Actuary India February 2015

8/16/2019 Actuary India February 2015

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VOL. VII • ISSUE 2 FEBRUARY 2015 ISSUE Pages 20 • ` 20

For Private Circulation Only


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3the Actuary India February 2015

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Chief Editor

Sunil Sharma

Email: [email protected]

Editors

Kollimarla SubrahmanyamEmail: [email protected]

Raunak Jha


Puzzle Editor

Shilpa Mainekar


Librarian

Akshata Damre


COUNTRY REPORTERS

Krishen Sukdev

South Africa


Frank Munro

Srilanka


Anshuman Anand

Indonesia

Email: [email protected] Laurence Smith

New Zealand


Rajendra Prasad Sharma

USA


Nauman Cheema

Pakistan


Andrew Leung

ThailandEmail: [email protected]

Vijay Balgobin

Mauritius


Kedar Mulgund

Canada


FROM HE PRESIDEN'S DESK:Rajesh Dalmia ................................................4

FROM HE EDIOR'S DESK:K Subrahmanyam ...........................................5

SUDEN COLUMN

• A poer to your pointby Karim Gilani ......................................6

• Financia Moeing – Anatomy of

Actuaria Science by K. Arumugam &Deepak Veerbhadra .................................8

• Guarantee Eucation To aby Paras Bhandari ..................................10

• Pain from oss, peasure from gain –the cost of risk aversionby Anupama Katariya ............................11

17H GCA BES ARICLE ANDBES REPORAGE AWARDS 2014 .......... 13

SUCCESS SORY

CA2 oppers:

Shagun Malhotra ..........................................14

Chinnaraja Pandian ........................... ......... 15

6

16

11

COUNRY REPOR

NEw ZEAlANdby John Smith ...............................................16

17H GCA PRESS RELEASE .........................18

SHILPA’S PUZZLES .....................................19


4/20

4 the Actuary India February 2015

FROM THE PRESIDENT'S DESK

D ear Members,we just concue 17th eition ofGoba Conference of Actuaries. Some of

you ou have been there aong ith700

eegates. It has been a fantastic event for

earning an netorking. I have got quite

positive feeback on the same aong ith afe suggestions. e purpose of any such

event is to further the research an aso

enabe netorking among the participants.

So, it is important to bring baance

beteen the to objectives. we increase

the number of concurrent sessions this

year an e ou continue this tren in

future to bring back the baance.

Some of you ho ere present at the

seminar ou have hear me outining

the things that are on the cars. I outake this opportunity to highight some of

the key aspects of the strategy. It is a

knon fact that Inia acks quaie

actuaries. Yes, toay e prouce neary 30

quaie actuaries in a year an yet that is

not enough. Aer 15 years of opening of

Insurance sector our membership has just

gone up from 220+ to 280+. I o hear that

there are no opportunities or no jobs for

actuaries. I isagree to that. Not ong ago,

I use to hear the same hen e use to

prouce 4/5 actuaries in a year. ere is

shortage an it is a matter of concern. US

have 22,000 actuaries in a popuation of

320 miion an yet I unerstan that US

has shortage of actuaries an more than

thousan vacancies exists. No that

actuaria ski set is in eman beyon

traitiona es, this shortage is going to

exists for ong.

In the profession, e nee to aress this

an there cannot be an easy soution to

this. ere has to be a muti-prong

approach to this issue. we nee to faciitate

our members ho are stuck ith the

exams. e Institute ou ho coaching

casses for stuents so that they can cear

the papers faster by earning from

experience actuaries. I ou request you

to take avantage of these initiatives an

quaify as a feo at the eariest. e

coaching casses for SA2 an SA3 are

areay announce. e stuents ho faishou get counseing opportunities so

that they can earn from their mistakes. we

have mae counseing avaiabe from CA

to SA eves for a papers so that stuents

can cear the papers faster. I ou request

you to take avantage of these initiatives.

Pease note that counseing can aso be

taken on phone in case you are unabe to

trave.

At SA eve, stuent faces a ot of icuty

ue to ack of stuy materias. Instituteou focus on the same so that e can

create our on stuy materia hich ou

make it easier for future stuents to appear

for SA papers. Hoever, at this eve of

examination, a stuent is expecte to go

beyon the stuy materia even though e

may bring out ith a comprehensive stuy

materia.

