The Hindu Business Line : High cost of actuaries worries IRDA

Actuaries - professionals who give advice on product pricing, design, contract wording, investments and reinsurance - are charging a heavy fee for vetting insurance products. This has become a constraint for IRDA to hire more hands.

As a result, there is delay in approving new products filed with the regulator by the insurance companies.

Mr K.K. Srinivasan, Member (non-life), IRDA said that actuaries are charging exorbitant sums for the approval of each product. "We are bringing in senior insurance professionals to clear the products. We are also consulting and using the expertise of the actuaries in insurance companies while approving the product," he said In the case of non-life insurance, the IRDA has no approved actuaries. For life insurance, the IRDA has sought help from LIC, which has deputed three of its actuaries. Currently, the IRDA has three consulting actuaries, five actuaries in the administration department and around six students.

Mismatch

Mr Srinivasan said that the mismatch between demand and supply had caused the aberration in terms of the cost of actuaries. He said that around 4,200 students had enrolled with the Actuarial Society of India and the next couple of years would see a change in the disturbing imbalance of the supply of actuaries and standards being restored in the profession.

"In India, regulation has meant that actuaries have been given tremendous power. They have access to all kinds of information and documents and can attend management, shareholders and policy holders' meetings," he said. The demand-supply mismatch has also meant that the age limit for actuaries has been extended to 70. According to another IRDA official, there are only 200 actuaries in the country. While 100 of them are in India, only 50 of them are active since the rest are past their retirement age.