VOL. VI • ISSUE 3 MARCH 2014 ISSUE Pages 60• ` 20
For Private Circulation Only Palreddy Vishnuvardhan Patrick Curtin Shivank Girish Chandra Devadeep Gupta
Philip Jackson Anurag Rastogi Dinesh K D Pant Pankaj Kumar Tewari
FELLOWSHIIP being awarded at 2014 AGFA at the hands of M. Karunanidhi, President, IAI
Neel Chheda Ajai Kumar Tripathi Joydeep Saha Raunak Jha
Shamit GuptaShamit Gupta Vikash Kumar Sharma Sunayana Mahansaria Bhavna Verma the Actuary India March 2014
2 Parasurambabu Varakavi Mehtab Khan Ramakant Malpani Ravi Balaji C O N T E N T S www.actuariesindia.org FROM THE CHIEF EDITOR • Institute and Faculty of Actuaries, UK Award Chief Editor by Sunil Sharma...... 4 Presentation Event by B. V. Deepak ...... 37 Sunil Sharma TH • IAI Student Event Email: [email protected] 16 GCA INTRODUCTORY ADDRESS by Prerana Sadarangani ...... 38 by M. Karunanidhi, President, IAI, ...... 5 Editors FEATURES 16TH GCA INAUGURAL & KEY NOTE ADDRESS Kollimarla Subrahmanyam by T. S. Vijayan, Chairperson IRDA ...... 8 Email: [email protected] 16TH GCA REPORTAGE 40 Raunak Jha Email: [email protected] 11
Puzzle Editor Effect of current Indian Economic Scenario Shilpa Mainekar use of discounting rate under Email: [email protected] AS 15 R (G sec rate) for the valuation of Employee Benefits As on 31-3-2014 • 2014 Actuarial Gala Function and Awards by Akshay Pandit Librarian (AGFA) by B. V. Deepak • Plenary Sessions Akshata Damre BUDDING ACTUARY by Neha Agarwala ...... 13 by Sumesh Sheth ...... 42 Email: [email protected] • Concurrent Sessions on Life Insurance by Aditi Goel ...... 17 ANNUAL SUBSCRIPTION NOTICE COUNTRY REPORTERS • Concurrent Sessions on General Insurance YEAR 2014-15_04 03 2014 ...... 43 by Sourav Mahapatra ...... 22 Krishen Sukdev • Concurrent Sessions on Health Care Insurance STUDENT COLUMN South Africa by Bhumika Bhatia & Swati Kwatra ...... 26 Email: [email protected] • Concurrent Sessions on Pension, Employee Benefits and Social Security 45 Frank Munro by Chitra Jaisimha ...... 29 Srilanka • Panel Discussion on Bancassurance Email: [email protected] by Khushwant Pahwa ...... 32
Pranshu Maheshwari FROM THE DESK OF Indonesia Volatility Index Demystified Chairperson - 2014 AGFA & 16th GCA Organizing by Chinnaraja Pandian ...... 45 Email: [email protected] Group – D C Chakraborty ...... 35 John Laurence Smith BEST ARTICLE & BEST REPORTAGE 2014 AGFA & 16TH GCA EVENTS New Zealand Awards In The Year 2013 ...... 47 Email: [email protected] 16TH GCA MEDIA COVERAGE ...... 48 Rajendra Prasad Sharma COUNTRY REPORT USA MAURITUS by Vijay Balagobin ...... 56 Email: [email protected] CAREER CORNER Nauman Cheema 36 Oliver James Associates invites application for multiple vacancies (Actuaries) in Indonesia ...... 57 Pakistan • The Whizzing Math Wizards Email: [email protected] by Divya Dadlani SHILPA’S PUZZLES ...... 58 Andrew Leung Thailand Disclaimer : Responsibility for authenticity of the contents or opinions expressed in any material Email: [email protected] published in this Magazine is solely of its author and the Institute of Actuaries of India, any of its editors, the staff working on it or "the Actuary India" is in no way holds responsibility there for. In respect of the Vijay Balgobin advertisements, the advertisers are solely responsible for contents and legality of such advertisements and Mauritius implications of the same. Email: [email protected] The tariff rates for advertisement in the Actuary India are as under: Back Page colour ` 35,000/- Full page colour ` 30,000/- Half Page colour ` 20,000/- Kedar Mulgund Canada Your reply along with the details/art work of advertisement should be sent to [email protected] Email: [email protected] ENQUIRIES ABOUT PUBLICATION OF ARTICLES OR NEWS Please address all your enquiries with regard to the magazine by e-mail at [email protected]. Kindly do not send it to editor or any other functionaries.
Printed and Published monthly by Gururaj Nayak, Head - Operations, Institute of Actuaries of India at ACME PACKS AND PRINTS(INDIA) PRIVATE LIMITED, A Wing, Gala No. 55, Ground Floor, Virwani Industrial Estate, Vishweshwar Nagar Road, Goregaon (E), Mumbai-63. for Institute of Actuaries of India : 302, Indian Globe Chambers, For circulation to members, connected 142, Fort Street, Off D N Road, Near CST (VT) Station, Mumbai 400 001. • Tel +91 22 6784 3325 / 6784 3333 individuals and organizations only. Fax +91 22 6784 3330 • Email : [email protected] • Webside : www.actuariesindia.org the Actuary India March 2014
3 FROM THE cHiEFc EDiTOR'S DESk
SUNIL SHARMA
t gives me immense pleasure to highlight the Profession and the It was a great effort by the profession connect with you post 16th GCA. Conference in the News and print by learning from the past experience to I This was the 16th successive global Media and get attention of the people. contribute a bit towards meeting Vision, conference successfully conducted in Mission and Values of the Actuarial For managing the reporters from Prints India by the Institute of Actuaries of profession in India. I am very pleased and Media, the profession engaged a PR India. It was a massive event with to share that today the Indian financial agency Genesis BM which had strong representation form all across the reporters to some extent understand relationship with media reporters globe. More than 700 people attended who actuaries are, what they do and reporting in the area of Finance and the conference held in Mumbai. There how important they are for the Insurance. The invitations were sent to is always scope for improvement; management of the Insurance the reporters of all major key Print & however, I must say this was a grand companies. However, a lot more has to digital media and TV network. Over 20 success event given the challenge of be done in this direction. reporters came to attend the Global managing such a large number of conference of actuaries to cover the The current issue of Actuary India has a attendees. There was wide varieties of 16th GCA on day one and day two. A pretty good coverage of the various papers presented by Indian and separate room was set as the Press plenary and concurrent sessions. It is overseas speakers. The Event was truly conference room where media can intention of the report writers is to a global event. interact with the Key leaders in provide readers a feel of the event, Over the last few years IAI has made financial services from India and even for those who could not attend significant progress in enhancing the overseas. There were various the events. I would like to thank all the awareness about the actuarial interviews conducted by media during reporters for puting their efforts to take profession among the general public in the GCA event. notes during the seminar and put India. However, it’s just the beginning together the minutes of the proceedings. An exclusive press conference was of a long Journey and the profession arranged for reporters from TV and The financial year end is coming closer has to work more to enhance the News media to interact with Mr. TS and it’s going to be a busy season for communication. In this constantly Vijayan, Chairman, IRDA. The reporters actuarial community. Therefore, changing world, the importance of felt very pleased with IAI having given without taking too much of your time, I communication with all stakeholders them opportunity to interact with IRDA would like to sign off to spare you more cannot be overemphasized. Chairman and other key Business time to work on new products settings I would like to take this opportunity to leaders in the financial services for valuation and reporting. give an update on some of Initiatives Industry.
that were taken during the 16th GCA to
To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty, to find the best in others; to leave the world a bit better, whether by a healthy child, a garden patch or a
March 2014 redeemed social condition; to know even one life has breathed easier because
you have lived. This is to have succeeded.
- Ralph Waldo Emerson the Actuary India March 2014
4 16TH GcA iNTRODUcTORY ADDRESS
16th GCA 2014 AGFA INTRODUCTORY ADDRESS by M. KARUNANIDHI - IAI, President, during the Inaugural function on [email protected] 17th February 2014
adies and Gentleman! Good profession to continually remain Actuarial science being a science has Morning and Welcome to the relevant in the increasingly complex universal applicability. And so, L 16th GCA. social, commercial and economic ensuring that actuaries go through environment. Secondly, state of the education and training that are globally It gives me great pleasure to be speaking industries in which actuaries operate relevant while being locally compatible to you this morning and being able to and the need to look beyond the both pre and post-qualification is share some of my thoughts. As you are traditional areas. And, last but not critical. The skill set requirements are aware, GCA is a major event in the certainly the least, the importance of changing and so it is important that we Institute’s calendar and is very well actuaries demonstrating highest have a mechanism to tune our attended by various stakeholders standards of professionalism and ethics education model to the changing besides the members of the Institute. and so the stakeholders gain complete requirements. Behavioral competencies It is running successfully for 16 years, trust in what actuaries do. (Soft skills) are becoming more an achievement in itself. The important than ever for successfully conference has been evolving over time We are a small and niche profession of executing solutions that are actuarially and focuses on contemporary issues of around 50 to 60,000 actuaries around sound. Our education model will need significance in today’s context besides the world. It is not that we have chosen to continually evolve and embrace this offering great networking opportunity to remain small but any specialist changing need. Embracing technology for participants. The theme for the faculty tends to be like that. The into our professional thinking and conference – Evolving frontiers; establishment of the International action is another critical element when Exciting prospects – reflects the fact actuarial association, an umbrella it comes to actuarial services delivery that changes are happening more than association of actuarial professional – an aspect where I would encourage ever, will continue to happen and every associations, has brought a large more thinking need to be done globally. change is an opportunity and so it is number of actuarial bodies together to In India, the privatization of insurance important to stay optimistic about the look at challenges and opportunities prospects that these changes bring industry spurred sudden demand for for actuaries in a truly global context. about. We have a number of actuarial resources. Since the We are on the right path of promoting presentations and discussions by privatization followed a pro-longed and making the profession more visible eminent speakers lined up. period of nationalization, the supply to the stakeholders who would stand to had to be built almost from the scratch. Let me take this opportunity to thank benefit from the services of actuaries. I The supply reacted reasonably well to the members of the GCA organizing believe the profession globally has got a the demand. We had significant jump group and all those who contributed for very strong foundation and reputation in our student membership. It took us putting together such a wonderful of offering a great proposition of sometime to realize that we need to program. Lot of hard work has gone applying science to the management improve the quality of entrants into into organizing this conference. I would risks and thus serving a public interest the profession and so they acquire the urge everyone to be as participative as need. Different local actuarial skills fast and start meeting the you can and make the best out of your associations are in different stages of resource gap quickly. That thinking time spent over the next couple of evolution and their ability to contribute resulted in the introduction of a system days. and influence policy makings is varied. of entry filtering. We see that started When I started thinking about this Given the size and not so obvious but yielding results. While there is pressure address, there are three themes that I very important value proposition that on supply to meet the sudden demand, thought I should reflect upon. Firstly, as actuaries we bring to the table, it is we have kept our standards high as we the current state of the actuarial important that we stay united and believe quality is fundamental. While profession globally and more leverage each other’s experience and producing qualified and experienced particularly in India and the aspects for expertise and take a global approach to actuaries take time, we have been able
us to pay attention to in order for the addressing public interest issues. to attract large number students who the Actuary India March 2014 5 have made significant progress and profession. Compliance with UNEP-PI advocates sustainable have the potential to become successful professional standards is of paramount insurance. What is sustainable actuaries of the future. importance to ensure that the users of insurance? One of the definitions for actuarial services draw the comfort that sustainable insurance is that it is a Couple of areas that I see there is more they are getting the best possible strategic approach where all activities strengthening to be done – one is professional advice. I believe, there is in the insurance value chain, including education delivery and another is greater rigor required and so a tone set interactions with stakeholders, are professional standards compliance by the profession with the bar rising till done in a responsible and forward- monitoring. There are two schools of such a time there is lot of comfort that looking ways by identifying, assessing, thought when it comes to the education the standards of actuarial services is a managing and monitoring risks and delivery model. One approach is to given thing. opportunities in the insurance business engage with academic institutions – associated with Environmental, Social universities – for education delivery. Moving on to the industries in which and Governance Issues. This is suitable for a more focused actuaries operate – Life insurance education delivery and thus potentially industry , a major employer for There are number of Environmental, reducing the time span for completing actuaries, has gone through significant Social and Governance issues such as the actuarial training. This can however regulatory intervention over the last climate change, natural catastrophes, work if we can figure out an effective few years. While there is a greater level emerging health risks and pandemics mechanism to manage and control of consensus on the regulatory etc. that relate to insurance, particularly, quality – something we cannot afford direction, there have been differences non-life and health insurance. Actuaries to compromise. Another approach is of opinion on the pace with which the thus have a central role to play in the current system of centralized changes have been made. There is promoting sustainable insurance. examination system. It has resource obviously some merit in the argument Innovation is a key ingredient for limitations and scalability issues but that once you decide to get to a place success in the insurance industry be it provides for quality control. There is why not get there as well quickly. The life, non-life or health. There is a sense also an argument that the profession regulatory changes resulted in the life that the insurance industry is too much with its limited resources should focus insurance industry realigning its into its comfort zone and the out of the more on setting standards and business models and starting from box thinking is hard to come by. There providing technical guidance targeted what we may call it a new normal. Long is more scope for innovation. towards qualified actuaries rather than term protection is fundamental to life Optimization such as use of technology expending energy on the pre- insurance – it is therefore important for services is often mistaken for qualification education delivery. that that fundamental fabric is not lost innovation. Optimization is important While this is debated, encouraging in the way products are designed and but there are likely to be diminishing academic institutions to teach students sold. The trick to success of the life returns from such an activity. to our professional examinations is, I insurance industry, I believe, is in getting an appropriate performance For example, a recent report by IBM believe, something that we should global business services says that, from facilitate. A reverse exemption system metric in place for the industry participants and that of course should 1955 to 2006, the U.S property and where the universities offer exemption casualty (P&C) insurance industry had a for some part of their degree curriculum allow for a measure of reasonable return to the shareholders who risk return on equity (ROE) below the to the students passing out the actuarial average for all U.S. industries more professional examinations conducted their capital. There needs to be good balance struck between serving a social than 87percent of the time. Broadening by the institute would be a good start. the market through innovation is This would facilitate building actuarial cause and doing business. In all these, I see a significant role for the actuarial therefore not only important but is academic capacity in the universities necessary to create win-win for both and thus potentially moving towards a profession to play collaboratively with the regulator. providers and the consumers of system where the academic institutions insurance products. play much greater role in the pre- General insurance industry – relatively Collaboration is a key source of qualification education delivery. The a new comer in terms of usage of Innovation. So, it is important to be aspects around soft skills, technology actuarial science to manage risks – able to listen and appreciate and research are something perhaps seems to have stuck to a few major perspectives of different stakeholders better addressed in such an academic product lines. There is need to create and be open to learn from other setup. more awareness and expand the industries. For example, there is a great product menu for greater penetration. As regards the compliance with deal to learn about how to apply Aligning the interests all the professional standards – there is again predictive analytics to help with stakeholders such as TPAs and health this debate on the level of self- product design, distribution and service providers etc is certainly key to regulation vs regulation by the understanding the drivers of experience the Actuary India March 2014 the industry’s well -being. 6 results by looking at how it is applied in Management. I guess the way to and without them no one should be some of the industries outside penetrate into the wider fields where allowed in the field – be it an industry insurance. actuarial skills add value and player or an individual member of the complementary to what other profession. When we think of Pensions and retirement benefits professionals may bring to the table is professionalism, the ability and industry – there is plenty of untapped to push ourselves into a situation of willingness to listen to others views potential for actuaries coupled with the excess supply of resources such that and perspectives are important. For us opportunity to serve a very important the supply then starts to drive demand to be able to appreciate other social need – the old age security with in the wider fields. perspectives, we must keep an open dignity. There is need for promoting mind. Respecting others’ views is one life contingent annuities as against In India, particularly, the outsourcing of the core values that we advocate our return of purchase price type provision industry has been very successful in members to imbibe in. Sustainable that is most commonly sold. Innovative terms the value that it brings to the success is possible only when it is built product design along with tax incentives table for businesses. While outsourcing on high moral, social, professional and will help promote this important helps free-up resources for the ethical grounds. It is therefore provision. While we are a young management to focus their energy on important that we stay true to ourselves country, on average, the size of the the core business issues, it brings in a and to the profession in whatever we retired and retiring population with no whole new dimension to operational do. access to defined benefit pension is efficiency and quality. We have a huge and will only increase over time. number of our members working in I hope you could relate to some these With people living longer, the pensions Global actuarial service delivery units, thoughts and reflect upon. For our industry will likely be faced with some of them are outsourced third profession to grow strong I see couple challenges of much longer time horizon party units and some are captive units, of behavioral attributes that are even longer than that of life insurance providing remote actuarial technical important – one, mentally our focus and actuarial inputs in addressing the support to consultants and actuaries should be more on ‘what and how’ and need would therefore be increasingly based overseas. It is important that we not as much on ‘who and why’, and important. nurture this industry and create secondly, the willingness to voluntarily opportunities for our members. Such contribute and give something back to While actuarial science has historically centralized units is also a source for the the profession that we all belong to and been at the core of decision making in insurance and pension industry to be proud of. the insurance and pension domains, its learn from as far as operational applicability is much wider and it is efficiency and resource optimization is Ladies and Gentlemen, let me thank pretty much up to members of the concerned in an increasingly you for your participation in this profession to expand the universe competitive business environment. conference and wish you a fruitful where the science has a role to play. two days of deliberations, networking Significant inroads have already been Lastly, I want to emphasize on the and fun. Thank you. made into other areas such as Finance importance of professionalism and and Investment and Enterprise Risk ethics. They are the tickets to the game
Honesty is a very expensive gift, Don't expect it from cheap people. March 2014 - Warren Buffett the Actuary India March 2014
7 iNAUGURAl & kEY NOTE ADDRESS
16th GCA Inaugural & Key Note Address by T. S. VIJAYAN, Chairman, IRDA
Participation of 720 delegates, with many participants coming from foreign countries also, indicates the importance of the Indian insurance sector in the global system. A country having population of more than 1.2 billion and growing economy offers a good opportunity for professionals from India and abroad. The conference, thus promote and showcase India to attract talent to this industry. The theme, ‘Evolving frontiers and exciting prospects’ sounds very interesting and would really catch the imagination of professionals.
