If you are an earning adult, chances are the word ‘insurance’ is always hovering around you. You’ve probably already had your brush with an agent or an excel sheet explaining the policy, the premiums, the maturity amount. But who decides what the risks to your life, your health or your car are worth?
Actuarial science is about identifying all the physical and emotional risks around us, financially quantifying it and finding ways to mitigate it.
As an actuary, Padmaja Raghunathan has been doing this for about 30 years now. She attributes her start in the profession to being in the right place at the right time. Padmaja was completing her final year of BSc Honours in Mathematical Statistics, when the Life Insurance Corporation (LIC) of India put out newspaper ads for actuarial apprentices.
It was 1991, Padmaja was 20 years old, LIC was the only insurance company in India and there were just about 15-20 actuaries in the country.
“Like most youngsters, I was a bit rudderless. So I put all my faith in the people who were advising me, wrote the entrance exam and joined LIC as an actuarial apprentice,” she says.
As apprentices, students divided their day between work and study. Upon clearing a few exams, they would be inducted into LIC job roles. Earlier, actuarial aspirants here had to write the UK exams. India got its own institute in 1989 and seven years later, in 1996, Padmaja became the first fully-qualified fellow of the Institute of Actuaries of India (IAI).
While it normally takes most people 15-16 years to pass all the exams, Padmaja took about four years.
“It’s a milestone I have always carried with huge pride within my fraternity. That’s a record nobody can break ever!” Padmaja beams.
An actuary, like a Chartered Accountant, goes through multiple exams, and can specialise in several areas — investment banking, life insurance, health insurance, general insurance or pension and retirement benefits. Since these subjects are not taught at school or college level, the course materials have been designed for beginners.
All one needs is a solid grounding and love for mathematics and statistics.
Today, a few colleges also offer BSc, MSc and PGD courses in actuarial sciences or integrate it with their MBA programmes. But the only way to become a certified actuary is to clear the IAI’s exams.
A booming sector
As Padmaja rose through the ranks in her career, she also moved companies and cities. Her three-decade-long journey has coincided with a sea change in India’s insurance sector. From having just one insurance player (LIC) to the emergence of 23 other companies of varying sizes vying for space and the formation of a regulator (IRDAI) — Padmaja has truly been in the thick of things.
Besides the market landscape, the technology around actuarial science also grew rapidly. “In the last 6-7 years, I’ve learnt coding as well. From a manual register and calculator to being able to write programmes, I’ve been lucky enough to see the whole spectrum,” says Padmaja.
As the head of product development and pricing, her typical day involved market analysis and product designing. She also ran extensive simulation models, applying probabilities to project future events with the help of artificial intelligence and machine learning.
Currently, she runs her own private practice as an actuarial consultant. “Working as a freelancer today gives me a lot more flexibility in terms of the assignments I pick up. Outsourcing work to private consultants is also a less expensive proposition for many companies,” she says.
One of the misconceptions about the discipline is that it is very difficult to crack. “If we can get more qualified practitioners to create a formal support system, it would help a lot of students receive proper guidance and may also reduce the number of dejected dropouts,” she says.
In a country as diverse as India, the ultimate goal of actuarial sciences, through the combined efforts of humans and AI, will be to come up with customised insurance policies for every person.
The scope is huge. But Padmaja says that as a country, we tend to follow, not lead. “So the task for young actuaries will be to reverse this trend and become more exploratory and proactive in devising creative solutions for a diverse populace,” she says.
Mapping Niches is a fortnightly series that sheds light on careers that are off the beaten track, through the eyes of professionals working in a particular field