Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries are professionals who are qualified in this field through education and experience. In India and several other countries, actuaries must demonstrate their competence by passing a series of rigorous professional examinations. Actuarial science includes a number of interrelating subjects, including probability, mathematics, statistics, finance, economics, and computer programming. Actuarial science involves assessment of the financial impact of future uncertain events. It enables financial decisions to be made with more confidence by analyzing the past, modeling the future, assessing the risks involved and communicating what the results mean in financial terms. The science has gone through revolutionary changes during the last 30 years due to the proliferation of high speed computers and the union of traditional actuarial models with modern financial theory. Actuarial science became a formal mathematical discipline in the late 17th century with the increased demand for long-term insurance coverage
1. In traditional life insurance, actuarial science focuses on the analysis of mortality, the production of life tables, and the application of compound interest to produce life insurance, annuities and endowment policies.
2. In health insurance, including insurance provided directly by employers, and social insurance, actuarial science focuses on the analysis of rates of disability, morbidity, mortality, fertility and other contingencies.
3. In the pension industry, actuarial methods are used to measure the costs of alternative strategies with regard to the design, maintenance or redesign of pension plans. AS-15 on employee benefits mandates the use of actuarial techniques (the Projected Unit Credit Method) for estimating the amount of pension (or any other defined contribution benefit) provision required in the accounts of employers.
In India, the profession of actuaries is regulated by the Institute of Actuaries of India. A Fellow member of The Institute of Actuaries of India is referred to as an Actuary. The Fellow membership is achieved by passing examinations at various stages and fulfilling other conditionalities as required from time-to-time. The examinations can be taken after being enrolled as a Student member. For enrollment as a Student member, one needs to be at least a graduate with a major subject in mathematical sciences such as mathematics, statistics, econometrics, engineering and actuarial sciences.
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Regards
CA Rahul Joglekar
Partner
Gokhale & Sathe
Chartered Accountants
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