eed of Actuaries: criteria, there are other professions in Growth in Insurance Sector: India, which may be equally difficult. N Demand of actuaries in To become a neuro-surgeon is not very insurance industry is increasing. easy, but supply of neuro-surgeons Indian economy is emerging and we Also, in non-insurance industries has increased. The situation clearly are witnessing decent growth. Indian like asset management and project highlights the gap in the supply Insurance Industry is growing rapidly. appraisals, the actuarial skill to forecast and demand. IRDA implemented At a penetration level of 4% of GDP, it economic consequences over long ‘appointed actuary’ system to give collected around US$ 60 billion, i.e. term would be very useful in decision impetus to the profession and focus ` 3, 50,000 crore. In the given situation, making process. There are around the importance of this profession in insurance coverage needs of the 60000 actuaries, across the globe. the insurance industry. Cut off age was population increase rapidly every year. With more than 1.2 billion population, set for the same, so that young people Though, lower income group people India should have proportionately, are motivated. Efforts of the institute may not recognize it as a primary need, about 10,000 actuaries. As India has to attract talent had resulted in having when income levels rise insurance got only 4% insurance penetration as 8000 student members. Recognizing becomes a need. In the last decade, we against world average of 6%, if 10,000 the courses offered by reputed Indian observed that the growth of industry is is too big a number, at least 5000 institutes of higher learning in the much more than the economic growth. actuaries? This is the demand before areas of mathematics, statistics and With new lives adding to the working Institute of Actuaries of India. During economics which are aligned with the population, new risks like, cars, 2004-2014, the increase is from 209 standards of actuaries could play a vehicles, houses increasing, prospects to 270 actuaries. Though it may be facilitating role in increasing the supply
the Actuary India March 2014 of the industry is good. In this context, a profession with difficult passing of actuaries. 8 the industry has to think about what short term goals, of the industry or type of products should be offered in the CEO. It is a reasonable expectation Non Life Products: the market? from a regulator, to see that customers are given a fair deal, better deal. Life Products: Better means, it is going to be better Erstwhile, India had a tariff advisory and better on the way forward, it’s committee, which used to determine not a static goal, a product coming the tariff of each line of non-life One of the primary responsibilities next time, must be better than the business. Now we have a detariffed given to IRDA is, to protect the policy previous one. India had different type scenario, where the non life industry is holders’ interests. In the area of of products. ULIP products have taken a allowed to quote the premium. But, by products, the regulator heavily relies on backseat now and traditional products, and large, non-life companies are not the judgment of Appointed Actuaries, particularly with profit products, are making profits. The situation clearly who calculate the premium and allow coming forward. With profit policies highlights the need for rationalization for expenses under products. In case of offer relatively low transparency, it is in the pricing approach and not to any innovation in product design, the not easy to understand how premium chase just the top line. Non Life Product questions that would arise are ‘Who is calculated, how bonus is declared, pricing is an area where actuaries is benefitted out of this innovation? than some of these products like ULIP. have to play an active role along with Is it the policy holder?’. Also, whether Hence, the regulator has prescribed underwriters. Presence of actuaries reasonable expectations of policy specific norms for managing with profit is more required today in Indian Non holders are enhanced by that, and products. Life Insurance Sector, which is really in whether all the stakeholders are also short supply. The institute shall focus more or less equally benefitted out In life insurance, huge cost is incurred more on the issue. of it? Whether it is going to use the upfront, for designing a product, efficiency of the system, efficiency getting a product on board, which is of the technology, efficiency of the only recovered over a period of time. Affordability and profitability: investment market? The innovation In this context, persistency of the shall not be solely for enhancing policy is very important. It is felt that profitability. persistency levels of life insurance As highlighted by Mr. Burr (previous policies in India should be improved. speaker), “access, affordability, It is expected that Appointed Actuaries This is the reason behind issuing information, ease of claims choice” ensure that the products are fairly detailed guidelines on persistency to shall be focus areas for enhancing priced and the interests of policy strengthen internal controls to ensure the role of Insurance Industry. In this holders are taken a step further in any that the insurer’s board addresses areas context, one choice made recently by innovation. Regulator expects highest of concern, relating to persistency the regulator is to advise the banks to level of professionalism from actuaries. experience, in a timely manner. distribute products offered by various Actuaries shall not to be swayed by the insurers. In India, government and
T S Vijayan, Vivek Kuruvila, D. C. Chakraborty, M Karunanidhi, Robert Burr and K Subrahmanyam the Actuary India March 2014 9 clear to the sales personnel.
Health Insurance:
Health Insurance in India is coming into big focus as is also observed in other jurisdictions. For effective delivery of Health Insurance, the persons who are providing the service, the hospitals, the doctors and other related professionals have to be consulted in designing the health insurance product and it’s pricing. Hence a need for coordinated effort is more relevant this area. With growing public awareness and transparency regulators are focused for providing area, the regulator has come out with laws, involvement of legal experts is affordable insurance to all segments of guidelines in addition to statutory required in the area of developing people. Today with the advancement norms on where & how it has to be appropriate policy wordings. of technology, we are better placed to invested, and exposure in particular design such low ticket products, and companies, group companies, particular Conclusion: making them available to across the sector. Compliance in this area is society and we expect actuaries to closely monitored by the regulator. contribute a lot to this area. Critical Insurers have to act as trustees of the Emerging trends in global regulatory balance between product pricing and insurance money placed with them and environment is an important profitability shall be maintained by as it is a long term activity, it should not consideration and we cannot isolate actuaries in such products. be subjected to high risk investments. ourselves and we need to follow them With this approach, maybe returns are closely and address the emerging not very high and because of lower risk, issues. The latest example in this Control on Expenses: it maybe inherent in it. regard being US decisions on quantitative easing. IAIS principles, the global solvency norms do impact us and In India, the expense limits for Mis-sale: we need to understand what is insurance business were set by a law happening across the globe and align which is more than 70 years old. With ourselves to them to maintain our place rapid advancement in information Many times life insurance sale happens at global level. We need support of and communication technology and in India, on the basis of IRR comparison actuaries and other professionals in increase in volume of the business, with other products or investments this area, not only from India but it may not be appropriate to push the etc. But the essential feature; the lower abroad also. expenses to the statutory upper limits. riskiness of the product is not getting By the new product regulations, the highlighted. The other assumption I am sure this global conference will expenses are expected to come down. usually made is that the person is serve as a platform, to contribute Amendment of the Insurance Act is going to survive the policy period. The knowledge, understand topics on the parliament’s agenda for quite situation clearly warrants focus to bring relevant for India and which can be some time and we hope that it will be right perspective during sales process. adopted. completed sooner rather than later and The communication as to what are the I wish all the success, for this
there will be rationalization of statutory benefits of insurance product and the conference, thank you very much.
limits on expense levels. suggested sales process should be made
Investment: Always bear in mind that your own resolution to succeed is ‘Investments’ is a very critical area for Insurance Industry. 82% of the more important than any other one thing. premium is collected by life insurers, - Abraham Lincoln the Actuary India March 2014 towards long term liabilities. In this 10 16TH GcA REPORTAGE to Mr. Govardhan for article “Current Issues in Life Insurance”. Then, awards for best reportages & ACET topper in 2014 ACTUARIAL GALA 2013 were presented. FUNCTION AND AWARDS (AGFA) • Organized by : Institute of Actuaries of India • Venue : Renaissance Mumbai Convention Centre Hotel, Powai • Date : 17th February 2014
ike each year, AFGA event provided which everyone who has benefitted much entertainment for the from Actuarial profession till now actuarial audience through its way L should be deeply indebted. He Vipul Goel to recognizing academic achievements & accentuated the difference in approach The above was ensued by a standup qualification milestones in the actuarial that Regulator has employed over the comedy show by Vipul Goel who ensured arena. years; from giving freedom with thorough entertainment for everyone publicity earlier to being more present in the audience. There was prescriptive now. In addition, he hardly a moment throughout his stay on emphasized the importance of Actuarial the podium when people stopped profession in general insurance business laughing. which was given less relevance by GI This was followed by a short speech by companies over the past 4 centuries. John Holden, CEO, Canara HSBC OBC Math star project, which is in its 4th year of operation, has been successful in M. Karunanidhi providing basic education to children The best start possible to any Gala who cannot afford it. New projects function was given by M. Karunanidhi, include Teacher teaching (teaching president IAI by completing his mathematics to mothers enabling them introductory speech in just few words. to teach their children) and helping 10th & 12th students to prepare for their His speech was immediately followed by exams. Math stars this year has covered a dance composition named “Govind John Holden 5 NGOs & 17 schools thereby touching Life Insurance, who urged Actuaries to Bolo” which depicted the blissful unison around 3000 students. have long radar to support the CEO in of Radha Krishna and Ram Sitha using a his effort to keep the Company on the semi -classical style. Started with a Institute may take up more projects in right track. tuneful flute sound, the dance had a future to enable children in its own way very good synchronization of both to pursue their dreams. Awards for obtaining highest marks in classical and modern style of dance. The subjects for the May & Nov 2013 diets Mr. Parikh’s Speech was followed by podium sparkled as dancers showed were presented to candidates for their welcoming students of the NGO to the their skills to entertain the audience. achievements. podium. Then, dance choreographed by Rekha choudary was performed by New Later, Presentations of Associate ship to Shakuntala Arts School. deserving candidates were presented by Vice president, IAI. Main event of recognizing academic excellence started with presentation of Award for 16th GCA “Evolving Frontiers About the Author and Exciting prospects” to Prasenjit Roy. Actuary India award 1st prize was given
N. K. Parikh The dance was followed by the speech of N. K. Parikh of M/s. KA Pandit, Consultants and Actuaries, who revisited the events in Mumbai (near [email protected] Churchgate) that led to the formation of Deepak is currently working in LIC of India Actuarial Society of India (ASI) in 1944. in its Actuarial Department, Mumbai. He is He gave credit also to GS Diwan, KA a student member of IAI. the Actuary India March 2014 Pandit for the establishment of ASI for M Karunanidhi awarding Prasenjit Roy 11 Video clips of families of few newly In addition to the Actuarial awards, qualified fellows were played to describe Students from NGOs were also given the efforts that they had had to go prizes for performing well in puzzles through in their journey towards and essay writing. Fellowship before the issuance of Dance for a Bollywood number was Fellowship certificates to deserving performed by “Anand Pandav Dance candidates by M Karunanidhi, President, Academy” to conclude the 2014 AGFA. IAI.
K S Gopalakrishnan
PHOTO FEATURES - 2014 ACTUARIAL GALA FUNCTION AND AWARDS (AGFA)
PHOTO FEATURES - THE WHIZZING MATH WIZARDS the Actuary India March 2014
12 TH 16 GcA REPORTAGE About the Author
PLENARY SESSIONS
• Organized by : Institute of Actuaries of India • Venue : Renaissance Mumbai Convention Centre Hotel, Powai • Date : 17th and 18th February, 2014 [email protected]
he two-day long sixteenth Global Conference of Actuaries organized on Neha Agarwala is an Associate Member of IAI. She is Actuarial Analyst (Life the theme of ‘Evolving Frontiers, Exciting Prospects’ saw active Insurance) at Towers Watson in India. Tparticipation from experts and leading lights from the fields of insurance and related fields of Mathematics, Economics, Accountancy and Statistics. thinking, embracing technology and optimisation are the need of the hour. He stressed upon the fundamental Session 1: Inaugural Session an important role to play in tapping the fabric of insurance products which same. Chairperson: Dilip Chakraborty, 16th is offering protection and ‘serving GCA Organizing Group (India) Vivek Kuruvila urged the insurance the public interest’ and the vital role companies, re-insurers and the current the actuarial profession can play in a Panel Members: Vivek Kuruvila, Head regulator to be ‘smart together’ and move towards ‘Sustainable Insurance’, of Life and Health Client Markets, Swiss work in synchronization in the given encompassing environmental, social Re (India); M Karunanidhi, President, rapidly changing environment. He and governance issues in its realm. The Institute of Actuaries of India (India); stated that there is a need to look education system should thus ensure Robert Burr, Head of Life and Health, beyond mathematical exactness and that the skills acquired by actuaries are Swiss Re (Asia); T S Vijayan, Chairman, globally relevant and locally compatible. Insurance Regulatory and Development Also, although there is a dire need to Authority (India); K Subrahmanyam, bridge the actuarial industry resource Chair, IAI Advisory Group on Peer, gap, the quality, integrity, independence Stakeholder and International Relations and professionalism of actuaries should (India); remain intact. Dilip Chakraborty welcomed the elite Robert Burr highlighted the challenges gathering of around 750 delegates, that a world-wide ageing population including around 150 fellow members, poses, strategic positioning of India in 50 associate members and more than 50 Vivek Kuruvila delegates from the foreign nations of UK, account of emerging trends in making Singapore, Australia, China, Germany, decisions. He also touched upon the idea Indonesia, Ireland and Philippines. He of looking beyond traditional insurance set the stage for upcoming thought- distribution channels and exploring the possibility of using social networking sites as insurance distribution mediums. M Karunanidhi acknowledged that ‘changes (economic and industry-wide) Robert Burr are happening and will continue to happen’ in India and across the globe this respect due to its relatively younger and that we should be optimistic about population and the opportunities the changes. Innovation, out of the box presented by the material health protection gap. He stated that a balance should be struck between selling
Dilip Chakraborty products based on the proposition of wealth creation versus wealth provoking ideas and discussions protection. He concluded with a call- on the very theme of conference, to-action for the insurance sector to re- ‘Evolving Frontiers, Exciting Prospects’, think their products, distribution and pointing out that rapid globalisation marketing strategy and align them with and expansion has laid bare myriad customer needs. opportunities and we as actuaries have M Karunanidhi the Actuary India March 2014 13 T S Vijayan in his key note address that actuaries should ramp up their product is offered for sale to a consumer. spoke on the increasing demand roles to wider facets and build strong He also noted that mis-selling results in communication skills in order to remain stricter regulations, increased cost of relevant in the dynamic business compliance and weeds out the bottom environment. Growing number of layer and hence it should be guarded professional statisticians, financial against. He also mentioned that the engineers and complacency could emergence of self-directed insurance be potential threats to the actuarial purchases through the online channel profession. He also gave a brief and mobile phones medium would introduction of the Certified Actuarial catch up with rising income levels of the middle class and increasing young and T S Vijayan internet savvy population in India. for actuaries from insurance and D K Pandit stated that the current role of other industries given their specialty employees in employee benefits mainly in areas of risk identification, risk consists of valuing various benefits as mitigation, long-term forecasting, asset per the requirements of national and management and portfolio management international accounting standards. and the glaring resource crunch in One exciting prospect for employee the industry. He stressed that talent development in the actuarial profession David Hare needs to keep pace with demand and Analyst which is a new actuarial suggested increased publicity of the qualification and membership category profession as one measure to attract from the IFoA. It would potentially help talent. He also emphasized on the need promote and publicise actuarial science for co-ordination between actuaries and the value it adds to the society and and other stakeholders and urged the also help the profession attract diverse actuaries in the room to stay committed and fresh talent. to public interest in insurance product D K Pandit Session 2B: Insurance and Pension development and sales and not be Industry: Hot Topics and Current benefit actuaries is the New Pension swayed by short-term profit making Problems Scheme of the Central Government goals. which is mandatory for employees Chairperson: K S Gopalakrishnan, MD K Subrahmanyam presented the vote joining the Central Government or State & CEO of AEGON Religare Life Insurance of thanks expressing gratitude to the Government and actuaries would be Company and Vice-President, IAI (India) speakers, attendees and sponsors of the best skilled to advise individuals/ group conference. Panel Members: John Holden, CEO, of individuals/employees on choice of Canara HSBC Oriental Bank of Commerce annuity providers. Actuaries will also Session 2A: Institute & Faculty of Life Insurance Company (India); D K be required to calculate appropriate Actuaries (IFoA) Pandit, Partner, M/s K A Pandit (India); and competitive annuity rates for the Chairperson: K S Gopalakrishnan, Asha Nair, Director & General Manager, annuity providers. Managing Director (MD) & Chief United India Insurance Company Ltd. Asha Nair spoke at length about the Executive Officer (CEO) of AEGON (India); Torben Thomsen, Chief Pricing problems in the General Insurance Religare Life Insurance Company and Officer, Life and Health, Swiss Re (India) Industry in the current scenario, its Vice-President, IAI (India) John Holden presented his ideas on large underwriting losses and the the changing insurance distribution difficulty in selling non-life insurance paradigm and the interactions between due to its annually renewable nature. greed, fear, complacency, confusion, She also mentioned that there are remorse and pride when an insurance myriad products in the market with
K S Gopalakrishnan Speaker: David Hare, President, IFoA (United Kingdom) David Hare focused on the ‘Changing
the Actuary India March 2014 Asha Nair Role of the Actuary’ and insisted John Holden 14 various terms and conditions which the Arup Chatterjee’s views on the ‘The Touching upon Solvency II regime, consumer is not aware of until a claim role of the Actuary in Financial Sector he said that despite many delays, the arises. This dearth of public awareness Development in Asia’ were presented general expectation is that Solvency leads to mis-selling and customer trust- to the attendees by Dilip Chakraborty II will be passed (eventually). Firms in deficit issues persist. There is a need to due to his unavoidable absence. He Europe are more likely to concentrate on adopt a customer-centric, quick service mentioned the emerging trends and addressing the interim measures based approach, innovate and ensure rapid notable problems in the financial on their local regulators demands. alignment with regulations in order markets in Asia like underdeveloped to strengthen the Non-Life Insurance capital markets and lack of alternative Dr. Achintan Bhattacharya, being a non- Industry. financing mechanisms. He believes actuary, could bring to the attendees that actuaries are part of the solution a different perspective on the topic Torben Thomsen discussed the topic and can support the design of of reinsurance aiding the life insurance innovative financial products aided companies in India sail through the by sound underwriting decisions transition phase they are undergoing and ensure the implementation of currently. The Life Insurance Industry international financial standards and best practices. They can contribute towards the evolution of a robust and resilient financial system that can
effectively preserve financial stability Dr. Achintan Bhattacharya, and contribute to balanced growth and development in Asia. of ‘Prospects of Indian Economy & Financial Services Industry -Investment Vivek Jalan presented an update on & Banking’. He highlighted the general the current life insurance penetration trends in Indian Economy like slowed Torben Thomsen rates for countries in Asia and indicated growth, current account deficit, rising in India witnessed a range of regulations a significant uplift in the same as inflation and fiscal imbalances. He lately and is currently experiencing countries move up the value ladder. went on to speak of the much-debated slowed growth. The existing life He stated that gross written premiums Draft Indian Finance Code released in reinsurance regulations in India limits would increase impressively and some March 2013 and the role it could play in counterparty exposures, requires an tying up the loose ends in the financial annual review of reinsurance programme regulatory architecture in India. by the Board and the Regulator and there are prescribed individual surplus Session 4 : Actuaries & Accountant and limits by risk type. If the reinsurance Business Strategy regulatory framework eases access to Chairperson: Richard Holloway, MD, market, promotes partnership approach, South East Asia and India, Life, Milliman allows proportional reinsurance India Private Limited (Singapore) (including quota share and original Panel Members: M M Chitale, terms), reinsurers can better support Vivek Jalan Chairperson, NACAS & Ex-President, direct writers who seek to explore new of the attractive fundamentals that Institute of Chartered Accountants of products and risks, improve efficiency would drive such growth are increased India (India); Gary Comerford, Chief of distribution channels and capital in wealth, continued urbanization, high Marketing Officer, Re-insurance Group such challenging times. savings ratio, expanding middle class, of America Services India Pvt. Ltd. new technologies, evolving distribution Session 3 : Global and Indian (Canada) and Takaful and micro-insurance. Development Chairperson: Dilip Chakraborty, 16th GCA Organizing Group (India) Panel Members: Arup Chatterjee, Senior Financial Sector Specialist, Asian Development Bank (Philippines); Vivek Jalan, Director, Risk Consulting, Towers Watson (India); Achintan Bhattacharya - Director NIBM and Retired Joint Secretary, DFS, Ministry of Finance, Government of India (India) the Actuary India March 2014 Richard Holloway, Gary Comerford, M M Chitale 15 M M Chitale discussed the need statements would be determined by lifestyle betterment, disintermediation, for co-ordination between actuaries the ethics and value system of both the dynamic regulatory environment and accountants. In case of financial accountants and actuaries. He stressed and changing consumer attitudes. He statements preparation for life and upon the need for adequate disclosure mentioned that demographic changes in general insurance business, the role of actuarial basis changes from year-to- terms of ageing population throws open of actuaries emerges as a part of year and its impact so the accounting the opportunity of designing products certification of insurance liabilities. principle of consistency is upheld. that cater to longevity risk. He also said In case of other businesses, actuaries that balancing the needs of distributors, Gary Comerford based his session value gratuity, leave encashment and shareholders and consumers while on the five possible game changers of other post-retirement benefits that are complying with the regulatory norms is the insurance industry: demographic disclosed in the financial statements. required. changes, medical, technological and Hence, the credibility of financial
PHOTO FEATURES - PLENARY SESSIONS March 2014
the Actuary India March 2014
16 TH 16 GcA REPORTAGE About the Author CONCURRENT SESSIONS ON LIFE INSURANCE • Organized By : Institute of Actuaries of India • Venue : Renaissance Mumbai Convention Centre Hotel, Powai • Date : 17th and 18th Feb 2014 [email protected] ession 1 • Who is effected by the regulations? Aditi is an Associate member of IAI. She Chairperson: G N Agarwal - • How large are the effects of the works in ICICI Prudential Life Insurance SDirector, Future Generali India Life regulations? Co. Insurance Company, (India) He used surrender value regulation negatively correlated with interest rates. Topic: Panel Discussion on Product and to highlight the importance of the According to him the following Regulation parameters above. Whether the issue of high lapse due to mis-selling and/or considerations should be considered Speakers: S Madhusudhanan - Actuary, low or no money paid on early surrender during product development: Munich Re, (Singapore); Dinesh Pant was addressed? Who is affected by the • Balance between interests of - Secretary Product Development change? Do continuing policyholders shareholder, policyholder and Actuarial Core Group/ Product Actuary, provide subsidy to surrendered policies? distribution channels LIC of India What are the implications of an • Economic and social factors, S Madhusudhan started by discussing increased reserve due to the increase in • Change in regulation the objectives of regulation and how guaranteed surrender value? • Technology and innovation He concluded by highlighting the need • Expenses, persistency, mortality, to meet the reasonable expectations of profitability criteria, guarantees, all key stakeholders and a requirement benefit illustration, underwriting, etc. for a strong framework before we He concluded by highlighting the move to principle based regulation. importance of innovation, satisfying Dinesh spoke about the importance of customer needs, good communication, considering marketing concepts when self-regulation, more market research
S Madhusudhanan and learning from experience.
