merit was treated as misfortune.

But, contrary to reflecting this in promotions for luring students towards the profession, the marketers pressed the accelerators harder. This can be seen from the first graph where the period from 2007 – 11 marks the great boom of students joining the Institute of Actuaries of India.

So, during this period of the great rising Indian actuarial population, actually left several hundred (or thousands ?) of deserving student members who had toiled hard to clear some papers to deal with coming to terms with both – shattering of dreams and seeing efforts made over the years go waste and with looking for new career areas. Some of these even lost a few years of professional or academic life, as they were in pursuit of clearing a few more papers so that they could be hired in their dream profession.

Such disillusionment forced the Institute of Actuaries of India to start the famed ACET or the entrance test to become a member of the society. The Institute of Actuaries of India could use this to regulate the number of students joining the profession and hopefully check another bubble burst.  I say another, as the year 2011-12 saw total student memberships of IAI fall by over 3900 members or 32%.

Has this fall completely corrected the number of memberships to job availability is very difficult to say. Or maybe not! While just typing this out, a brainwave took me to analyse the current number of actuarial job postings on two major recruitment portals i.e. naukri.com and shine.com.

This is what naukri.com throws up when you search for actuarial jobs – Only 1 vacancy for actuarial science fresher profile (the rest of the job postings are related to backend analytics!) and close to 45+ vacancies for people with some actuarial papers and mostly over 3 years of experience in the industry. A ratio of 1:45! A similar story is there on shine.com too. Even considering that this may not be the peak season for recruitments, it certainly shows that the demand for freshers isn’t that great.

Trends in Membership of the Actuarial Science Profession

It is important to view trends in membership of Institute of Actuaries of India to figure out “how many fresh student members reach the top of the actuarial qualification to be able to pursue a career which is touted as the highest paying jobs with great work environment?” Consider the first graph again, and it is easy to find that the top comprises of less than 3% of the total membership, and the middle layer is almost non-existent at about 1.5%.  (probably qualifies the high proportion of job postings for this cadre) while the student members comprise the rest over 95% of all members !  (with as good as zero job opportunities at the 0-2 years experience level).

I expect only the foolhardy to read beyond this and be interested in pursuing the actuarial profession. And it is great, because this profession requires not huge volume of people, but a few foolhardies who can make a great impact.  And since you still want ways to pursue this and cover risks while pursuing the actuarial science fellowship, let me lay out a few options for you in the order of preference. The first option being the most advisable and the last one being least preferred.

  1. Secure a job first: Land a job with a KPO in actuarial processes first or if you are very lucky, in a core insurance or pension company! This way at least you are in the market gaining relevant job experience.  Then work towards clearing actuarial papers along with the job.
  2. Do a short term course first: Clear the Certified Actuarial Analyst Certification (a new certification launched by Institute and Faculty of Actuaries, U.K). A short term certification covering a good range of main actuarial papers that you can pursue and complete in 2-3 years of your graduation. (If you do not look to complete it before your graduation, either ditch it or pursue course of action 1). Then look for actuarial jobs and land one. Now decide if you really want to clear the main actuarial profession papers. This way, you have a strong complete certification during graduation that should be good enough to land you a financial analytics job if not an actuarial one! Though taking and pursuing this degree may be a tad bit more expensive comparing Indian standards.
  3. Prove that you can clear actuarial papers: Try clearing 1 or 2 actuarial papers during graduation and see if you land a job in the actuarial processes. But simultaneously seek other job opportunities. If you are unlucky to not get one in an actuarial process, atleast you would not have wasted effort and sacrificed parties in your prime years!
  4. Plan for the long haul: This is the ideal process. We know that clearing all papers of actuarial course will take 5 – 8 years. So plan on what you will do along with this. I would put my money on planning to complete graduation, post graduation and Ph.d along with pursuing for the fellowship. And if you are doing this in relevant streams, as Statistics, Insurance, Finance or even Economics, not only the chances of you landing prime jobs is much greater irrespective of the industry situation but you will really be able to make meaningful analysis during your PhD. However, there is a word of caution! Strictly looking at IAI membership statistics, we find that currently there are 290 Fellows registered with the IAI, and about 137 waiting to clear just one or two papers to become a fellow. Considering that the number of Fellows have stuck around a 3% growth mark over the years, we may be looking towards another bubble bursting and this time at the very top of the actuarial pyramid with a potential of sending the “among highest paid job” tag into the “Land of Shadow” awaiting another “Fellowship of the Ring” to retrieve it.

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This article has been authored by Sharad Jain