Role of Actuaries in General Insurance

On October 2, 2017, AAUI (General Insurance Association of Indonesia) together with the READI project conducted the first part of a workshop series. The first workshop discussed the role of actuaries in general insurance and the fullfilment of OJK (Financial Services Authority) regulations requiring all  insurance and re-insurance companies to have at least one actuary on-staff before 1^st January 2018.  A total of 101 participants (60 Male, 41 Female) including representatives from 63 general insurance and reinsurance companies attended the event.

Mr. Dadang Sukresna, Chairman of AAUI, highlighted the imminent need for all general insurance to comply with the OJK regulation. He noted however, that facts from the field show that among the 81 general insurance companies in Indonesia only 36 have already have hired and appointed actuary.  This hiring gap is exacerbated by the lack of understanding regarding the pivotal roles of actuaries in general insurance companies, but is also affected by unclear job descriptions and the limited numbers of qualified actuaries available for hire in the general insurance job market. Mr. Ahmad Nasrullah (OJK- Acting Deputy Commissioner Non-Bank Supervision) underlined the need for general insurance companies to motivate their brightest and potential existing staff and provide time and guidance so that they can take PAI (Society of Actuaries of Indonesia) exams to obtain accreditation as actuaries. He also encouraged the READI project to expand its partners to beyond the current nine universities partners, and to consider working with JASINDO Insurance Academy.

Workshop participants were also exposed to the “real experiences” and summary of actuarial best practices for the insurance functions as presented by Mr. Matthew Maguire, President of the Singapore Actuarial Society. He stressed that the role of actuaries is not merely on pricing and reserving, but also capital modelling noting that capital modelling is an essential part as of developing sustainable business plans and stress-testing for adverse events.  Other useful presentations were delivered by Ms. Dini Hardini (Actuary Manager, Allianz Indonesia), and Mr. Rianto (Head of General Insurance Supervision Department-OJK) with many useful comments and questions provided by Mr. Masdar (Director of Avrist Insurance) who served as the workshop moderator.

The workshop provided an important opportunity for AAUI and OJK to explain why it is so important for general insurance companies and reinsurers to have appointed actuaries on staff.  But the workshop also provided industry representatives with the chance to explain the very real hurdles that they face in hiring actuaries – particularly the critical shortage of actuaries in Indonesia – and thus the difficulties that most general insurance companies will face in meeting OJK’s January 1^st deadline.  It seems that OJK and insurance industry representatives, perhaps represented by AAUI and AAJI, will need to continue discuss strategies to enable insurance companies to comply with related regulations as quickly as possible.  Initiatives such as the READI project and the OJK’s 1,000 Actuaries program can clearly support the search for viable solutions.