these objectives cover the interests A member of the audience raised a of policyholders, shareholders and question regarding the implications of financial markets at large by ensuring change in surrender value regulations. stability of the financial system. S Madhusudhan discussed the approach to deal with it is by identifying the Countries like Japan and Korea operate different stakeholders, splitting the prescriptive regulation and others such policyholder in different classes, Dinesh Pant as China are moving from prescriptive capturing the effect on different classes based regulation to an increasingly undertaking product design and pricing. and other implication like reserving. liberalized regime. He moved on to He highlighted the importance of the 4 Session 2 discussing prerequisite for principle P’s; Price, Product, Promotion and Place. based regulations which are stable Chairperson: Heerak Basu - Senior Vice He highlighted the following reasons for products that target customer needs, President & Appointed Actuary at TATA needing prescriptive based regulation suitable distribution methods and AIA Life, (India) rather principle based regulation in regular monitoring of products by the India: Topic: The Value in “Value for Money” insurers. - a Practitioner’s view • low persistency The following parameters to assess • low education level of consumers Speaker: Chirag Rathod - Appointed regulation were considered - Actuary and Director - Products & • low per capita income • What issues do the regulations Strategy Canara HSBC Oriental Bank of • lapse supported products address? Commerce Life Insurance Company; He stated that insurance consumption (India) • What are the impacts of the in India is positively correlated with regulations? Chirag spoke about the value of life
education levels and inflation and the Actuary India March 2014 insurance products. He explained that 17 products were quite generous, however because of the experience on the first generation of products the later products were designed with lower benefits. Another lesson learned was that there was an increase in thyroid cancer cases in women because of the increased detection of tumors of insignificant
Chirag Rathod Jyoti Majumdar sizes. This has now resulted in tighter claim definitions for CI claims. the price is the amount customer pays Speakers: Karsten de Braaf - Head for a product or service and value is of Product Development, SCOR Karsten de Braaf talked about the what the customer derives from product Global Life, Singapore and Kattumuri popularity of CI products in the South or service. Raghavrao, Manager – Pricing & East Asian markets. The products Product Development, SCOR Global offered have features like juvenile He spoke about a value for money Life,Singapore covers, female CI, multiple CI and framework - Identifying target segments staged CI products. The Chinese market and their needs, creating customer is highly competitive with a fast product propositions, designing products, cycle. There has been a demand for aligning sales and service models, innovative products such as CI annuity. communicating embedding value The major challenge has been the huge proposition and refining through a post demographic diversity due to the large execution review. size of the country. He said that we should use checklists To a question raised by Jyoti Majumdar in the development process to focus on Karsten de Braaf of what CI products mean to India, K de customer needs and not just product Karsten de Braaf started by giving an Baarf replied that there was an increased features. He compared other saving overview of the international market for awareness among the general population instruments with life insurance. He said Critical Illness insurance. Worldwide CI that a medical problem could result in that there are some unique benefits that premium constituted 1% of the total life loss of income and some coverage is are available only from life insurance. insurance premium. In Asia, which has required. This presents a good potential Value for money framework offers the significant volume, the CI coverage was for CI business and the way forward following advantages – 3% of the total life insurance premium. would be standardize CI definitions, probably emphasize CI along with Life • Clear context Raghavrao Kattumuri talked about Insurance cover and in the beginning Japanese and Korean markets. In • Product suitability have accelerated benefits for increasing Japan, cancer care products have had penetration of the business. • Expectation setting • Thinking beyond products To another question on whether longevity is the reason for the popularity • Align distribution perspective of Cancer products in Japan, K de Braaf • Product optimization and long term affirmed that as people live longer, profits they do see an increase in incidence of cancer and this creates an awareness He concluded by saying value means in the general population for the need different things to different people of such a cover as people would have and extend beyond product design and Raghavrao Kattumuri seen someone in the family suffer from pricing. As actuaries we need to start high market penetration attributed cancer. questioning whether we need to place to mass marketing. Pricing challenges cost and commission structure or the To a question on whether the Asian include increased A/Es especially of the customer value requirement first. Regulators would be taking a cue from insured population which suggests anti the European Regulators and disallow Session 3 selection. gender differentiation in underwriting Chairperson: Jyoti Majumdar – Head of The Korean market is culturally similar and pricing, Karsten de Braaf, said Client Markets, Property and Casualty, to the Japanese market and therefore that while Asian Regulators do look at India, Swiss Re, (India) cancer products are quite significant. European Regulations for policyholder Topic: Critical Illness in Asia – a success However, there is a coexistence of protection, discrimination on account of story CI products. The first generation of gender is not something that they have
the Actuary India March 2014 thought about. 18 Session 4 Chairperson: Chandan Khasnobis Director and Appointed Actuary, IndiaFirst Life Insurance Company Ltd, (India) Topic: Current Issues - Appointed Actuary Session, Life Speakers: Rajesh Dalmia - Appointed Actuary, Reliance Life Insurance; Anil Kumar Singh - Appointed Actuary, Birla Sun Life Insurance, and P K Arora - Rajesh Dalmia, Anil Kumar Singh Appointed Actuary, LIC Chandan then asked Rajesh to talk about importance of Agency Management and challenges around with profits business briefly talked about the fact that the and how can the AA manage these? Regulatory changes affect LIC more than any other Insurer. Rajesh Dalmia raised questions around asset share calculation and handling He raised concerns that the AA is high level of expenses, especially responsible for all the activities but has when these are not allowed for in the not authority to decide on them. He benefit illustration. His next question gave examples to illustrate the same and was related to funding of the cost concluded the discussion on a lighter of guarantee arising from returning note sharing his experiences. premiums paid, whether the shareholder Session 5 or policyholders belonging to other cohorts would meet it? In continuation, Chairperson: Avijit Chatterjee - Chief how would one meet the high level of Actuary, ICICI Prudential, (India) Chandan Khasnobis guaranteed surrender values on the Topic: Summary, interpretation and current basis? Whether one is expected Chandan gave a brief introduction on issues for principles based reserving of to change or weaken the reserving basis? the duties of the Chief Actuary pre- life insurance in US Rajesh once again iterated that he did liberalisation and evolution of the not have the answers to any of these Speaker: Aravind Venugopalan - Senior Appointed Actuary (AA). He also said questions but these issues were being Consultant Genpact, (India) that the Chief Actuary was primarily faced by an AA. responsible for Valuation but the AA, Currently, statutory reserving in the in addition, should protect the interests P. K. Arora shared his experiences of US for life insurance is based on net of policyholders. He also spoke on the working with the largest life insurer premium reserves which are Zillmerised. stringent regulations pertaining to the in India. He took us through the The determination of reserves is rules- appointment of AA. He suggested a complexity of valuing above 300 million based and commutation functions are question and answer format to take the policies under 170 products spanning used to compute the reserves. panel discussion forward. Principles Based Reserving (PBR) would Chandan asked Anil to comment on enable companies to use complex attributes required for an AA? modelling that better reflects reality and enable them to use their own experience Anil Kumar Singh, mentioned that for setting assumptions. being technically sound is one of the basic qualities required to be an AA. PBR is calculated as the maximum of the He also highlighted the importance following: of expectation management of all - Net Premium Reserve (NPR) which the stakeholders. He discussed the is based on prescribed methods P. K. Arora definitions of fairness, adequacy and and assumptions and acts as the market conduct with examples and how over 50 years. He gave examples of regulatory floor. those should be carefully interpreted challenges faced by LIC such as bilingual - Deterministic reserves which and took us through the challenges of forms mandated for LIC, larger scope are gross premium reserve based being an AA with some examples. He and purview under Right to Information on cash flows with an explicit concluded by saying that the Appointed Act and being answerable to around allowance for provisions for adverse Actuaries should believe that the
1.2 million agents. He highlighted the the Actuary India March 2014 deviations. Regulator is always right. 19 technology, revamping the sales process, creating customer centric programs and focusing on rural business. • Legislations/Regulations – making distributor compensation flexible, making it mandatory to buy term insurance, revamping pension product regulations, relaxing restrictions on rider premiums, providing greater tax incentives on insurance policies, taking Aravind Venugopalan, Avijit Chatterjee, Varun Gupta, Sanket Kawatkar, Sanchit Maini steps to promote annuities, - Stochastic reserves based on In the last phase of his session, he allowing Provident Fund monies Economic Scenario Generators shared the following dilemmas faced by to be invested in insurance provided by the regulator. Only Indian life insurers. policies, making distributors more interest rate and equity returns - Product risks such as ALM, accountable and increasing the FDI need to be stochastically modelled longevity, etc. limit for investments in insurance while other assumptions should companies. - Expensive distribution channels be as in deterministic reserve In conclusion, there is significant calculations. - Poor quality of business and flat yield curve impeding the industry potential to achieve high growth rates in The impact of PBR was analysed from improving customer value the long term. based on results of 2011. The proposition on investment products Avijit Chatterjee asked the panel how analysis showed that reserves have Varun Gupta outlined various persistency levels can be improved. reduced for term products due to opportunities for life insurers: Sanchit’s response (from the perspective reduction in NPR while there were of company) was that viability of policy mixed trends for universal life • Differentiating based on brand channels with poor persistency should products. The analysis also showed • Increase protection business given be questioned. Different measures like that exclusion tests may not be very low insurance coverage to engaging with customers and linking effective. annual income ratio compensation to persistency need to be - Design viable distribution channels Topic: Strategic Dilemmas and taken to encourage policy channels to Opportunities - Optimization by being on efficient improve persistency. frontier Speaker: Sanchit Maini - Appointed Sanket’s response (from the perspective - Consolidation by large players Actuary, Max Life Insurance & Varun of regulator) was that insurers should Gupta - Corporate Vice President, Max - Improvement in areas of UW, fraud, not be allowed to write new business Life Insurance, (India) longevity, ALM, technology, etc. if they don’t achieve minimum persistency standards within a specified Sanchit Maini spoke about the evolution Topic: Revival of Indian Life Insurance time. Regulator should let CEOs figure of the Indian life insurance industry and Sector – How and When? out ways to kill poor persistency. how the industry has struggled to grow Speaker: Sanket Kawatkar - Head, Life in the last five years due to regulatory Insurance Consulting, Milliman, (India) A member of the audience asked Sanket changes and unfavorable economic Kawatkar whether companies need to Sanket spoke about the following conditions. This has led to: explore a completely new segment or changes that will enable the industry to market. Sankets’s response was that - decline in agency and third party reach a sustainable growth path: companies could explore new markets channels • Macro-economic environment and that there is space for many - significant decline in ULIPs and – revival of the Indian economy insurance companies in India. However, increase in participating products through GDP and investment companies should not focus only on top line but also on other parameters like He said that persistency has not growth, restoration of investor good service to customers, etc. improved despite a lot of efforts by confidence in ULIP through stable companies in this area. performance of equity markets. This ended the conference, where • Business Practices – changing the Heerak Basu thanked the financial He gave an overview of regulatory promoter’s mindset to a longer partners, speakers, IAI, hotel staff and developments, in the light of changing term horizon, aligning shareholders the audience for making the 16th GCA Indian demographics and overseas interests and cost structure with a great success. regulations, which will continue to drive the Actuary India March 2014 productivity, enhancing use of changes in our industry. 20 PHOTO FEATURES - CONCURRENT SESSIONS ON LIFE INSURANCE
Happiness cannot be traveled to, owned, earned, or worn. It is the spiritual experience of living every minute with love, grace & gratitude.
