Daffodil International University
Faculties and Departments => Business Administration => Business & Entrepreneurship => BBA Discussion Forum => Topic started by: Rozina Akter on February 26, 2020, 06:52:41 PM
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MetLife Bangladesh has taken a set of initiatives to popularise the actuarial profession with a view to making the inert insurance sector vibrant, said Andrew D Rallis, global chief actuary of the American insurer.
"Insurance is an important part of the economy, so there is an urgency to develop the actuarial profession," he told The Daily Star in an interview recently. Rallis, who is based in the US, called in to Bangladesh earlier this month.
Inclusive economic growth of a nation has strong links with the insurance sector. As Bangladesh's economy is growing fast, the insurance sector should get a better shape.
There is an operational and business risk for insurance companies if they set premiums and reserves for clients without calculations by an actuary.
"If an insurance company suffers, it is not good for the industry, regulators and the population as a whole."
An actuary applies mathematical and statistical models to specific institutional and financial problems based on solid knowledge of business context and behavioural implication. Knowledge of actuarial science is the base of actuarial profession.
Actuaries, who are trained in the theory and applications of mathematics, statistics, economics and finance, apply their analytical skills to manage financial and other risks stemming from running business of insurance.
MetLife, the largest life insurer in Bangladesh, has been providing scholarships to students of the University of Dhaka for the last three years to promote the professional growth of actuaries, said Rallis, who is an executive vice-president of MetLife.
The students of the applied mathematics department of the university are eligible for the scholarship.
It is in talks with the Insurance Development and Regulatory Authority (IDRA) to promote the actuarial profession, said Rallis, who is also the chief of the US-based Society of Actuaries, the largest professional body for actuaries.
It provides professional certification to individuals upon completion of necessary courses.
"This is an old profession. I have recently visited Japan as a guest speaker to mark the 120-year anniversary of the profession in the country," he said.
MetLife, which is a 150-year old insurer, appointed actuaries from its inception.
It started its journey in Bangladesh in 1952 as Alico until its acquisition by MetLife Inc globally in November 2010, when it was co-branded as MetLife Alico. In 2015 it was renamed MetLife.
It serves more than a million customers and is a major employer in Bangladesh: MetLife has more than 16,000 field forces and employees.
There are 33 life insurance and 46 non-life insurance companies in Bangladesh. But the profession is quite new in Bangladesh, which is why there are only six actuaries in the country.
There are about 500 actuaries in India, more than 100 in Pakistan and about 30 in Sri Lanka. Globally, there are 75,000 actuaries.
Three out of the six actuaries in Bangladesh are working at MetLife, which has a strong presence in 40 countries.
"Bangladesh should widen the profession as a majority of the insurance companies have no dedicated actuary to set premium and reserves for clients and entities," said Rallis, who earned a Bachelors of Science in both Physics and in Mathematics from the Massachusetts Institute of Technology.
The number of actuary depends on the volume of a country's insurance industry.
Actuary is the core theme to develop the insurance sector because everything is dependent on data. Analysing data and statistics is an essential part for insurance companies.
"Everyone needs to understand the importance of insurance in order to realise the merit of the actuarial profession."
If an individual or entity face unexpected things, insurance companies provide financial support as per the commitments made under coverage.
"Commitments made by insurance companies help people plan a life in a way that provides peace of mind. As a result, they will not feel too much worry even if things go bad in life unexpectedly."
An actuary calculates the risk factors of clients by analysing their age, sex, occupation and heath condition and the insurance company sets premiums for customers based upon the risk factors.
"People whose risk factors are high should pay more premiums. An actuary assesses the risk factors in order to set aside required reserves for the clients. For this reason, actuary has a great role in bringing peace in people's mind. That's why I became an actuary. It is one of the best tools to serve the society."
According to Rallis, artificial intelligence (AI) will help the actuarial profession in the days ahead as it will enable accurate prediction of risk factors.
Actuaries will receive support by using AI and this will increase the value of the profession, Rallis said.
The profession is highly popular in North American countries and it is also getting traction in Asian countries.
Saudi Arabia, the UAE and some other Asian countries are focusing on developing the insurance sector.
Rallis also touched upon the challenges facing Bangladesh's insurance sector.
In Bangladesh, the coverage of insurance is low when compared with global situation.
"The authorities should pay heed to bring more people under insurance coverage."
As of December, around 2 crore people in Bangladesh have insurance coverage, according to data from the IDRA.
"Many educated people in Bangladesh have never heard the name of the profession. Even teachers are unaware of it, which is a barrier for the expansion of the profession," he said, while urging local universities to introduce actuarial-related courses to make the profession popular.