With Asia’s growing middle class demanding more and more general-insurance products, actuaries with the right skills are hot property
Fires, car accidents, disease and death - for many actuaries, such events are all in a day's work as they calculate the insurance risks of life's disastrous occurrences to establish premium prices and payout levels.
The rewards for such work, however, can be immense. In the US, the actuarial profession is consistently voted one of the top three careers for stability, compensation and prospects. In China, actuaries are not "white collar" workers, they're "gold collar" workers. And with Asia's fast-growing middle class demanding a growing range of insurance products, prospects for qualified actuaries in the region are incredibly bright.
Though the actuarial field has traditionally been dominated by life insurance, it is the general insurance (GI) field - that covers areas such as property, automobile and employer-liability insurance - that is currently growing more rapidly than any other area, especially in Asia.
"As we look at the growth opportunities for the actuarial profession, we see important opportunities in the GI field in Asia, where it now makes up about 25 to 30 per cent of the actuarial work that's out there," says Greg Heidrich, executive director of the US-based Society of Actuaries (SOA). "In Asia's developing economies, more and more people are moving up into the middle class. Middle-class people buy homes and cars and they start businesses, so they need more insurance cover."
This has prompted the SOA to include the GI "track" in its study programme, adding to its existing five tracks: life insurance, group and health, investment, enterprise risk management, and retirement benefits.
Those thinking of entering the actuarial profession, however, have to realise that studying to become an actuary is very hard. The full qualification process takes about seven years on average and includes some of the toughest professional examinations on the planet.
"This is a difficult, complex field," Heidrich says. "You've got to be really good at math, you've got to get really good grades and you have to be really disciplined. You don't get thousands of students suddenly rushing in to study it, because most can't do the work. But those who can, find stable careers, lucrative opportunities and can move internationally."
In Hong Kong, there are around 1,000 qualified actuaries. Most would have started by studying actuarial science at university, following a course based on the exams of a professional body, such as the SOA or the UK's Institute and Faculty of Actuaries.
They are then usually hired straight out of university by large multinational insurance companies and continue to study for several years while working. It is usually at this stage when they will choose the area in which they want to specialise, based on the tracks available.
The growing importance of the GI track can be seen by looking at the recent activities of some of the major players in the market. Jonathan Zhao, partner and actuarial and insurance advisory services leader, Asia-Pacific, at Ernst & Young (E&Y), says many of the big global insurers are striving to grow the GI sides of their businesses.
"The latest one we see is AXA buying HSBC's GI business. What AXA plans to do is become number one in both the life and GI market and combine the two. They're doing this because they see the opportunities in the GI market, not just in Hong Kong but across Asia-Pacific."
A large portion of the demand is, unsurprisingly, coming from China. The growing middle class is mostly responsible, though other developments, such as changing regulations - for example, in 2012, motor-insurance premiums were deregulated - and an improving claim experience are driving GI business growth. However, other Southeast Asian countries are also registering strong GI growth, especially Indonesia, Malaysia and Thailand. For Hong Kong actuaries who consider their English better than their Mandarin, these countries can be more attractive than China.
Regardless of the language used, actuaries have to have excellent communication skills because of the extremely technical nature of their work. "It is critical that actuaries are able to explain complex, technical issues to management who need a clear understanding of results before they make decisions," Heidrich says. "I can't tell you how many chief actuaries have told me that when they're hiring people, they just don't have any space for backroom actuaries who can do the calculations, but can't talk to clients or present to management."
Career and salary progression for pre-qualified actuaries are usually linked to exam passes. After qualification, prospects are just as bright due to the varied nature of actuarial work. "People can move from actuarial roles to chief actuary, and sometimes to CFO and CEO roles," Zhao says. "A lot of really senior executives at major insurance companies are from the actuarial profession."
UPPING THE PROBABILITY
Zhao's jobseeking advice for actuarial students
- Passing exams at university is important. You have to show an employer you are capable of getting through the later exams. If you come out of university with no passes, you have almost no chance.
- Get involved with university activities. Companies want actuaries who are good at communicating, both verbally and written. Do whatever you can to be able to show this to employers.
- Most students do internships during their second or third year of university, and employers like this. A typical full-time actuarial internship lasts between three and six months. Graduation can be pushed back to accommodate this.
- Once in the workforce, but still studying, set up study groups. It shows leadership and helps develop people skills.