- Denis Waitley the Actuary India March 2014
21 TH 16 GcA REPORTAGE About the Author CONCURRENT SESSIONS ON GENERAL INSURANCE •Organized by : Institute of Actuaries of India •Venue : Renaissance Mumbai Convention Centre Hotel, Powai •Date : 17th & 18th February, 2014 [email protected]
he session was organized by the General Insurance Advisory Group of the Sourav is currently working as an Actuarial Institute of Actuaries of India to present the discussion on “Current Issues in Analyst at Bajaj Allianz General Insurance. He has completed his Masters in Actuarial TGeneral Insurance”. Statistics and is a student member of IAI. The topic for the sessions of the assembly gave full justice to the ongoing issues in general insurance industry. The sessions provided a platform to exchange general said and also raised an important point and technical updates involved in General Insurance industry. that the rate increase in TP is based on the data of IIB which is always open Session 1: Panel discussion on Current 5) Importance of asset liability for challenge. Gayle agreed to what the Issues in General Insurance management in general insurance other speakers said. Chairperson: M Karunanidhi, President industry Talking about adequate reserves IAI 6) Industry benchmark number Anurag commented that most of the GI Panel Members: Anurag Rastogi, VP& (including development pattern) companies are not under reserved. In his Head (Actuarial), Bajaj Allianz General M Karunanidhi introduced the topics view IBNR is like a black box and nobody Insurance Company Limited; Mehul and supervised the proceedings of understands how it comes. According Shah, Appointed Actuary, L & T General the session. The session was highly to him it is time we actuaries should Insurance; Tania Chakrabarti, Head - interactive between the panel members educate the non actuarial people about Actuarial Services & Appointed Actuary along with many interesting questions IBNR. Tania disagreed with Anurag and at Royal Sundaram Alliance Insurance from the floor. said that there are still under reserving issues in GI in India. She mentioned Company Limited; Gayle Adams, Beginning with TP liability, Tania that stake holders do not understand the Appointed Actuary, Raheja QBE discussed the effect of declaration implication IBNR has in the company. of 110% ULR for She suggested that from industry point declined risk of view there must be some bench pool. She also said mark level of TP loss ratio which the that the recent companies can look for reference. Mehul exposure draft on the other hand disagreed to both on TP premium the speakers and brought forward an rates is not in line important fact that from 2007 onwards with the industry the IBNR as a percentage of NEP in expectation. the industry is going down instead of Throwing more increase in TP rates. light into this topic, Anurag said Talking about profitability in GI Anurag Gayle Adams, Anurag Rastogi, M Karunanidhi, Mehul Shah, Tania Chakrabarti, that stand alone started the discussion stating that the The discussion was based on six TP business is very small and thus its overall GI industry growth last year important issues in current general impact on the GI industry will be small. was around 13%. In his view after de insurance industry which are as follows. Agreeing with Tania that the exposure tariff, the profit margin is sinking due to intense competition in the market and 1) Third Party Liability – pricing draft on TP premium is not as desired he to this he gave the example of 99.9% adequacy (or inadequacy), long said that in his opinion it is time to de- discount in fire insurance. Taking the tail, uncertainty, segmentation tariff the TP and if that happens the way GI market is behaving the TP prices will profitability discussion forward Tania 2) Financial Health and profitability come down. He also emphasized that mentioned that we are fortunate as we of the general insurance industry pricing adequacy has to be broader and have not faced many cat losses. She also 3) RSBY – Pricing challenges and brand we need to look at two of its components said that due to competition the market image of the actuarial profession which are correction of historical price rates are going down as a result of which within General Insurance adequacy and taking care of increasing the reinsurers are also losing money. So in her opinion the companies should the Actuary India March 2014 4) Economic Capital and role of inflation. Mehul agreed to what was 22 capital look for long term sustainability rather From James’s point of view much loss diabetes, high BP, Obesity), urbanization than just short term profit. reserving practice are still pre theoretical and sudden change in life style. He and the techniques like chain ladder, BF suggested few things as a control When it came to Economic Capital, are not performed in a statistical frame major which are 1. Not smoking, Anurag gave a statement that in today’s work. Adding to this he also said that 2. Controlling cholesterol, 3. Lifestyle date economic capital is just a number traditional methods are not optimal (diet and exercise), 4. Avoiding diabetes, for the company. Agreeing to him Mehul from a statistical point of view as they 5. Alcohol in moderation, 6. Controlling mentioned that economic capital is used produce only point estimates and reserve blood pressure. just for reporting requirements and now variability estimates are often ad-hoc. it is time for the actuaries to explain the Session 4: CEO Session: Pricing Issues To overcome the above difficulties he real importance to the share holders. He in GI discussed a way towards more realistic also said that IAI has a really important Chairperson: N. M. Govardhan, Actuary loss reserving frame work. For issues role to play in this. Continuing the and Former Chairman of LIC of India, like ‘repeated measures’ & ‘multiple discussion Tania said that economic India. time series’ we need hierarchical capital is an opportunity for the GI models and to deal with ‘non linear’ & Speakers: G Srinivasan, Chairman industry and companies should start ‘incomplete information’ we should use cum Managing Director, New India taking this more seriously. She also growth curves and the non hierarchical Assurance Co. Ltd.; Praveen Gupta, MD added that Economic Capital to be the models should be Bayesian. & CEO, Raheja QBE General Insurance most important part of FCR. Co. Ltd.; K G Krishnamoorthy, CEO, He threw some light on hierarchical Due to constrain in time rest of the Future Generali India Life Insurance models and its importance but due to topics could not be discussed. Company, India time constraint the topic could not be Session 2: (Loss Reserving using discussed in detail. Bayesian Hierarchical Models) Session 3: Heart Disease: A Growing Chairperson: Frank Ashe, Associate Epidemic Professor, Macquarie University, Chairperson: Dr. Suhas Shah, Chief Australia Medical Officer, Kotak Life Insurance Speaker: James Guszcza, National Co. Predictive Analytics Lead, Deloitte Speaker: Dr. S Prasad, Consultant Consulting Cardiologist Royal Brompton Hospital, London Praveen Gupta, N. M. Govardhan, K G Krishnamoorthy Praveen Gupta commenced the presentation with very important issues in GI industry. He believed that the Global GI market is likely to remain challenging over the coming decades. Issues like greater price sensitivity, a lack of differentiation Frank Ashe, James Guszcza among carriers and record low interest Dr. Suhas Shah, Dr. S Prasad rates have constrained top line growth James started the session by describing Dr. Prasad started his presentation by for most insurers in general insurance. Bayesian Concepts. According to him stating that heart disease is the number Adding to these, uncertain pricing Statistical methods have been evolving one killer disease and is a real point of environment has been squeezing rapidly, and many people think it’s concern/ major challenge for the health margins and contributing to low equity time to adopt modern Bayesian data industry. returns. Various catastrophic events analysis as standard procedure in our have evaluated loss ratios in recent scientific practice and in our educational He threw light on how blockages are years. curriculum. Main reasons for which created in the heart and how that affects are a) from astronomy to zoology the functioning of heart and causes Also he raised a very important question all scientific branches are moving to heart attack. He mentioned that in the that whether we have learnt any lessons Bayesian data analysis and we should be last few decades there has been a large from the mistakes of HIH insurance leaders of the move. b) Modern Bayesian decline in heart disease for developed (Australia) which had been accused of methods provide richer information, countries due to awareness but there under pricing policies and pressuring with greater flexibility and broader has been an alarming increase in Asian actuaries to reduce the projected level of applicability c) there is little reason to countries. outstanding claims liability. persist with NHST (Null-hypothesis According to him the main reasons are G Srinivasan described the evolution of significance testing) now that Bayesian genetic predisposition, poor handling the GI industry from Tariff regime to methods are accessible to everyone. of fats and metabolic syndrome (like De- tariff regime. He highlighted that cut the Actuary India March 2014 23 throat competition with a large number They displayed a comparative picture They described catastrophe modeling as of players, increasing complexity of of ‘Global CAT Bonds’ against equities, hazard and exposure based model since the products, increasing stringency corporate bonds, commodities etc. The it is used to calculate the probability of regulations, increasing exposure annual return on CAT bonds is 8.5% of occurrence of a CAT event and the requiring robust risk management as compared to annual return of less expected cost of the event if it occurs. practices are few of the burning issues than 6% for equities, commodities and The hazard and exposure models enable in GI. corporate bonds. Adding to this, the the calculation of the vulnerability to Talking about the importance of volatility (p.a.) for CAT bonds is lowest damage of the properties at risk. (By actuaries he highlighted that with the among all the other bonds and equities. quantifying the physical impact of the availability of massive amount of data Through a graphical comparison they natural hazard phenomenon on the and exponential leap in information pointed out, how unlike other bonds property at risk).Lastly, the financial technology the role of actuaries have and equities the return from Swiss loss to the portfolio of exposures is increased significantly. He then briefly Re CAT bond has increased over the last evaluated. By presenting a graphical described the role actuaries have to play decade instead of various catastrophe view they divided the Indian map into in pricing, reserving, risk & reinsurance, events like Katrina, Rita, Lehman four earthquake hazard zones and investment, compliance with regulations collapse etc. suggested that by combining the hazard etc. According to his view, pricing has They concluded the presentation by zones and its exposure in these zones, gone beyond simple frequency severity pointing out the need of cat bonds in an insurance company can understand analysis with methods like GLM gaining Indian market as India has suffered its susceptibility to CAT loss in the event prominence. Pricing of new products, from various catastrophe events in last that an earthquake occurs. developing models for pricing complex few decades. Further this presentation suggested few products when available data is sparse, Session 5B : Catastrophe Risk: ideas to manage cat risk which are not identifying unprofitable segments and Modelling & Opportunity to write policies that are exposed to high balancing the interest of various stake CAT risk, transfer the risk to reinsurer Chairperson: Sharad Shrivastva, holders will be a real challenge.He or capital market, higher prices for cat Secretary General, Insurance Institute of pointed out an important issue of lack exposed policies (CAT loading). The use India of fully qualified actuaries in GI. In 2004 of CAT modeling to project CAT losses the total number of actuaries (from IAI Speakers: Aditya Vardhan Tibrewala, and hence evaluate the benefit from website) was 204 and in 2013 it has only Director RSA Actuarial Services (India) different reinsurance covers available in increased to 259. Pvt. Ltd.; Tanu Shree, Actuarial Advisor the market was also discussed. RSA Actuarial Services (India) Pvt. Ltd. He concluded the presentation by The session was concluded by suggesting highlighting the growing importance of They started the presentation by that an integrated catastrophe model the actuaries in the general insurance highlighting catastrophe events in India is only practical way to provide business and saying that “an actuary is a and its economic & insurance losses. information requested by regulators and valuable resource for every GI company They emphasized that with increased rating agencies such as S&P, Fitch and and they need to tap his expertise to the penetration of Insurance, more frequent AM Best. maximum”. Session 6: Index Insurance For Risk Session 5A : Catastrophe Bonds Management In Agriculture Sector Chairperson: Sharad Shrivastva, Chairperson: Omer Morshed, Chief Secretary General, Insurance Institute Executive, Sidat Hyder Morshed of India Assoicates (Pvt) Ltd (Pakistan) Speakers: Ankit Goyal - Student, IAI & Speakers: Akshay Pandit, Partner, M/S Saanya Jain - Student, IAI K. A. PANDIT (India); Manish Kumar, Ankit and Sanya began the presentation Actuarial Analyst at KAP Consultants Tanu Shree, Aditya Vardhan Tibrewala, by defining the structure of catastrophe Sharad Shrivastva, and Actuaries, India and how it works through collateral natural CAT events, coupled with growth Akshay and Manish started the trust. in Indian economy, CAT exposure of presentation by defining WII: ‘Weather Indian insurance industry is increasing. index insurance is a form of insurance CAT risk is one of the key risks that a that is linked to weather index such typical P&C insurance company faces as rainfall rather than a possible today and could potentially destroy the consequence of weather, such as crop company. This not only impacts the failure’. They pointed out few important policyholders but creates systematic risk features of WII such as reduce in the in the market. It is not easily diversifiable high monitoring and administrative because many policyholders are affected costs, more quick and efficient payment the Actuary India March 2014 Sharad Shrivastva, Saanya Jain, Ankit Goyal at the same time. & limiting the possibilities of moral 24 hazards etc. they suggested methods like station With the help of flow chart average method, normal ratio method, they described the method of inverse distance weighting and ranked pricing staring from obtaining regression. Their presentation threw data to fitting PDF to weather light on trend analysis of weather data data to making choice between using ‘Mann Kendall’ test and also various premium methods. discussed about pricing techniques. Then they discussed a very They concluded the session by important point as far as WII addressing the challenges in WII and is concerned and that is ‘how solutions. to fill the missing data using The concurrent sessions on General similar data from nearby Insurance ended with a vote of thanks Omer Morshed, Akshay Pandit, Manish Kumar weather stations?’ For this from Debarshi Chatterjee.
PHOTO FEATURES - CONCURRENT SESSIONS ON GENERAL INSURANCE March 2014 the Actuary India March 2014
25 TH 16 GcA REPORTAGE About the Authors CONCURRENT SESSION ON HEALTH CARE INSURANCE • Organized By : Institute of Actuaries of India • Venue : Renaissance Mumbai Convention Centre Hotel, Powai • Date : 17th Feb 2014 [email protected] ession 1: Panel Discussion on achieved the level of market penetration Bhumika Bhatia works in Actuarial current issues in Indian Health that was expected to be reached, but the Department of Apollo Munich Health SInsurance Industry bancassurance channel has somehow Insurance Co. Ltd. She is involved in reserving, product pricing, IRDA reporting The first concurrent session on Health supported the growth in the business. and monitoring of product performance. th Insurance in 16 GCA began with He further emphasized on the point an introductory note by Biresh Giri, that Indian Health Insurance Industry appointed Actuary, Max Bupa Health is more focused on indemnity based Insurance. Biresh Giri, chaired the panel products, wherein it needs to widen discussion where Herbert Meister, Chief its area of business to more innovative Actuary, Asia Pacific, Munich Health products such as OPD Covers, (Singapore), Alam Singh, Independent Preventative Health Care, etc. The [email protected] Consultant (india) and Shreeraj insurance companies also need to play a Deshpande, Head, Health Insurance vital role in achieving a comprehensive Swati Kwatra works in Actuarial Future Generali India Insurance Health Care System. Following the Department of Apollo Munich Health Company Ltd. (india) were the panellists. Insurance Co. Ltd. She is involved in highlights by Mr Deshpande, Alam regulatory reporting, Group Health pricing and monitoring of product performance.
separately could be one of the steps in this direction. Herbert Meister also added a few points to the discussion, pointing out that the lack of expertise or commercial considerations to achieve top-line might be responsible for under- pricing. He suggested that the companies must not quote unless they have an access to a minimum data set to price a group policy. Managing claims size by negotiating rates with providers is also Biresh Giri, Shreeraj Deshpande, Alam Singh, Herbert Meister, crucial to make premiums competitive. Biresh Giri firstly invited Shreeraj Herbert Meister was then requested to Deshpande to present his views on Singh joined the discussion where he comment on some product ideas from more than 20% CAGR in health for past talked about the losses that the industry other countries that india could learn several years and the opportunities is incurring due to group health under- from. He said that the indian insurance of future growth in this segment. pricing. He stated that the industry is industry needs to get comprehensive. it Mr. Deshpande began the discussion, reeling under aggressive competition should keep health insurance attractive by highlighting that the shareholders due to which the industry losses have to healthy people who buy insurance see a lot of opportunity in the growth crossed a mark of 1000 cr. He said that for protection purpose. The benefit of this segment and that the industry the corporates tend to under-spend on might not be new, but it can be packaged finds it as the fastest growing part of employee health benefits resulting in innovatively to make the product more non-life sector. He also mentioned that aggressive negotiation with insurers, marketable. the competition in this segment is and cut throat competition between increasing. However, the loss ratios have them, which is ultimately driving down To this, Mr. Singh added that the Indian also been rising in both the retail and the premium rates. Insurance Industry mainly provides group businesses. The losses of group He suggested that there is need for inpatient products with some part of health business can be mainly attributed regulatory intervention to correct outpatient as a rider. it is a challenge to under-pricing. For the retail business, under-pricing. Asking the companies to to provide only outpatient cover, as the Actuary India March 2014 conventional agency channel as not report retail, group and social business the administration of the cover and 26 identifying anti-selection will be difficult. He recommended that indian market can expand by providing innovative products, such as health saving account cover, which is a tax-advantaged medical savings account. it can be offered as a high deductible plan (deductible can be increased as the savings fund grow) where the first tranche of expenses can be met from savings fund and any claim amount over and above that will be taken care of by insurance company. Further, he said that young and healthy citizens may be targeted to make this Winnie Ching, Akshay Pandit, Marianne Gilchrist product a success. However, there may Session 2: Cancer Insurance- the Road • Awareness of the general public/ be regulatory constraints on designing Travelled and Opportunities for India. National Cancer Campaign such a product. Also, the insured might Akshay Pandit, Partner, M/S KA Pandit • Higher Utilization of The Medical not be able to buy the most appropriate chaired the Second Concurrent Session Facilities care, when in ill-health. on Health Insurance where Winnie • Change in Lifestyle and Dietary Mr. Deshpande then suggested that the Ching, FIA, Director, Health Solution habits leading to higher incidence marketability of the new products can Asia, Swiss Re, Singapore and Marianne in Colon cancer. be increased by specifically targeting Gilchrist, Head of Health Solutions, The issues were also due to pricing and certain sections of the population, e.g. Seinsurance Client Markets, Swiss product design, such as: Certain products can be made more Re, South Korea, gave a presentation • Windfall claims from Early Thyroid aggressive for younger ages. The product on Cancer Insurance. Winnie Ching Cancer needs to be affordable and take care of commenced her presentation by stating needs. that cancer is one of the most dreaded • Use of reference rate with little diseases across the world, accounting for flexibility in setting premium rates The focus then shifted to rsby model, and more than 40% of deaths in developed or allowing for trends. how cut-throat competition in premium countries like Australia, Canada and • Guaranteed premium levels and rates has pulled down the premiums to Japan. in developing countries too, the coverage up to 80 years of age. a level which may be unsustainable in cancer incidence rate is expected to future. Herbert Meister said that it is true Following the issues faced by the show a steep rise, e. g., in India by the that due to unregulated pricing approach insurers, some repositioned their year 2035, the number of new cancer and competition, the premium rates product offering and some withdrew cases is expected to increase by 70%. have gone down steeply. He pointed out from the market. As at 2010, there were that RSBY data has discrepancies when She then discussed a case study by only 7 companies selling the standalone downloaded from website. He said that referring to the insurance cycle of product and the rest, including the for correct pricing, it is imperative for all korean cancer product. The first cancer market leading companies, provided companies to work on same data that is product in korea was launched in 1988 only cancer riders. accurate and reliable. Also the correct that covered cancer deaths, surgery She stated that in the light of the adverse interpretation of data is necessary. and hospital cash needs. However, the past experience and expectation of a Although the data may be same, the product didn’t give lump sum diagnosis much higher cancer incidence in future, outcome can still be different due to benefit until early 1990s when the the companies have redesigned their no prescribed methodology to arrive market grew competitive driving the products by moving away from long at premiums. Streamlining of pricing companies to introduce lump sum term guaranteed products to renewable techniques by introducing guidelines diagnosis and out-patient benefits. By cancer products. The benefit structure prescribing minimum standards such the year 2009, the product had become and claim conditions have also been as, considering trends, could be a step popular amongst the population and modified by introduction of waiting towards curtailing irrational pricing. made up for a considerable proportion period and restricting the pay-outs for of business. After late 1990s till early In addition to this, Mr. Singh added that certain type of cancers. Certain cancers, 2000s, the claims experience began to another factor that should be considered such as thyroid and skin, have now been worsen leading to erosion of companies’ while RSBY pricing is the competency of excluded from cancer definition. profits. The underlying reasons for the state administration, as high awareness deteriorating experience were identified She further explained the other changes can lead to high utilization. as: that were made in product design and pricing: • Advancement of Medical techniques the Actuary India March 2014 27 • Shortening the policy term: shorter Mumbai, New Delhi and Kolkata, led to 2005, showed vast deviation from the term renewable with less guarantee to some interesting findings. Firstly, benchmark, with loss ratios as high as • Reducing per life coverage indians have good insurance product 200% for male insured population in the knowledge, as compared to other asian age group of 35-39. • Varying benefit amount by cancer countries. However, indians rely much type/site Proactive Experience Monitoring more on personal and family funds for Process, feeding back to pricing and • Reduced SA/ROP only in initial their medical expenses, compared to considering impact of medical advances, policy years their chinese or hong kong counterparts. are also crucial to pricing exercise. • Surgical / Hospitalisation benefits Only 12% of indians own some form of only offered as minor benefits medical reimbursement insurance. On Other Risk Management Considerations • Using own experience of recent the other hand, people in china and identified by the speaker are as follows: years to price the product hong kong rely more on medical/ health • Future proof definitions • Allowing safety loading in the insurance and government or public • Specific, clear and objective claim pricing to account for future trends funding to pay their medical bills. definitions consistent with clinical/ medical practice of deterioration in the experience The speaker then highlighted that • Management of survival period In addition, the Korean Market has also Health Protection Insurance is still come up with specialised products for in its infancy in India where the • Effectiveness of underwriting 60 and above age group. largely unmet consumer needs and - considering extent of non- economic growth are creating a strong disclosure in market The speaker then switched gears and potential for increased penetration. • Product and life time limits to presented various interesting aspects However, there are certain factors, manage exposure of indian insurance market. In 2010, from risk management point of view, • Apply lien / waiting period, approximately $64 billion dollars that a company needs to consider packaging of benefits to manage were spent on Healthcare in India, while designing and pricing the cancer incentive to be selected against constituting 4% of the GDP of Indian products. Economy. However, a majority of the The speaker concluded the session by $64 billion healthcare expenditure was Availability of data and the extent to contributing her views on how market in form of out-of-pocket expense. in fact, which reference rates can be used are penetration of such products can be at 59%, India has the highest portion one of the major considerations here. increased by targeting the right segment of out-of-pocket expenses among the The speaker accentuated this idea by through a skilled distribution channel Asian Countries. A Regional Consumer giving an interesting example from and also, by making the products Medical Insurance survey conducted in Taiwan Cancer Product Market, where simple and more understandable to the customer. four Metropolitans of India - Bangalore, the claims experience for the period 2001
PHOTO FEATURES - HEALTH CARE INSURANCE the Actuary India March 2014
28 TH 16 GcA REPORTAGE About the Author CONCURRENT SESSIONS ON PENSION, EMPLOYEE BENEFITS AND SOCIAL SECURITY SCHEMES
• Organized By : Institute of Actuaries of India [email protected] • Venue : Renaissance Mumbai Convention Centre Hotel, Powai Chitra Jayasimha is a Senior Actuary with th th • Date : 17 and 18 Feb 2014 Mercer Consulting India’s Retirement Benefits practice. At Mercer, She is currently involved in Actuarial Valuations ession 1 discussed the following for domestic and multinational companies, Chairperson: A D Gupta- Consulting • The characteristics of the plan and retirement benefit consulting, merger and acquisitions and other value added SActuary, Charan Gupta Consultants associated risks employee benefit services. She is a Fellow Pvt. Ltd., (India) • Identification and explanation member of Institute of Actuaries, UK and Institute of Actuaries, India. Topic: Panel Discussion on Current of the amounts in the financial Executive remuneration Issues on Pension statements • While discussing the due diligence Speakers: Anuradha Sriram - Director • Amounts, timings and uncertainty of the cash flows Saket mentioned that, the key activity Benefits, Towers Watson, (India), Saket of due diligence is to determine and • Other issues such as exchange rate Singhal - Consulting Appointed Actuary mitigate risks and liabilities. Normally implications, derivation of asset at Tata AIG General, (India) and K this includes such areas as defined ceiling, settlement recognition and Subrahmanyam - Consultant Actuary, benefit retirement plans, retiree medical special events. KN Actuaries & Consultants, (India) benefits, change-in-control clauses, Anuradha Sriram presented on the She concluded the session with severance and executive long-term changes & clarifications and additional summarizing the key changes in the IAS incentive plans. Understanding talent disclosures of the IAS 19 Revised (2011). 19 revised 2011. requirements and determining the Saket Singhal presented on the merger integration approach (from standalone and acquisitions and what Actuaries can to full assimilation) is also important do to help in such transactions. during the due diligence phase. He concluded the session by mentioning various non-traditional areas where Actuaries can participate and practice.
