Actuaries increasing in influence in the region
The actuarial profession has been gaining popularity in recent years, commensurate with the growth of the insurance and financial services segment in the MENA region. We spoke to Lux Actuaries & Consultants’ Mr Shivash Bhagaloo about developments and opportunities for actuaries in the region.
By Jimmy John, Middle East Insurance Review
The actuarial profession in the GCC has been increasing in membership and influence on the back of IFRS17. The entry of Lux Actuaries & Consultants into the region in 2007 resulted in a significant increase in local actuarial talent, particularly in Saudi Arabia.
Regional regulations have been strengthened, resulting in increased involvement by actuaries in regulatory reporting. Auditors need more locally-based actuarial support in fulfilling their actuarial responsibilities.
“I see the profession being recognised as a cornerstone of prudential regulation as well as being custodians of data-driven decision making,” said Mr Bhagaloo, who is an executive director with the company.
He said that the creation of the Gulf Actuarial Society (GAS) in recent years, which welcomes students and qualified actuaries from across the Gulf, was difficult to achieve a decade ago. GAS is now a recognised association of the Institute and Faculty of Actuaries (IFOA). “This is all thanks to the support of actuaries on the ground here in the GCC, working towards improving the industry,” he said.
Favourable market environment
The way that actuaries are received in the region has generally been favourable but varied. “Each GCC country has its own nuances so it’s important not to paint with a broad brush,” said Mr Bhagaloo.
In 2007, when Lux commenced operations in the region, appreciation of the value added by actuaries was limited and the word actuary was used loosely to describe anyone who had taken a few actuarial exams.
“Today there is a general understanding that a qualified actuary brings a skill set that is specific and valued. And the recognition of specific actuarial bodies as being fraternities for international recognition of the wider profession has indeed found its way into regulation,” he said.
GCC regulators such as the Central Bank of the UAE and the Saudi Central Bank have created specific regulations governing actuarial practices and have led the region in bringing actuaries to the forefront of many insurance initiatives.
Opportunities and challenges
Mr Bhagaloo believes that the greatest challenge facing the profession in this region is the availability of sufficient local talent at a grassroots level. He believes that there has been improvement in this area but there is still a significant opportunity for the industry to produce more graduates from the region.
“The success of the next 10 to 15 years will depend on support from local training institutions, universities, international actuarial bodies and regulators,” he said.
One of the biggest opportunities for the profession is the ability to adapt to IFRS17 and to lead the future of financial reporting. “The professional curriculum must necessarily keep pace with global developments in order to provide actuaries with the tools to face these upcoming challenges. These include areas such as data science, important when looking to hire analysts,” he said.
Regional universities now offer actuarial courses
The two main universities in Saudi Arabia, King Fahd University of Petroleum and Minerals and King Saud University, offer undergraduate courses in actuarial science.
“We have taken interns from these universities over the last nine years and have always been impressed with the quality of the candidates,” said Mr Bhagaloo.
As an international body, the IFOA has supported GAS and continues to keep an ear to the ground to address concerns in the GCC region. Over the years, IFOA presidents have regularly travelled to the GCC to meet with and understand the local industry.
Technology as an enabler
IFRS17 places actuaries at the centre of financial reporting and will require an upskilling of the profession in new systems in a short space of time. Mr Bhagloo feels that this will create opportunities for actuaries to work on software and systems still being developed.
“Machine learning and data science have a pivotal role to play in understanding underlying relationships between rating factors and building fit-for-purpose models,” he said.
Future growth opportunities
Mr Bhagaloo is very positive about the future for actuaries in the region, largely because of the quality of those currently on the ground.
“I look forward to further growth of local talent and support from international actuarial bodies like the IFOA,” he said.