Anuradha Sriram She spoke in detail about the following topics:- Saket Singhal • Comprehensive Income In particular he discussed the merger • Financing Cost and acquisitions in context to acquiring
• Clarifications of Measurement companies and acquired companies. K Subrahmanyam Issues He mentioned that the actuaries need K Subrahmanyam spoke about Actuaries • Financial Reporting and Disclosures. to concentrate broadly on the following Act, Guidance Notes (GN), Actuarial Practice Standards (APS), and In the first section she spoke about while conducting a Merger and the various recognition alternatives, acquisition transaction. Professional Code of Conduct (PCC) presentation of defined benefit costs • prevalence of employee benefits issues. and net interest on defined benefit and other programmes that need He mentioned that the Actuaries need liability /asset. to be considered during business to comply with the GNs, APSs, PCC, In the second section on financial transactions and Actuaries Act, on a voluntary basis reporting she mentioned that the • Due Diligence and when they come across any non- disclosures are more principles based • Practices by both the companies compliance by other members, it is
than specific. While on the topic she also their duty to formally complain to the the Actuary India March 2014 • Compliance issues 29 Disciplinary Committee as per the also mentioned that economic value Speakers: Anshul Srivastava, Co- Professional conduct standard (PCS). of liabilities, choice of discount rate, Founder, Organisation – Finance Interest Rate Duration and Convexity of Wizards, (India) specializing in Financial He also mentioned that it is of Concern Liability Related Cash flows and Inflation Literacy and Investor Awareness and A to the profession, if actuaries taking up Duration of the Liability Related Cash P Peethambaran , Consulting Actuary in new client assignments fail to inform flows are the liability related inputs for Retirement Benefits, (India) the previous actuary and in such a implementing LDI. situation the presence and purpose of Anshul Srivastava ‘s topic was on the GNs, APS, and PCS etc. is defeated. While discussing implementing pension fund industry in India and its unconstrained investment strategies scope for future. He covered a broad He stressed on point that many he spoke in detail about interest rate canvas of development in the pension Actuarial Reports being prepared are not and inflation swaps and how it works. area in India. in compliance with the Guidance notes On constrained investment strategies, and AP’s. There is no uniform practice he broadly discussed investment among the actuaries in this area and this environment and relevance to Indian may lead to wrong reporting causing context. damage to the professional image of the actuaries as a whole. Dr K Sriram , on the topic of “implementing LDI”, the Key Session 2 Considerations according to him are Chairperson: D K Pandit -Partner, M/s K • Which liabilities are to be hedged? A Pandit, (India) Anshul Srivastava • Level of Precision Required Topic: Developing Investment He started his presentation by asking a • Short Vs Long Dated Cash flows Strategies for Funded Employee Benefit question “what is social security?”. He Embedded Liability Options Plans and Role of Actuaries • discussed about the issues in Indian • Liquidity and Capacity of the Swap context –typically on Speakers: Dr. K Sriram - Consulting Market Actuary, • Average Life Expectancy He concluded the session by speaking Moving away from Traditional Joint about next steps which were • Family System • Role of Actuarial Profession • Inflationary Pressures • Underscoring the Need for LDI strategy • Unorganized Sector • ALM Diagnostics • Organized Sector • Creating a Traded Market for Transferring Liability Risks Next he spoke about Pension reforms in India mentioning about Migration Dr K Sriram The question and answer session was from defined benefit system to defined Dr K Sriram in his presentation spoke very lively with the audience asking contribution system, DC assets vs DB about key concerns while developing multiple questions on the presentation. investment strategies , risk profile of assets, Pension assets comparable to defined benefit plans, need to revisit Session 3 GDP as proportion in major markets across the world and the Indian Context. investment strategies , concepts and Chairperson:. N M Govardhan, Actuary inputs of liability driven investment and Former Chairman of LIC of India, He also spoke about the National strategies (LDI’s) , constrained (India) Pension System (NPS), its introduction, and unconstrained liability driven framework, adoption and current status. investment strategies ,Key factors and Anshul discussed at length the Pension next steps. scenario – both global and the Indian He started his presentation asking the Scenario. question “How can Actuaries help in He concluded his presentation designing investment strategies with discussing on the next steps while reference to the liability profiles of stressing on - employee benefit plans?” and followed it up with discussing the risk profile of N M Govardhan • India’s large elderly population the defined benefit plans. Topic: Pension Fund Industry in • Indian Pension assets He discussed in detail the liability driven India and Scope for the future and • Fund availability for investment in investment strategies on concepts of a deterministic Model for Actuarial infrastructure valuation of Long-term Compensatory the Actuary India March 2014 the LDI strategy and what it does. He • Stability to Capital Markets Absences 30 • Role of Insurance and Mutual Fund • Long Term compensated absences Companies • Accounting standard board’s • Burgeoning Young working guidance (Para 4) population He then explained the deterministic NPS • model including all the mathematical Annuities • formulae’s involved. He also generated A P Peethambaran made a presentation several scenarios on certain standard on the deterministic model on leave assumptions to illustrate the model benefit valuations. A P Peethambaran working. Accumulating compensated He started the session with a brief • He concluded the session making few absences – Vesting and Non Vesting reference to paragraphs 11 to 16 of the observations and alternative approaches. Accounting Standard 15 Revised 2005 on • Illustration on Liability to be the following: recognized (Para 15)
PHOTO FEATURES - PENSION, EMPLOYEE BENEFITS & SOCIAL SECURITY
THE ACTUARY INDIA – EDITORIAL POLICY (VER. 2.00/23RD JAN 2011) Version history; Ver. 1.00/31 01 2004 Ver. 2.00/23rd Jan. 2011 A: “the Actuary India” published monthly as a magazine since October, 2002, aims to be a forum for members of the Institute of Actuaries of India (the Institute) for; a. disseminating information, b. communicating developments affecting the Institute members in particular and the actuarial profession in general, c. articulating issues of contemporary concern to the members of the profession. d. cementing and developing relationships across membership by promoting discussion and dialogue on professional issues. e. Discussing and debating issues particularly of public interest, which could be served by the actuarial profession, f. student members of the profession to share their views on matters of professional interest by way of articles and write-ups. B: The Institute recognizes the fact that; • there is a growing emphasis on the globalization of the actuarial profession; • there is an imminent need to position the profession in a business context which transcends the traditional and specific actuarial applications. • The Institute members increasingly will work across the globe and in global context. C: Given this background the Institute strongly encourages contributions from the following groups of professionals: • Members of other international actuarial associations across the globe • Regulators and government officials • Professionals from allied professions such as banking and other financial services • Academia • Professionals from other disciplines whose views are of interest to the actuarial profession • Business leaders in financial services. D: The magazine also seeks to keep members updated on the activities of the Institute including events on the various practice areas and the various professional development programmes on the anvil. E: The Institute while encouraging stakeholders as in section C to contribute to the Magazine, it makes it clear that responsibility for authenticity of the contents or opinions expressed in any material published in the Magazine is solely of its author and the Institute, any of its editors, the staff working on it or "the Actuary India" is in no way holds responsibility there for. In respect of the advertisements, the advertisers are solely responsible for contents of such advertisements and implications of the same. F: Finally and most importantly the Institute strongly believes that the magazine must play its part in motivating students to grow fast as actuaries of tomorrow to be capable of serving the financial services within ever demanding customer expectations. the Actuary India March 2014
31 TH 16 GcA REPORTAGE About the Author PANEL DISCUSSION ON BANCASSURANCE • Organized By : Institute of Actuaries of India • Venue : Renaissance Mumbai Convention Centre Hotel, Powai • Date : 18th Feb 2014 [email protected].
rief about the Session Khushwant is a fellow member of Institute of Actuaries of India as well as UK. He has The year was 2000. Insurance sector was thrown open to the private sector. worked in the insurance industry in India BSoon enough the industry started growing at a phenomenal pace and before for around 8 years. Currently, he is the Chief and Appointed Actuary of Iffco Tokio one could realise, Bancassurance had already become the buzz word in the General Insurance. insurance industry in India. Over the years, Bancassurance emerged as the key distribution channel for insurance in India - perhaps the most cost effective and developments whilst others see this with its wide geographical reach, arguably the only distribution channel that had as an opportunity. the potential to boost insurance penetration into rural markets and tier II / tier Setting the tone for an exciting III cities in a quick and viable way. discussion in light of yet another Today, almost 13 years later, Bancassurance has again become the buzz word, significant regulatory change though for a different reason this time. This time it is the regulatory move facing the industry, Mr Sahay then to mandate an open architecture for the banks selling insurance products, introduced the speakers for the something which will have major implications for most insurance companies Panel discussion, requesting them in the industry. The insurance industry, thus, finds itself at the threshold of yet to share insights on Bancassurance another regulatory change, a change that can easily change the entire industry (separately for life and non life dynamics. segments). He requested the These developments warranted a discussion on the topic at the Global speakers to touch upon the role of Conference of Actuaries, which took place in the session - “Panel Discussion on new regulations given the currently Bancassurance”. declining insurance penetration, demographic challenges faced in distributing products and potential ession Highlights He also added that banks, with use of technology. • Kamalji Sahay (Ex-CEO, SUD their large branch networks and • R. Krishnamurthy (Senior Advisor, S Life & Advisor, GIC Re, (India)) wide geographical reach, make for Towers Watson, India), in his fact set the scene for an exciting a cost effective way of reaching based presentation, highlighted the discussion by highlighting the the vast population of India. Such current issues with Bancassurance potential of Bancassurance and the vast potential for Bancassurance in India new regulatory regime has also lead to Banks to enter Mr. Krishnamurthy said that the The session started by the Mr. insurance business in joint venture importance of Bancassurance has Sahay giving the introduction and with established foreign insurance increased both because it has been setting the tone for the discussion. companies. able to garner higher sales and He highlighted how Bancassurance He then drew attention to the new because of the persistent struggle of had emerged as one of the leading regulatory regime being envisaged, agency channel. The same is clearly distribution channels for insurance which includes open architecture evident in increasing share of new products in India, accounting for (i.e. moving from having one bank business premium garnered by more than 40% of new business tied up to one insurance company Bancassurance channel. premium for in FY13 for private life to one bank selling products He, however, stressed that the insurers. of more than one insurer). He growth of Bancassurance has not He mentioned that when the emphasised that various insurance been without its own significant industry was liberalised at the start of companies viewed such regulatory issues / challenges, some of which the millennium, there was a promise moves differently, depending upon are: to allow / develop new channels of their circumstances. For example, − Concentration on savings distribution and Bancassurance has banks that have floated insurance / investments products (at proved to be one such new channel companies and have exclusivity the expense of protection / that contributes significantly to agreements for distribution were risk oriented products) and
the Actuary India March 2014 insurance industry sales today. most concerned with these proposed concentration on cities and 32 urban areas (at the expense of is no alternative to developing a On the new regulatory moves, Mr. distributing insurance in rural competent advice-based sales force Tanksale suggested that different markets and lower end cities). at bank branches. banks viewed the developments Both these aspects are evident He also, in his closing remarks, differently – depending upon from the average ticket size cast his vote in favour of product whether they are promoter of an that the banks are able to drive; innovation for Bancassurance, with insurance company or not. He − Low share of Bancassurance a need to develop ‘combi’ products. therefore suggested that there must be a proper roadmap for transition. (only 6%) in general insurance • Mohan V Tanksale (Chief Executive, sales, clearly suggesting that IBA, India), giving the banker’s On being asked about how banks Bancassurance has been less point of view, suggested that feel about getting regulated by exploited to distribute general Bancassurance is here to stay! two regulators (IRDA and RBI), Mr insurance products. Mr. Tanksale started by highlighting Tanksale suggested that the motive of − Huge persistency gap the vast expanse of banking network both regulators is to curb misspelling − Growing number of insurance across India, which has more than and increase penetration and the complaints from bank 1 lakh branches and reaches more banks had no issue in dealing with customers (with about 50% of than 3 lakhs villages. He suggested two regulators. the complaints being / relating that banking network is the key to • Deepak Sood (CEO, Avanta ERGO, to ‘unfair business complaints’) increasing insurance penetration India), speaking about role of − Service to clients, which and hence, Bancassurance is here to Bancassurance on non life side, continued to be an issue as stay! suggested that it will take time to policyholders could not get the Mr. Tanksale accepted the issues evolve entire lifecycle of the product and challenges highlighted by Mr. Mr. Sood started by highlighting serviced from the branch they Krishnamurthy but suggested that that until now, Bancassurance has bought the policy. the amount of fee income banks been more focussed on selling Policymakers Banks Insurance Companies − Banks as corporate agents – a unique − Banks with divergent agenda − Companies with divergent agenda set of regulations in FY 2003 − Track record of poor cross selling concerning bank distributors − Experience of poor penetration and − Humungous issues on the HR front − Focus only on customer acquisition service in banking network − Poor adaptation and use of tech- − Keen to tap banks mostly for high − Sweeping change on any form of nology tickets; no real interest on the low sales incentive at banks mass market − Now a tearing hurry to introduce a − Willingness to bend the rules to broking model across banks ‘accommodate’ bank distributors Insured bank customers − Blind faith in banks, often obligated to the branch manager − Absence of independent evaluation or communication before buying insurance − Huge post-sale issues − No reliable grievance redress mechanism
‘investment’ oriented products Mr. Krishnamurthy presented the • generate out of selling insurance rather than ‘risk’ or ‘protection’ entire Bancassurance paradigm products is small compared to their oriented products and on selling from various stakeholders’ total profits and that the banks offer more in cities and metros rather perspective, which is shown in the insurance products as it enables than rural areas and tier II / tier III table below: them to offer their customers all town. This is clearly evident in the He concluded by saying that Insurers financial products under one roof, relatively higher ticket sizes that the and banks need to realise that effectively helping them become Bancassurance channel is able to the current scenario is far from financial supermarkets. garner. customer-centric. Relentless product In such a circumstance, therefore, He suggested that the problem with push and exploiting the ignorance the responsibility of selling suitable selling more ‘investment’ oriented of bank customers are not in the products and curbing mis-selling products through Bancassurance is long term interest of the Industry. (whether intentional or happening that insurance companies would Banks need to realise that poor due to lack of knowledge) lies with be competing not just within the insurance sales practices may hurt the insurer. industry but outside the industry the banking business and that there the Actuary India March 2014 33 also e.g. mutual funds, fixed deposits • Girish Kulkarni (CEO, SUD Life, (i.e. excluding dividend income) for etc. Consequently, insurance India), touching upon the recent banks associated with top 5 private companies get exposed / vulnerable regulatory developments, suggested insurance companies for has already to what the banks are driving. He, that too much too soon seems to be reached close to 7%, whilst it is only therefore, highlighted the need happening at around 2% for some of the other for insurance companies to drive PSU banks. Thus, he suggested, that Mr Kulkarni started by accepted sales of more protection oriented there is a merit to learn from the all the points raised by Mr. products through Bancassurance experience of some of such private Krishnamurthy in his presentation. channel. players. He suggested that managing On the new regulatory moved, Mr networks of banks is not an easy He suggested that all such models Sood said ultimately right advice tack and if Bancassurance is not should be well researched and must be given in selling such evolved and has issues highlighted well rehearsed before very specific products, something which hasn’t earlier, then all stakeholders have regulations governing Bancassurance really happened as yet insurance played a role in reaching where the are brought into for. selling through banks. Bancassurance is. He also suggested Summary of the Session that a part of the blame goes to He also highlighted the needs for ULIPs as during the boom in the Overall, the common theme that “combi” or embedded products, initial few years of the first decade emerged from the discussion was that which extend banking products of the millennium, no one really giving the right advice to customers at to include protection. He urged questioned if proper selling was the time of sale and ensuring proper the same to be enabled through happening. delivery of services thereafter are regulations as such products would paramount and steps must be taken in result in better advise and value to On the regulatory front, Mr Kulkarni that direction. the customers. felt that too much too early is being attempted. He suggested that On the new regulatory moves, the He then concluded by highlighting it would be useful to gain more consensus seemed to emerge that they that service of policies bought experience before coming out with will come with their own share of through banks is also an issue, specific regulations like the ones that issues, challenges and opportunities the most common being that are currently on the horizon. and perhaps there is merit in gathering policyholders buy the products more experience and having a planned from the bank whereas they have He also suggested that, perhaps, transition over a period of time. to go somewhere else for the their monogamy may be better from service / administration needs. He the point of post sale service Also, to further the cause of insurance suggested that the entire life - cycle to policyholders and also from penetration, the panel advocated the of the insurance products need to be knowledge / misspelling perspective. need for product innovation and the serviced though the banks to enable need to drive more protection / risk He also brought to the notice Bancassurance further thrive in oriented products in combination with of the audience that for the top Indian market. banking products. Bancassurance players, fee income PHOTO FEATURES - BANCASSURANCE the Actuary India March 2014
34 FROM THE DESk OF DILIP. C. CHAKRABORTY Chair, 16th GCA Organizing Committee
he 16th Global Conference of certificates. In between we had shake off our share of responsibility. Actuaries (GCA) of IAI held on professional troupe offering a variety of The actuarial profession exists to serve T 17th – 18th February 2014 was a dances. The stand-up comedy show was public interest, as reiterated by David wonderful experience for me. The GCA a roaring success. Hare, IFOA President and IAI entirely agrees. The Regulator and public, organizing committee in close On 16th February evening dinner explicitly and implicitly, rely on us to association with IAI officials led by Mr meeting jointly sponsored by the IAI ensure protection and wellbeing of RBL Vaish, Executive Director, and a and IFoA, we observed Birth Centenary stake holders in the industry, to whom large team of volunteers worked of J T Ranadive, a legendary Actuary we render expert service. Ours is not a relentlessly over past few months to and honoured six of our past Presidents Trade body or a lobby group. We are a deliver a brilliant event. Thank you for their contributions to the Profession profession and a learned body, serving friends for the collective good work. in India. public interest. We must have only Over 720 participants from 18 countries We thank our partners -28 of them -for “wise” actuaries and eliminate any joined in two days deliberation their support and contributions. I will “otherwise” actuaries operating in our involving 70 odd speakers from India make special mention of the Institute profession - as Mr. Chitale, Ex – and abroad. We tried to offer a balanced and Faculty of Actuaries, Swiss Re President ICIA said at the GCA. diet of subjects – actuarial as well as (Principal Partner), KA Pandit In his key note address, Mr. T.S. general business related topics, India Consulting, Canara HSBC Life and Vijayan, Chairman IRDA expressed his specific and global subjects, special Hannover Re / GIC Re for supporting views on the state of insurance industry sessions for students and papers the GCA/AGFA generously. selected from amongst the members. and regulations, and his expectations Appointed Actuaries and CEOs of Life, “Evolving Frontiers, Exciting Prospects” from the actuarial profession. He Health and General Insurance industry – the theme of the 16th GCA captured expressed concern about the long time- met for panel discussions. CEOs and mood of the conference. The Actuarial span of actuarial examinations, industry leaders including IBA CEO universe is expanding and will continue particularly in view of the shortage of deliberated over the impact of recent to evolve. There will be exciting actuaries in certain areas. We will have regulations on Bancassurance. opportunities, but so there will be to engage with the regulators to address problems and pitfalls. In the recent these issues. The GCA helps us to We had very entertaining recreation on past, life insurance industry, and by crystalize our thoughts and seek a way the 17th evening during the AGFA. association the Actuarial Profession forward in collaboration with Student members excelling in actuarial have been at the center of high profile Regulators and various stakeholders exams were recognized. New Fellows mis-selling scandal, which adversely and Associates of IAI were awarded affected all stakeholders. We can’t
MANY HAPPY RETURNS OF THE DAY the Actuary India wishes many more years of healthy life to the following fellow members whose Birthday fall in MARCH 2014
G. CHIDAMBAR K. K. DHARNI S. KRISHNAN R. C. CHADHA H. C. MEHTA
(Birthday greetings to fellow members who have attained 60 years of age) the Actuary India March 2014
35 2014 AGFA & 16TH GcA EVENTS competition where the students, based on their standards were given five brain whacking teasers to be cracked in a span of twenty minutes. Most of them THE WHIZZING MATH WIZARDS surpassed our expectations by • Organized By : Institute of Actuaries of India demonstrating great analytical abilities • Venue : Renaissance Mumbai Convention Centre Hotel, Powai and one student from each of the three age groups was declared as a winner – • Date : 17th Feb 2014 Snehal Kamble, Shraddha Gupta and nowledge finds unity in the midst event (AGFA). We conducted a writing Sohail Ansari. M Karunanidhi, President of diversity. It is said that contest where the students had to pen of IAI felicitated these students with the K Mathematics is the gate and key of down “A Memorable Episode in my prizes. In the meanwhile, the shortlisted the Science and neglect of Mathematics Teacher’s Class” in 30 30 entries from the writing contest were Mathematics is an injury to all words. We received about 150 entries evaluated by R B L Vaish, Executive knowledge. This is a subject applied to out of which 30 students across 14 Director of IAI and Chetan Toshniwal every field and profession. schools were shortlisted based on their from Munich Re to decide on the top With an aim to educate young minds by narration of the incident and math three writers. The winners of the writing giving them a glimpse of how math is grades. contest - Anjana Salunkhe, Suman Ray infused in most aspects and Lalita Waghmare were felicitated by of life, we as a group of David Hare. Anjana volunteers along with Salunkhe’s winning episode our lead and mentor, in her math teacher’s class Mayur Ankolekar have was written in Marathi, reached out to around which on translation reads - 3,000 students in the last “Once our math teacher Mr. year. These children Shetty explained to us the study in the municipal hide and seek of schools of Mumbai and Mathematical expressions, my fear of Mathematics vanished. I we meet with them through the five The kids were brought to the beautiful became very interested in math. Our non-profit organisations namely venue of the 16th GCA, the Renaissance teacher also explained how Mathematics Doorstep School, Muktangan, Room to hotel and were introduced to the is linked to life. We should add our Read, Salaam Balak Trust and Saksham. actuarial world at the start of the AGFA happiness, subtract our sorrows. Our anecdotal teaching and a forty event. They were then ushered into a Multiplication means addition of happy minute interactive session with the conference room to enjoy the snacks, moments and division means open minds and closed books of the interact with the actuaries and play neutralising the sorrow by happiness.” children is quite similar to a stand-up some exciting math games. David Hare, comedy act with a target to inculcate President of the Institute and Faculty of The children’s presence indeed their interest towards studying and Actuaries (IFoA) and Paul Reynolds lightened up the evening for all of us enjoying Mathematics. We try to addressed the students emphasizing on and it was overwhelming to see them all supplement their teachers by presenting the importance of Mathematics, charged up with a positive energy to them easier ways of tackling math education and how one should strike a throughout the event. They then problems by instilling common sense in balance in life between school and play. enjoyed a sumptuous meal by the lovely what we do and by referring to our Anushree Prakash from RSA Analytics, lake and headed back to their respective mundane activities where these Delhi advised the kids to chase their destinations loaded with gifts, newly problems are dealt with on a daily basis. dreams and find joy in what they choose infused enthusiasm for math and happy Our philosophy with the kids is “Good to do. Antonio Ferreiro, Appointed memories. in Mathematics, good in all subjects”. Actuary at HDFC Ergo General Insurance About the Author We have gone a step further this year explained the concept of motor with two new projects for the Doorstep insurance and bad risk to the children School; a structured math training with an example of buying insurance for program for the teachers and a ten their bicycles and how the policyholders session model designed to concrete have to pay more when they are exposed certain fundamental concepts in Algebra to a higher risk with the same instance. and Geometry of the students preparing Such relevant illustrations strike a chord for the tenth standard board exams. of familiarity in students, thus helping [email protected] In line with the last three years, we took them absorb the concepts better which Divya is a student member of the Institute this opportunity to felicitate some of the they would surely relate to on growing up. of Actuaries of India and the IFoA since the brightest students at the 16th GCA’s These interesting interactions were then year 2009. She is currently working with the Actuary India March 2014 Actuarial Gala Function and Awards followed by another set of math Towers Watson in Mumbai. 36 TH 2014 AGFA & 16 GcA EVENTS profitability of different merged entities. Even to this day, the concepts followed by his team are referred INSTITUTE AND FACULTY throughout the world to understand the nuances of mergers. Further, OF ACTUARIES, UK AWARD he was one of the chief reasons for the introduction of computers PRESENTATION EVENT in LIC in 1964. More than that, he ensured in-house development of • Organized By : Institute and Faculty of Actuaries, UK (IFoA) software expertise in LIC by strongly •Venue : Renaissance Mumbai Convention Centre Hotel, Powai discouraging outsourcing of software •Date : 16th Feb 2014 programming. Also, in 1971, he prepared FCR (Financial Condition his year’s IFoA (Institute & Faculty warmly welcomed by Dilip Chakraborty Report) & Valuation Report for the of Actuaries) event was held as a (Chairperson, External Affairs and first time in LIC’s history. He retired T part of Pre Conference Dinner Research Committee), guests were in 1973. function on 16th February 2014 at the addressed by Mr. Karunanidhi, LIC’s self-reliance in handling hundreds same venue as that of GCA. President, IAI. In his address Mr. of millions of policies today is due Awarding new qualified Fellows Karunanidhi emphasized the need to visionary efforts of people like J T from India was as much a theme to leverage the experience of Senior Ranadive. In addition, FCR and valuation of Pre Conference dinner function Actuaries by younger Actuaries in this reports instigated by him in India have as remembering legendary Actuary scenario of swift external changes. become the mainspring of the Actuarial J T Ranadive who laid out a strong He explained why “Experience” is an Valuation process today. objective parameter to measure maturity foundation to Actuarial profession in Speech of M G Diwan was soon and wisdom in a person. India. followed by a nostalgic speech by In a short event preceded by a Magic Just after that, David Hare, President, T S Vijayan, Chairman of IRDA who Show by Mangesh Desai, IFoA awarded IFoA in his address accepted the fact that remembered his days in LIC and his Fellowship to 4 students from India IFoA, which could be termed as a parent interactions with M G Diwan. Mr. namely; Bhavna Verma, Neel Chetan, institute to IAI, was proud to regard IAI Vijayan honored 6 past presidents of Archana Anoor & Ajay Kumar Tripati. as a grown up child now and would look Institute of Actuaries Of India who had Congratulations to everyone getting forward to treating IAI as a friend and contributed immensely to the growth of certificates of their fellowships. colleague of IFoA in future. the profession of whom M G Diwan was Obtaining fellowship from any of This was followed by speeches by also one. the Actuarial Institutes in the World, 2 persons who were closely related Mr. Vijayan’s speech was followed by a as clichéd as it may sound is the to Late J T Ranadive. One was his charming and enthralling magic show culmination of hard work, perseverance brother-in-Law who while thanking IAI performance by Mangesh Desai who and patience. Reaching the pinnacle for the invite told how professional succeeded in both entertaining and of steps leading to Fellowship is more underwriting, Actuarial profession tricking the guests present. and Risk management were intimately of a test of student’s character than of Finally K. S. Gopalakrishnan, bonded together. Another, M G Diwan Intelligence as failure is a more common Vice president of IAI thanked (Celebrated Actuary & Former Chairman visitor at each step even to sharper K Subramanyam, who was present as a of LIC of India) who worked under J T students. guest, for organizing the very 1st GCA in Ranadive in LIC of India. After issuing awards to the newly Delhi 15 years ago in his vote of thanks qualified fellows, David Hare, President, Brief note on the legendary life of Late speech. IFoA noted that Relevance, Learning and J T Ranadive: Being right are the 3 most important Born in 1913, J T Ranadive obtained About the Author attributes that an Actuary should his fellowship in 1948 from UK possess in the current environment; Institute of Actuaries. He witnessed Being relevant to the people to whom nationalization of around 240 private the Actuary is giving advice, being able companies in 1956. He worked in the to update oneself&willing to choose Actuarial Department of LIC where Integrity over career prospects if he, along with his team determined situations arise. a methodology to distribute surplus [email protected] Thinking of learning, events which between old policyholders of lead to IFoA event were equally erstwhile private Insurers and new Deepak is currently working in LIC of India transpiring and more inspiring than policyholders of LIC. He created a in its Actuarial Department, Mumbai. He is a student member of IAI. the Actuary India March 2014 the award function itself. After being unique Index system to recognize the 37 TH 2014 AGFA & 16 GcA EVENTS About the Author IAI STUDENT EVENT
• Organized By : Institute of Actuaries of India • Venue : Renaissance Mumbai Convention Centre Hotel, Powai • Date : 17th February 2014
[email protected] he event was chaired by G.L.N. Sarma, M.D., Hannover Re Consulting Prerana Sadarangani is working as a part Services India. The agenda of the event was twofold, i.e., to provide of the Actuarial team at TATA AIG General T information on a new qualification, ’Certified Actuarial Analyst’, offered by Insurance Company IFoA, and effective communication skills. After an introduction of the speakers, G.L.N Sarma highlighted the notion about actuaries not being able to Module 4 : Short Term Actuarial communicate effectively and emphasized on the importance of good Mathematics communication skills. The event then opened with the first session covering Module 5 : Models & Audit Trails the new Certified Actuarial Analyst qualification. It will typically take about 2-3 years part time to qualify. However, members (i) Certified Actuarial Analyst: A new in the UK who are willing to take on already pursuing Actuarial exams will be credential for a changing market CAAs. eligible for exemptions. Speaker: Derek Cribb-CEO, IFoA This qualification can be pursued by The first entrance test is expected to The Institute and Faculty of Actuaries students looking for a career in the take place later this year. (IFoA) is introducing two new financial sector with a wide range of (ii) Effective Communication membership categories, namely, career options. It can also be pursued Speaker: Sumit Seth - Managing Certified Actuarial Analyst and Student by students of the IFoA who have Director, Forum India Actuarial Analyst. Derek initiated the started taking Actuarial exams but discussion by giving an overview of are not inclined towards attaining the qualification of a Fellow. Fellowship for some may not be the right choice, but rather the only choice. From the perspective of an employer, it is an opportunity to invest appropriately in staff development as not all Actuarial students within the Actuarial function Sumit Seth of a company would be inclined towards The session on Effective Communication gaining a Fellowship qualification. They Derek Cribb presented by Sumit Seth was interesting can be used for technical and analytical as well as interactive. Actuaries the new qualification. The qualification roles alongside Actuaries or otherwise. are believed to struggle with their developed is not specifically for roles Hence, actuarial capacity can be built at communication skills and hence this within the actuarial function of a a manageable cost. This role can support session threw light on some important company but rather for those working business models which are built around ways of communicating effectively. alongside actuaries and in varied a few high level experts supported by Sumit covered the following areas: financial services. The CAA (Certified a greater number of technically skilled a) How humans communicate? Actuarial Analyst) is clearly differentiated professionals. from Associates and Fellows but will still Humans communicate using a Derek then went on to discuss the have high quality technical skills and the combination of words, body language structure of the examinations. support of a leading professional body. and tone. An Italian scientist named The qualification does not focus on a Module 0 is an entry test which needs Mehrabian put an end to the debate of specific stream in insurance but it is more to be taken by non-members. There are which of these is most important while focused towards Financial Mathematics, then five modules which need to be communicating. According to him, a Probability & Modelling. taken in order to qualify. These are given message is conveyed 55% through the as follows: The IFoA has introduced this body language, 38% through the tone Module1 : Finance & Financial qualification after carrying out research and a mere 7% through words. Sumit Mathematics and recognizing the market demand for then illustrated this with the help of Module 2 : Statistics & Models it. As mentioned by Derek, the IFoA has examples to emphasize the importance the Actuary India March 2014 Module 3 : Long Term Actuarial been in discussion with big companies of body language. 38 Mathematics b) What comes in the way of effective which is then responsible for thinking process of thinking in our brain involves communication? and communicating. asking questions and answering them. Ineffective communication is when the Sumit went on to demonstrate how one The quality of questions asked is three, i.e., body language, words and can easily deactivate the reptilian brain important since it determines how one tone are not aligned. This was further by bringing him/her into a complete feels. Positive words play an important explained by the structure and evolution state of happiness. This can be done role in this process. of the human brain. Prior to being apes, by releasing a few neurotransmitters in Using all three ingredients can lead we were believed to have evolved from the body. Sumit demonstrated this by to extreme happiness and one can reptiles. Our reptilian brain which was involving the whole audience. completely shut down the reptilian then used for only instinct survival He then went on to discuss the three key brain and activate the neocortex. The evolved to incorporate emotions. This ingredients for happiness which were body gets flushed with four best things portion of the brain is known as the discovered by scientists carrying out an that we need: limbic system. This further developed experiment in UC Berkeley on a group of (i) Opiate to incorporate the ability to think and to depressed people. (ii) Dopamine use words. This segment of the brain is The first ingredient is ‘Physiology’ (iii) Adrenaline known as neocortex. which is the way one uses his/her body (iv) Endorphins When the reptilian brain and the limbic and determines how a person feels. For Antidepressants also release these in the system are very active, they can shut example, a person smiling can never feel body to fight depression. Using the three down the neocortex which is essentially depressed and hence this can deactivate ingredients is a natural way to release responsible for communication. This the reptilian brain. can happen when one is in a state of them in the body. The second ingredient is ‘Focus’. Sumit anxiety, fear and extreme emotions. Besides the use in daily life, this method discussed how humans are designed to of shutting down the reptilian brain can c) What we could do about it? be negative thinkers. Focusing on happy be used when one needs to engage in One can communicate effectively when events in one’s life can deactivate the important communication or when one he/she shuts down the reptilian brain reptilian brain. is in a state of anxiety and fear. and is in a complete state of happiness The third ingredient is ‘Thinking’. The or bliss. This makes the neocortex active
PHOTO FEATURES - IAI STUDENT EVENT
What you get by achieving your goals is not as important as
what you become by achieving your goals. March 2014
- Henry David Thoreau the Actuary India March 2014
39 FEATURES About the Author EFFECT OF CURRENT INDIAN ECONOMIC SCENARIO USE OF DISCOUNTING RATE UNDER AS 15 R (G SEC RATE) FOR
THE VALUATION OF [email protected]
EMPLOYEE BENEFITS AS ON 31-3-2014 Akshay Pandit, is a Partner in M/S. K. A. Pandit, he has more than 28 years of mployers are mandated to provide impending issue of volatility in the G. experience in Pension and Insurance field working in India and abroad. He is for employee benefit liability into Sec yield in the last 10 years. Diagram currently heading portfolio of Business E their books of account as per below, shows movement in rates, it can Head and Head of General Insurance provisions of the applicable Accounting be noticed that these fluctuation is to Division in firm. Standard in India. Valuation of employee the tune of 2.50% in 10 years, though for expected future cash flows using a benefit liability and disclosing the most period it was around 8.00%. discount rate that reflects both the risk same as per the associated with the plan assets disclosure requirements and the maturity or expected of Accounting Standard disposal date of those assets 15 (R). (or, if they have no maturity, As per the Indian Income the expected period until Tax Act 1961 financial the settlement of the related year is 1st April to 31st obligation). March for calculation of 102. Where plan assets include taxable profit. Majority of qualifying insurance policies the companies follow the that exactly match the amount same as their accounting and timing of some or all of the 2014 rate is as on February 2014 all other rates are as of March each years. period and close their benefits payable under the plan, st books as on 31 March the fair value of those insurance policies each year. One can observe that the yield has gone is deemed to be the present value of While making the valuation of retirement up from 8.04% to 9.10% from March 2013 the related obligations, as described in benefits, Actuaries use several financial to February 2014, this will have an impact paragraph 55 (subject to any reduction and demographic assumptions, one of on the valuation figures of the liability, required if the amounts receivable the key assumption is the Discount rate and with all other parameters remaining under the insurance policies are not which affects the value of estimated same, there will be substantial reduction recoverable in full). in the Liability figures and this will give liability substantially in any year of As per the Indian Tax Laws, the pattern huge Actuarial Gain. volatile interest rates. of Investments for retirement benefit Para 78 of the Accounting Standard As Accounting standard 15 mandates trusts includes major portion of G- Sec. states: routing of Actuarial Gain / Loss through As part of approved investments. With “78. The rate used to discount post- Profit and Loss account, there will be a yield on G-Sec. Going up there are fair employment benefit obligations (both reduction in the amount charged to the chances that the fair value of the asset funded and unfunded) should be P&L (This is expected to be negative in will go down and will result in the determined by reference to market most of the cases, and may bring reversal substantial Actuarial Loss on the plan yields at the balance sheet date on in B/S) due to Actuarial Gain on account Assets and ideally will nullify the impact government bonds. The currency and of higher discount rate. This will distort of Actuarial Gain on the Obligation and term of the government bonds should comparison of employee benefit costs there will be a neutral impact on the be consistent with the currency and between two years. Profit and Loss of the enterprise. estimated term of the settlement of Effect on Assets: Indian Scenario post-employment benefit obligations.” Para 100-102 of Accounting Standard 15 Majority of the funded are funded with Effect on value of Actuarial Liability: deals with the Fair value of Assets: Insurance companies, either in their As stated in accounting standard 15 100. The fair value of any plan assets is a) Traditional plan or b) Unit linked to use market yields at the balance deducted in determining the amount plan. sheet date on government bonds for recognised in the balance sheet under Investment value under the Unit linked discounting the liabilities, a close look paragraph 55. When no market price is at the movement on the yield on the plan is a fair value as on the data and the Actuary India March 2014 available, the fair value of plan assets is government securities will throw up the will represent the yield movement but, 40 estimated; for example, by discounting traditional plans are considered to be a cash plan and the value Though it is not compulsory to disclose the PBO on earlier of Investment do not change with the change in the yields and assumptions, in some situation like this, disclosure of PBO this will mute the neutralisation effect on P&L and there will on earlier assumptions also helps client to understand be an actuarial gain booked on the liability. inconsistency in the accounting. Those companies (with some exceptions) who have their Below are three tables showing comparison of Charge to P & L investments outside the insurance companies, prefer to as Expense, B/S Liability and Experience Adjustment: - consider their investments as a HTM (held to maturity) Before After category and do not revalue investments and this will also Revaluation / Revaluation mute the effect of yield change on the investments. MTM of Assets / MTM of Assets Actuaries will have tough time explaining the reduction in the EXPENSES RECOGNIZED IN THE April-13 To April-13 to P&L and Liability values. INCOME STATEMENT: Mar 14 Mar 14 Probable solution to this anomalies can be found in Ind As (19) CURRENT SERVICE COST 27,632,000 27,632,000 which routes Actuarial gain/loss through other comprehensive INTEREST COST 24,646,875 24,646,875 Income. Other solution is to use the average rate of past few (ExPECTED RETURN ON PLAN AS- (21,808,875) (21,808,875) years , such as average of past 7 years as is adopted in one of SETS) the European country, but this unless provided in the standard ACTUARIAL (GAINS)/LOSSES 2,348,000 22,348,000 may not meet accounting requirement. EXPENSE RECOGNIZED IN THE IN- 32,818,000 52,818,000 Probable way of knowing impact of higher yield on the COME STATEMENT accounts: From above table we can see the charge to profit & loss has As a reader of the accounts of an organisation, one would increased because of re-valuation of assets which is actually be able to know the impact by looking at the disclosure of true & fair view which needs to be disclosed. the movement in the assets and liabilities of the retirement benefits in the accounts. AMOUNT RECOGNIZED IN THE April-13 to April-13 to BALANCE SHEET: Mar 14 Mar 14 As per accounting standard 15 (R), entities which have to give the reconciliation in the accounts as to the liability and asset FAIR VALUE OF PLAN ASSETS AT 325,182,000 305,182,000 movement also shows the Actuarial gain/loss on experience, by THE END OF THE PERIOD comparing the experience actuarial gain/loss with the reported (PRESENT VALUE OF BENEFIT (338,700,000) (338,700,000) actuarial gain or loss, one will be able to arrive at the impact OBLIGATION AS AT THE END OF the effect of the higher yield has on the accounts. THE PERIOD) Note : As one of the requirement under Accounting standard DIFFERENCE (13,518,000) (33,518,000) is to show Experience adjustment, which requires calculation NET (LIABILITY)/ASSET RECOG- (13,518,000) (33,518,000) of liabilities with last year assumptions, this will justify the NIZED IN THE BALANCE SHEET difference in liabilities, though Actuaries may advise the company of PBO based on Last year’s assumption, this will Similarly from above table we can see the balance sheet value be more simpler for companies to understand the effect. Also shows true & fair view when we consider actual revalued assets. Valuation of Assets wherever there is a privately managed Lastly below table shows the experience adjustment when we fund to be performed by Actuary to arrive at Asset values and consider actual revalued asset v/s original asset value minimise the effect on P/L. Before After Example: Let’s consider an Example where previous year Revaluation Revaluation valuation liability was worked out using discount rate of 8.25% / MTM of / MTM of Assets Assets p.a. and in current year at 9.25% p.a. This will obviously lead April-13 to April-13 to to a reduced expense and PBO at end due to reduction in EXPERIENCE ADJUSTMENT Mar-14 Mar-14 calculated liability value (PBO). Below values are considered based on assumed situation for representation purpose only ON PLAN LIABILITY (GAINS)/LOSSES 32,108,000 32,108,000 (but in reality this can be actual situation). ON PLAN ASSETS (LOSSES)/GAINS 3,040,000 (16,960,000) As an example we have also tried to reproduce some tables So we can say, revaluation of assets would give smooth charge considering revaluation of assets, which also resulted drop in to profit & loss and balance sheet value. This will be consistent the value of assets due to assumption. with increase in discount rate for liability calculations and vice Comparison of Liability & Assets: April-13 to versa where discount rate reduces similar methodology can be Mar 14 adopted to revalue assets which would again lead to consistent Closing Assets 325,182,000 calculations. This is possible if assets durations are matched
Closing Assets (Mark – To – Mark (MTM) / Re-value) 305,182,000 with durations of the liabilities. This would be an additional work for Actuarial portfolio as the volatile phenomenon of Closing PBO 338,700,000 discount rate can be tackled to an extent with valuation of
Closing PBO on Last year’s Assumptions 365,420,000 assets. the Actuary India March 2014
41 BUDDING ACTUARY: ON THE LIGHTER SIDE I am a happily married person (With indeterminate level of significance) and with a square family. Have a good job. I was happy with everything and settled in my life. One fine day I had a chance meeting with a friend, Raju at a bus stop. Raju had become thinner in his build but the hairs on his head were even thinner. As we were meeting almost after a decade I just pulled him for a cup of coffee. A rather reluctant Raju entered the restaurant hesitantly and settled down. After a chat I found him rather agitated. Upon probing he told me that he is giving an examination next month and worried about his preparations. [email protected]
y god! We are out of college almost explained the whole idea of mine. She think he is rather young for it?” He a decade ago and now again you stood speech less for a moment then asked. He knew this as incidentally my M want to invite same trouble Raju? said “you can’t take our beta’s study, son goes to him for tuition. I managed “ I shouted. Raju explained to me that what study you will do?”. I ignored her to explain him in a hoarse voice that it this was not like college, where we rarely compliments and immersed myself in to was for me. His eyebrows were raised studied but for some professional the books I had never fully understood to the upper possible limit. “What on qualification called actuaries.“Actury? when I was a student with full vigour. earth YOU (was there a hint of contempt What is this?” I asked. Its “Actuaries” Over the weekend my dad happens to or was it a genuine concern) are doing and not “actury” said Raju and visit us and he saw me reading something with these books?”I somehow croaked a enlightened me for next half an hour. rather than dozing on the sofa in front few things about actuary and my Nobel One thing stuck me is the rarity of fully of the Telly as was my usual practice on determination. ““My god, what the qualified actuaries in India which the weekends. He was concerned and world is coming to?” He shouted .I saw seemed even rarer than the tiger asked me what was wrong. I told him his cheeks red and the visible rise in his population. The potential salary was that I want to become an actuary and excitement level. Fearing he may have a attractive and in millions. We parted studying for that. “What’s this actuary?” heart attack at his old age I beat a hasty ways after promising to meet again. he asked me. “It’s something to do with retreat. I came home thinking which was predicting present financial implication I have read somewhere that “when the probably oozing on my face. Wife looked of future risk” I explained as I had read going gets tough, the tough gets going at my face and gave me a sympathetic it just a day before. Oh! My father said, “.So I decided to ignore everyone’s look as she felt I got a routine dressing our family astrologer, Ganesh who is scepticism about my abilities and down from the boss. I didn’t clear up her just Matric ( xth Standard ) failure can decided to trot along. on this but went to the web to find more do this and is making a neat bundle Few days later I bumped in to Raju again about this actuary business. with his skills. Why you had to waste my near a movie theatre. He seemed in a money and your time in getting all those I always wanted to be someone and I jolly mood and wanted to pull me for a fancy degrees and end up like this, there thought this is my chance to join the movie. I was worried about my study as was lot of sadness in his voice as he said elite band .But the more I read more examination dates were near. So I asked this. He just left me at this. I felt the hurdles. I felt becoming an him about his examination preparation. actuary will be tough for me as I need to I removed all depressing thoughts and Raju said “ ‘Chod de Yaar’, I have given cross the first hurdle of the entrance and ploughed along bravely in to word of up that. I have got a promotion and I later on give lot of papers seemingly full numbers. A few days later I was coming may get an overseas assignment. So I of Mathematics which I always dreaded. out of a bookshop after purchasing few do not want to study and anyway it’s so But the reward was tempting enough for more mathematics book. As I was near tough”. someone stuck up like me to give it a try. the door I faced an elderly gentleman. He I went in for the movie with him and recognised me and broke in to a smile. I filled up the entrance examination enjoyed a treat from him. It was one of the most dreaded faces in form and purchased some books for But in my mind I was saying “grapes are my life and had given me nightmares, study. As I was keeping them on my table sour for the fox”. the face of my school mathematics at home my wife saw them. “Why have teacher. “What are you doing here?” Whatever may happen, I am not going to you got this high school mathematics he asked me and as his eyes fell upon give up my dream of an actuary. After all books?, don’t you think our beta still has the book which I was trying to hide so if you will it, you can do it. YES! I will be some time to reach there?”, she asked. clumsily there was a wonder on his an actuary one day.
the Actuary India March 2014 “No No, these are for me” I shouted and face. “A book for your son?, don’t you 42 NOTICE FOR SUBSCRIPTION FEES FOR THE FINANCIAL YEAR 2014-15 March 4, 2014 A) Due date: 1st April 2014. after 30th September) Mode of Payment: B) The subscription rates: with effect of his ceasing to be a from 1st April 2013: 1. Online Payment : member, he/she has Note: These rates are applicable to all to pay existing annual The Procedure for online payment is as under: Fees in Indian Rupees Class of Membership i) Visit to IAI website at (www. (INRs) actuariesindia.org) and login Fellows and Affiliates 5,000 in member login with your Associates 1,500 login id and password. 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44 STUDENT cOlUMN About the Author
VOLATILITY INDEX DEMYSTIFIED : FROM MEASURE OF UNCERTAINTY TO AN ASSET CLASS [email protected] Chinnaraja currently works with n 26th February, 2014, National If the annualised volatility is 10% for Global Risk team of Nomura. He is Stock Exchange of India (NSE) Nifty with current level of “S”, then a student member of Institute of Olaunched futures on volatility this indicates that Nifty index would Actuaries of India and honoured with index, India VIx nearly five year from be in the range of S*(1 – 2.23*10%) and Gen Re Academic and Paternoster the dissemination of real time index S*(1+2.33*10%) at the end of one year India Academic Excellence Award for value. Earlier in the year Securities with a confidence level of 99%. i.e. his merit performance in Finance and Exchange Board of India (SEBI) paved Investment. Nifty volatility of 10% with current the way for trading in new asset class, level of 5000, indicate that Nifty would It represents the future volatility of the Volatility. Globally leading option market be in the range of 3835 to 6165 at the underlying financial asset as determined like US, Europe, Japan, Russia, Australia end of one year with a confidence by today’s price of the option. Implied and Hong Kong have exchange traded level of 99%. volatility can be implicitly derived by volatility derivatives based on their inversion using option pricing models. benchmark indices. With this launch Type of volatility measurement: India had propelled into this niche class Thus Black-Scholes (BS) implied Historical (Realised) volatility: of countries having sophisticated volatility for an option can be considered exchange traded products. Close to close volatility estimator: as the constant volatility in the stock Standardised deviation of the daily process, dS = Sµdt + SσdW which So the time is right now to demystify closing log return value (r ) of underlying when substituted in the Black-Scholes what is volatility and volatility index i stock with mean rate zero used to get PDE gives the observed market price of which I am going to touch base in this the daily volatility and scaled to arrive at the option. article without getting much into the the annualised volatility. mathematical details. Local volatility: It’s a simplified version of stochastic Let’s start with the basic what is volatility model. Here we consider volatility? volatility to be a function of strike and Volatility is the measure of market H-L method: time to maturity in the diffusion process of stock price. The volatility so extracted fluctuation in layman term. Higher the It’s an extreme-value estimator of volatility the more choppy the market by applying the BS PDE to observed volatility which uses the high (H ) and would be and during calm period the i market price is known as local volatility. (L ) low value of the stock during the volatility tends to be low. Volatility of i day. Stochastic Volatility: market is an important parameter in In the stock process if volatility has any option pricing and risk management a randomness of its own—often model. A regime in which the markets described by a different Wiener process tend to be up one day and down other then volatility in the model is called day would be depicting higher volatility. Parkinson method: stochastic volatility. What does Volatility indicates? It incorporated not only the high and low historical prices but also the open Why trade volatility? Just as stock investors think they know (Oi) and (Ci) closing historical indicators of stock price movements in estimating something about the direction of the variance and hence volatility. stock market, or bond investors think they can foresee the probable direction of interest rates, so you may think you have insight into the level of future volatility. If you think current volatility Implied volatility: is low, for the right price you might want Implied volatility (IV) depends on the to take a position that profits if volatility the Actuary India March 2014 type of option pricing model being used. increases. 45 How people used to trade volatility is the annualized volatility delivery The fair forward value of the variance conventionally? price, and N is the notional amount was the building block of volatility of the swap in dollars per annualized index. Using the near and mid month Delta hedging options: volatility point. options traded in the exchange the near Options are impure they provide and mid month variance is computed Fair value of Variance Swap: exposure to both the direction of the from which the variance over the 30-day stock price and its volatility. In order to Carr and Madan in 1998 suggested a is interpolated. eliminate the sensitivity to stock prices model-free method for valuing variance and obtain pure exposure to volatility swaps that has the advantage of requiring risk, the amount of stocks held delta, very few assumptions about stock price CBOE started disseminating VIx on is periodically re-adjusted to ensure dynamics. Instead of defining a process real time bases and which was later the portfolio’s sensitivity to the stock for the stock price, Carr and Madan only used as an underlying for the derivative price remains null. Delta hedging is assume that markets are complete and products. done under the assumption of constant that trading can take place continuously. What is CBOE VIX Futures? implied volatility. Hence P&L not only The fair forward value of the variance at depends on variance risk but also on a Futures on VIx give an exposure to the time 0 should be equal to: vega risk which itself results from the forward starting volatility of S&P 500 fact that risk cannot be hedged at the index (SPx) 30 days from the expiry of the futures contract. unknown future realized volatility and Thus variance-swap strike prices (K) can that volatility may not be constant over be replicated by a continuum of out-of- India VIX: time. Indeed, delta-hedging options money puts ( P (K)) and calls ( C (K)) 0 0 India VIx is a volatility index based on yields further risk sources of interest inversely weighted by the square of the index option prices of NIFTY. India rate, transaction cost and liquidity their strike price. Note that the above VIx uses the computation methodology issues. valuation is model-free since we did of CBOE (fair price of variance swap) not have to state a specific process for Straddles and strangles: with suitable amendments to adapt to the dynamic of the stock price in order Straddles involves buying both ATM call the Indian market dynamics. to derive the formula. It is also worth and put options to get exposure on the mentioning that the above formula - Nifty future value used to identify volatility with no bet on the direction provides a market-based estimator of the strip of out-of-the money of stock. Strangles involves buying out future realized volatility. options rather than determining of money call and put option. But both the forward index from the option In discrete form and due to non- straddles and strangles do not provide book pure exposure to volatility, as once the availability of option at the exact forward stock price move away from the initial level (F) and strike interval - Uses “Natural Cubic Spline” to value the straddle delta is no longer variance fair value can be expressed as: interpolate quote for illiquid option null and becomes sensitive to price - 3 trading days left to expiry, India movements. VIx “rolls” to the next and far Need for pure volatility measure month Volatility index Trading practical constrain to get a India VIx represents annualized pure exposure in volatility paved the volatility hence to get monthly volatility way for the creation of new derivatives value, the VIx number need to be instruments like Variance and volatility divided by square root of 12. swap in OTC market without bearing India VIx serves as a barometer to any other risks. gauge market volatility over the Volatility/Variance swap next 30 days. India VIx value of 20% indicates Nifty may move by over the Volatility swaps are forward contracts on next 30 days. future realized stock volatility. Variance swaps are similar contracts on variance, India VIX vs. Nifty: the square of future volatility. In the plot of India VIx against Nifty A stock volatility swap is a forward As variance and volatility swap were we can observe low nifty value region contract on annualized volatility. OTC products CBOE was exploring the coincide with high volatility regime Its payoff at expiration is equal to opportunity to get this on exchange and vice versa. The correlation between Where is the platform which started off by redefining the daily return of Nifty and India VIx realized stock volatility (quoted in annual the volatility index methodology in 2003 over the four year period is around -62% based on the strategy of replicating the
the Actuary India March 2014 terms) over the life of the contract, which indicates a significant negative variance swaps using options. 46 Thus futures contract on India VIx serves as a vehicle to trade on volatility efficiently replacing the conventional costly and inefficient way of using delta hedging and straddle in Indian financial market. Looking at the history, volatility derivatives were more successful in CBOE than in other exchange, hence need to wait and watch how Indian market is going to perceive this new product. Given the fact of high expected volatility regime currently in India, with elections event around the corner to unfold and absence of other developed correlation. Hence India VIx could be downturn when correlations between products to hedge volatility risks, may used as a portfolio diversification and other asset classes tend to be nearly make India VIx futures a success. perfect hedge against severe economic positive.
BEST ARTICLE & BEST REPORTAGE AWARDS IN THE YEAR 2013
BEST ARTICLES
N. M. GOVARDHAN Current perspective on Life Insurance in India Sept 13 • Vol. V • Issue 9
KUNJ BEHARI MAHESHWARI In-force value and optimisation- enhancing value for existing policyholders Oct 13 • Vol. V • Issue 10
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NAVIN VISHWANATH 19th India Fellow Seminar Jul 13 • Vol. V • Issue: 7
SRIKANT VATTURI 15th GCA : Concurrent Sessions on Life Insurance Mar 13 • Vol. : V • Issue : 3 the Actuary India March 2014
47 16TH GCA MEDIA COVERAGE the Actuary India March 2014
48 the Actuary India March 2014
49 the Actuary India March 2014
50 the Actuary India March 2014
51 the Actuary India March 2014
52 the Actuary India March 2014
53 IAI/16 Area Sl. Circu- AVE GCA Publication Edition Comments (sq. Headline No lation (INR) Men- cm) tion 1 The Economic Times Mumbai 223,184 101,483 Yes T.S. Vijayan 46 IRDA Eases Bancassurance Norms under Present Set-up 2 The Hindu Business Line National 151,265 115,631 Yes T.S. Vijayan 106 Banks can continue as agents of insurers: IRDA 3 Business Standard Mumbai 24,055 5,326 Yes T.S. Vijayan 38 Bancassurance to gain traction: (The Smart Investor) IRDA 4 Business Standard Hyderabad 5,173 5,326 Yes T.S. Vijayan 38 Bancassurance to gain traction: (The Smart Investor) IRDA 5 Business Standard Bangalore 7,164 5,444 Yes T.S. Vijayan 64 Need actuaries in non-life firms (The Smart Investor) too: IRDA chief 6 Business Standard Kolkata 8,947 7,930 Yes T.S. Vijayan 64 Need actuaries in non-life firms (The Smart Investor) too: IRDA chief 7 Business Standard Chennai 5,254 4,575 Yes T.S. Vijayan 64 Need actuaries in non-life firms (The Smart Investor) too: IRDA chief 8 Business Standard Delhi 24,355 5,326 No T.S. Vijayan 21 Bancassurance to gain traction: (The Smart Investor) IRDA 9 The Financial Express Delhi 29,246 5,125 No T.S. Vijayan 22 Banks’ insurance broking model to gain traction in time’ 10 The Financial Express Bangalore 9,000 3,836 No T.S. Vijayan 24 Banks’ insurance broking model to gain traction in time’ 11 The Financial Express Mumbai 20,000 11,402 No T.S. Vijayan 29 Banks’ insurance broking model to gain traction in time’ 12 The Financial Express Kolkata 10,000 9,931 No T.S. Vijayan 76 Banks’ insurance broking model to gain traction in time’ 13 Business Bhaskar Delhi 100,000 142,866 Yes T.S. Vijayan 130 No hurdle for Banks in sale of insurance 14 Financial Chronicle Delhi 25,000 24,362 Yes T.S. Vijayan, 97 Shortage of actuaries will go Dilip C Chakraborty down in 3 years: IRDA 15 The Financial Express Mumbai 20,000 10,737 No T.S. Vijayan 27 IRDA chief sees dearth of actuar- ies receding 16 Business Standard Mumbai 24,055 4,393 No T.S. Vijayan 15 Vijayan hopeful on actuaries shortage 17 Business Bhaskar Delhi 100,000 135,681 Yes T.S. Vijayan 123 Actuaries demand rise besides insurance sector also 599,374*
Institute/ 16th Online Portals Link Headline GCA mention http://economictimes.indiatimes.com/personal-fi- nance/insurance/insurance-news/irda-banks-insur- IRDA: Banks’ insurance broking The Economic Times Yes ance-broking-model-to-gain-traction-in-time/arti- model to gain traction in time cleshow/30567188.cms http://www.livemint.com/Industry/FJ44MadIIW- Insurance broking model of banks Mint guA5OFOc3zVP/Insurance-broking-model-of- Yes to gain traction in time: IRDA banks-to-gain-traction-in-time-I.html http://profit.ndtv.com/news/industries/article- Banks’ insurance broking model NDTV Profit banks-insurance-broking-model-to-gain-traction- Yes to gain traction in time: IRDA in-time-irda-380901 http://www.thehindubusinessline.com/economy/ IBanks can continue as agents of The Hindu Business Line irda-allows-banks-to-continue-as-corporate-agents- Yes insurers: IRDA of-insurers/article5698521.ece
http://www.business-standard.com/article/finance/ Need actuaries in non-life firms Business Standard need-for-actuaries-in-non-life-companies-too-irda- Yes too: IRDA chief the Actuary India March 2014 chairman-114021700428_1.html 54 http://www.financialexpress.com/news/quick-view- ‘Banks’ insurance broking model The Financial Express banks-insurance-broking-model-to-gain-traction- No to gain traction in time’ in-time-/1227003 http://zeenews.india.com/business/personal-finance/ Banks’ insurance broking model Zee News analysis-and-opinion/banks-insurance-broking- Yes to gain traction in time: IRDA model-to-gain-traction-in-time-irda_94599.html http://www.indiannewsandtimes. 16th Global Conference of Actu- com/2014/02/17/16th-global-conference-actuaries- aries begins; Delegates deliberate Indian News and Times Yes begins-delegates-deliberate-evolving-frontiers-excit- on ‘Evolving Frontiers, Exciting ing-prospects/ Prospects’ 16th Global Conference of Actu- http://www.asiainsurancepost.com/NewsFull. aries begins; Delegates deliberate Asia Insurance Post Yes aspx?Id=1402000111 on ‘Evolving Frontiers, Exciting Prospects’ http://pressreleasewatch.blogspot.in/2014/02/16th- 16th Global Conference of Actu- Press Release Watch Yes global-conference-of-actuaries.html aries begins in Mumbai http://realtime.rediff.com/news/india/Need-for-ac- Need for actuaries in non-life Rediff.com tuaries-in-nonlife-companies-too-Irda-chairman/73 Yes companies too: IRDA chairman 7e855be763fc1f?src=interim_alsoreadimage http://realtime.rediff.com/news/business/irda-al- IRDA allows banks to continue as Rediff.com lows-banks-to-continue-as-corporate-agents-of-in- Yes corporate agents of insurers surers/75447780b313d3ce http://www.news.nom.co/banks-insurance-broking- Banks’ insurance broking model News.nom.co Yes model-to-gain-8074295-news/ to gain traction in time: IRDA http://finance.indiaeveryday.in/fullnews-banks- Banks’ insurance broking model Finance Everyday insurance-broking-model-to-gain-traction-in- Yes to gain traction in time: IRDA time-1027-6553835.htm http://instantpublish.blogspot.in/2014/02/16th-glob- 16th Global Conference of Actu- Instant Publish (Blog) Yes al-conference-of-actuaries-gca.html aries (GCA) to be held in Mumbai http://www.indiainfoline.com/Markets/News/Actu- Actuarial profession to take a leap India Infoline arial-profession-to-take-a-leap-forward-in-chang- forward in changing economic Yes ing-economic-landscape-TS-Vijayan/5870250694 landscape: TS Vijayan http://www.business-standard.com/article/finance/ IRDA chief sees shortage of actu- Business Standard irda-chief-sees-shortage-of-actuaries-receding-in- Yes aries receding in 3-4 yrs 3-4-yrs-114021800675_1.html http://profit.ndtv.com/news/industries/article-ir- IRDA chief sees shortage of actu- NDTV Profit da-chief-sees-shortage-of-actuaries-receding-in- Yes aries receding in 3-4 yrs 3-4-years-380988 http://in.finance.yahoo.com/news/irda-renew-cor- IRDA to renew corporate agency Yahoo.com Yes porate-agency-licenses-122450835.html licenses of banks http://smartinvestor.business-standard.com/mar- ket/Econnews-227238-Econnewsdet-Need_actuar- Need actuaries in non-life firms Smartinvestor.in Yes ies_in_non_life_firms_too_Irda_chief.htm#.UwQyr- too: IRDA chief WKSyE4 http://www.ptinews.com/news/4418315_Irda-chief- Inda chief: Shortage of actuaries Press Trust of India No sees-shortage-of-actuaries-receding-in-3-4-yrs-.html to recede in 3-4 yrs http://realtime.rediff.com/news/business/Irda-chief- Rediff.com sees-shortage-of-actuaries-receding-in-34-yrs/ IRDA chief sees shortage of actu- Yes ed4c1e4ad57827e1?src=interim_alsoreadheadline aries receding in 3-4 yrs http://www.sify.com/finance/Need-actuaries-in-non- Need actuaries in non-life firms Sify.com life-firms-too-Irda-chief-news-Default-ocscJUabfei. Yes too: IRDA chief html http://in.top99news.com/2014/02/18/irda-chief- IRDA chief sees shortage of actu- Top99news.com Yes sees-shortage-of-actuaries-receding-in-3-4-yrs/ aries receding in 3-4 yrs http://www.inooz.in/article/view/2601793/irda- IRDA chief sees shortage of actu- iNooz chief-sees-shortage-of-actuaries-receding-in- Yes aries receding in 3-4 yrs 3-4-years/022014 http://promarketnews.com/india/news/irda-chief- IRDA chief sees shortage of actu- India Stock Market News Yes sees-shortage-of-actuaries-receding-in-34-years aries receding in 3-4 yrs
TV Coverage Appearance Content 16th CGA Logo Zee TV Done To be checked Interview with T.S. Vijayan and Dilip C Chakraborty Yes
CNBC TV 18 Done To be checked Interview with T.S. Vijayan and Dilip C Chakraborty Yes the Actuary India March 2014 55 cOUNTRYcOUNTRY REPORT MAURITIUS
computation of the Technical Provisions ajor pension reforms are still on the way in the Mauritian landscape over (accrued past service liabilities based on the course of the year 2013.These reforms apply to both the Public Sector projected salaries) and the Funding Ratio, M(Government employees, Parastatals and Local Authority Employees) and i.e the ratio of the Assets of the Fund to the Technical Provisions. to the Private Sector Occupational Schemes. A DB Scheme is deemed to meet the funding requirement if it has a funding Public Sector Pensions goes DC as from Commission. The first major impact of the ratio of at least 100% and the rates of 01 January 2013. scheme was the significant change in the contributions are such that it can be governance structure of pension schemes; As from 01 January 2013, all new entrants expected to be maintained for the period where by under the new Act, pension to the public sector in Mauritius no longer for which the schedule of contributions is schemes are to be established either under contribute to the existing Defined Benefit in force. arrangements which were in force. Instead a trust or a foundation. If the ratio is 90% and the Scheme has they will contribute to the Public Pensions The concept of managing a pension established a schedule of contributions Defined Contribution Pensions Scheme. scheme under a trust, with a governing to meet the target of 100%, it shall be body is a relatively very new concept in This is another major step in the reform considered as meeting the funding target. of the Public Sector Pensions, the first one Mauritius where schemes are mostly Statement of Funding Policy: being in 2008, when the retirement age managed by insurance companies, which was increased from 60 to 65, and public provide the whole range of administration, This statement is a document which pensions became contributory, with investment and actuarial services under sets out the method and assumptions employees contributing at the rate of 6% one roof. used in the computation of the technical of salaries and employers meeting the The change in governance structure to provisions and contributions schedules to balance of cost. manage private pension represents quite the scheme. This document also states the deficits in funding level will be financed, The contribution to Defined Contribution a challenge to the industry as pension as well uses of surpluses by employer. scheme is set at 18% of salaries, 12% from administrators and insurance companies the Employer and 6% from Employees. have to comply with new approval This document is therefore essential to processes, disclosures and reporting the governing body as it highlights all the The Scheme will be governed by the requirements both to the FSC, and the risks and uncertainty pertaining to the Public Pensions Advisory Committee governing body, as well as additional scheme contributions, funding levels and under the Ministry of Finance, consisting compliance to new investment rules and especially the possibility of additional of representatives of the Ministry of technical funding requirements. The next funding in the future in case of adverse Finance ,Ministry of Civil Service, Unions section focuses on the Technical Funding fluctuations. representatives and other insurance Rules which came into effect on 31 January professionals, under the chairmanship of Surplus 2014. the Financial Secretary The administrative The surplus of the Scheme cannot be and investment management Technical Funding Rules: Increasing utilised in such a way that funding ratio responsibilities have initially been Actuarial involvement falls below 105%. entrusted to the State Insurance Company The latest rules published further to Actuarial Certificates of Mauritius. the main Act relates to the work and The Scheme Actuary is required to responsibilities of actuaries, namely the The employees will be allowed Investment provide a certification of the calculation Technical Funding Rules. There was a Choices and switching facilities under the of the Technical Provisions and Funding void in the area of actuarial management, Scheme. Ratio, and if applicable a certification which has now been filled. It provides The maximum lump sum payable at time of the Schedule of Contributions and for the financial tools to manage / resolve of retirement is 25% of the Accumulated Contingency Plan to the Financial Services the deficits in pension schemes due Fund Balance, and the remaining 75% Commission. to underfunding or other reasons thus would be used by the retiree to purchase improving the security of the benefits. an annuity on the open market. Death It also improves the awareness of gratuities are also payable on death before About the Author employers setting pension schemes to the retirement, in addition to the Accumulated complexities of pension scheme financing. Fund Balance at time of death Actuarial Valuation report: At the moment the drafting of further regulations is still underway, to define The Rules firstly makes it mandatory that amongst others, the finer elements of the an actuarial valuation report be produced Scheme as guarantees etc, which may be to the FSC at least once every 3 years put in place so as to ensure a minimum for DB Schemes. This is also applicable to DC Schemes ( unless it is exempted). level of security of benefits. [email protected] This report needs to be submitted within Private Pension Funds Act 2012 9 months of the valuation date of the Vijay Balgobin is the Group Actuary Reforms to the Private Pensions have Scheme. and Senior Manager (Group Business) been embarked upon since November Technical Provisions and Funding Ratio at the State Insurance Company of 2012, through the Private Pensions Act the Actuary India March 2014 Mauritius . 2012 issued by the Financial Services One of the main outputs required is the 56 cAREERc cORNER
Actuaries required in Indonesia!
Our globally renowned multinational insurance clients are looking to expand their footprint in Indonesia and are looking for experienced actuaries such as yourself.
Indonesia is the most rapidly growing insurance market in Asia Pacifi c with a population of over 250 million and a dramatically expanding middle-class with expendable income and a hungry appetite for Life, Health and GI Insurance.
There is a signifi cant shortage of skilled actuarial talent in the Indonesian market with very few local actuaries being educated overseas. Consequently there is a concrete need for international talent to meet the demand of this growing sector.
Having moved three senior actuaries across from India to Indonesia we have found this to be a mutually benefi cial arrangement.
The packages tend to be very attractive, the cultural gap easily manageable, the standard of liv- ing often an improvement. It also offers an opportunity for actuaries in India to gain international exposure and a route into the more advanced Asian markets (Singapore / Hong Kong).
Please email me at [email protected] for a more detailed discussion.
Chief Actuary – Life Indonesia Chief Risk Offi cer – Life Indonesia
Global European insurer seeks a qualifi ed life Leading multinational insurer looking for a Actuary to lead and grow a large actuarial func- Chief Risk Offi cer to operate as a member of tion in its quickest growing region. Excellent their senior leadership team and drive all risk opportunity on offer though European reporting initiatives. You will have the ability to proac- skills required (EV, EEV, MCEV, or IFRS). tively provide strategic oversight, challenge current processes as well have sound techni- cal knowledge in solvency management.
Head of Valuations – Life Indonesia Head of Pricing – Life Indonesia
A top-tier multinational insurer with global Well-renowned multinational insurer is seek- presence and number one brand recognition ing an experienced and qualifi ed Actuary is seeking a Head of Valuations to support, to revamp their product suite and mentor develop, and enhance the capability of local a team of young actuaries. You will gain actuarial teams. You will have a minimum of excellent exposure throughout the APAC 8 years of relevant experience and excellent region and you will have the opportunity to communication skills. take your career to the next level. A qualifi ed Fellow of a recognized institute necessary.
E [email protected] W www.ojassociates.com @OJAssociates oliver-james-associates
Indian Actuary.indd 1 24/02/2014 10:46:14 PUZZlE Correct solutions were received from: Puzzle No 205: chain of words could be formed: FIG, Puzzle No 209: 1. Shilpi Jain HIT, JOKE, ALMS. Alternatively, Two lists of words have been created. inserting P to K in reverse order could 2. Graham Lyons Embedded in one list are the 26 letters give POINT, MOLE, ASK. 3. JagratiChhalani of alphabet in their correct order. 4. Rakesh Kumar Sharma Embedded in the other list are 26 letters Puzzle No 210: Puzzle No 206: in reverse alphabetical order. In this multiplication, each ‘x’ represents 1. Shilpi Jain The alphabet (forwards or backwards as a different digit (so that each digit appropriate) has been removed from appears once and once only) and the 2. Vishvesh Kumar three-digit number is prime. What is the each list, and the spaces between words 3. Graham Lyons multiplication? have been closed. In each case the same 4. JagratiChhalani string of letters remains, as shown × × × 5. SurbhiNarang below: × × 6. Rakesh Kumar Sharma DOSITELEROEUIUSIGUATRESAEST ------7. Vishnupriya S. Can you recreate the original two lists of × × × × × words, given that all the words have at 8. Ambikeshwar Kumar SOLUTIONS TO PUZZLES least three letters and each word includes at least one letter from the Puzzle No 205: above string and at least one letter to be Yes, in the sense that the letters in each reinserted from the alphabet. word are in alphabetical order. By way of example, suppose part of the Puzzle No 206: string of letters was ITOEAS. By inserting There are five other solutions. 1/1, 8/512, [email protected] the letters from F to M the following 18/5832, 26/17576, 27/19683
The art of resting the mind and the power of dismissing from it all care and worry is probably one of the secrets of our great men.
- Captain J. A. Hatfield
SUDOkU SUDOKU No. 20 for the month of MARCH 2014 HOW TO PLAY Fill in the grid so that every horizontal row, every vertical column and every 3x3 box contains the digits 1-9, without repeating the SUDOKU GENIUS numbers in the same row, column or box. You can't change the digits already given in the grid.
1 7 - Sudoku Puzzle by Vinod Kumar 2 6 8 Solution of Sudoku Puzzle No.19 published in the 3 4 5 Month of February 2014 SOLUTION
4 9 1 4 2 3 9 5 7 6 1 8 5 3 7 6 1 8 4 3 2 9 7 5 7 9 5 6 1 8 2 3 4 6 8 2 9 4 7 2 8 3 1 5 6 1 3 6 5 9 4 7 8 2 7 5 9 8 5 2 1 7 6 4 9 3 8 1 6 3 6 9 8 2 1 5 4 7 5 7 4 3 6 9 8 2 1 the Actuary India March 2014 4 3 2 8 1 7 4 5 3 6 9 58 Dharmender Kumar Shrivastava Abhishek Patodia Kashvi Jagnani Saurabh Kochrekar
Suruchi Bhargava Vikash Kumar Sharma Himanshu Bhatia Ashish Ranjan
ASSOCIATESHIP being awarded at 2014 AGFA at the hands of K. S. GOPALAKRISHNAN, Vice-President, IAI Nakul Yadav Gaurav Batra
Prashansa Jain Krithika Verma Shamit GuptaKavita Singh Rahul Khandelwal
Vaibhav Tyagi Ridhi Paliwal Shamit GuptaNeha Aggarwal Sourav Roy
Ramanuj Bhangdiya Yogita Rawat Neha Agarwala Kruti Patel RNI NO. - MAHENG/2009/28427 Postal Registration No. - MH/MR/South/297/2012-14 Published on 16th of every month Posted between 17th - 23rd of every month
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At Swiss Re, it’s our business to enable risk-taking. Why? Because that’s how progress happens. That’s how societies become better, safer, and more resilient. And that’s why we believe in forging equally resilient partnerships with our clients. Because when we work together, share our ideas, and open our minds to the risks facing both today’s communities and future generations, that’s when we can identify not just the risks that are out there – but the opportunities too. Not just for you, not just for us, but for everyone. We’re smarter together. swissre.com/ai