Of course, e nee to attract the right

taent ith potentia to quaify as an

actuary. erefore, there is a nee that itshou be markete to the right stuents so

that e attract right taent. Besies, the

entrance exam shou be such that it ters

an aos right caniates ho are ikey

to become an actuary. we currenty have

arge number of stuents (though not

quaie actuaries here short fa exists)

an not a of them can be empoye in the

traitiona actuaria e. erefore, many

of them en-up in broaer es an it is

require as actuaries nee to be invove inthe broaer areas, going beyon the

traitiona ones. It is important that e

recognize broaer areas here an actuaria

stuent is ikey to ork an future

actuaries are ikey to be empoye.

we nee to focus on professionaism.

Many of the professiona stanars ere

rae more than a ecae ago an it is

important that they get reviee more

oen. Other professiona boies across

the or o unertake such revies

perioicay. It is a high time that e not

ony unertake such a revie but aso

introuce stanars for various other

issues facing appointe actuaries an

other practicing actuaries. You ou see

more action in these areas in the time to

come. e ra on CPd scheme is out an

e ecome your comments on the same.

Very soon e ou announce an interim

version of CoP scheme hich ouunergo further changes aer a etaie

revie.

I argue ast month that this is the year of

change. True to that spirit, it is the rst

time e sa the reguator, IRdAI,

convening a joint meeting of CEOs an

IAC to take their vies before reeasing

the ra reguations for pubic comment.

we, at the Institute, ecome this initiative

an congratuate the chairman, Mr.

Vijayan, for such a nice initiative. is isimperative that the reguator takes the

vie of the inustry an other stake-

hoers before raing such reguations.

I am ucky to be here in this era of change

across the or. is is an interesting

phase of change here the impact of

technoogica revoution is greater than

the inustria revoution. is ou aso

impact the actuaria profession an it i

unergo signicant changes in the future.

let’s hope that e aapt to these changes.

Mr. Rajesh Dalmia


5/20


H ope a of you enjoye the yearyfunction—GCA. we aait yourfeeback. Pease visit our

Institute’s ebsite an participate in thesurvey on the GCA. I express my gratitueto a speakers for their exceent papersan thank a the eegates for theirsupport. Specia thanks to a sponsors formaking GCA fruitfu. I ou ike tocongratuate Ms. das, the actuary an anexceent singer, ho entertainein the Pre-inner event. If you haveexceptiona taents in singing,ancing, an other activities ofpubic interest to entertain, peaseet us be informe.

is time I am covering ‘fraus anactuary’ for ERM. Fraus are part ofbusiness. Fraus start in the mins ofiniviuas. Purpose of frau is to gain orestroy someone ese’s business. Generaythese iniviuas i be cever anmischievous. Actuaries have been seeing,atching an anayzing fraus. Anactuary is require to take into account of

t h esame in

measuring sovency ratio an pricingtoo!Recenty IRdA has estabishe fraucommittees to o something.

Fraus can go unpunishe ue to ant oftime or importance. Someboy in theoce takes home oce stationery. In a

survey of 2000 empoyees conuctesevera years ago by Key Services, one infour Austraians amitte taking home(an keeping) minor stu that beongeto their empoyer. It’s not as chronic asother parts of the or, such as theUnite States, here three in four peope

honesty ecare their ishonesty.Apparenty, the orst oeners are menith tertiary quaications.

Rea more at: http://.smh.com.au/sma-business/bogs/ork-in-progress/are-you-an-

o f f i c e - t h i e f - 2 0 1 2 0 6 2 1 - 2 0 q u 7 .

htm#ixzz3QBocPaknI.

Some peope o in genera insurance,e.g.‘on amage’ caims. If there is asma scratch on bayonet of a car, theoner amages his bayonet using bunt

objects an proves that this happeneue to an accient, an prefer caimagainst insurer. Insurer oes notinvestigate each caim an generousypay the caims. ‘No caim bonus’

poicy is a remey to some extent.

Peope have innovative ieas to makefraus.desire to make frau is a see in aniniviua’s min. It is son grabbingopportunity. Mr S sa neighbors’ VCP[Vieo cassette payer]. S ants to havethe VCP. He has no cash. No Mr Shatchesa pan to buy the VCP. He goes to a bankfor a oan ith forge ocuments. ebank gives the oan to him aer ueiigence, the chequein the name of

venor. He got the check into cashthrough a broker ho is an expert incashing such checks. He, of course, has toshare some money ith the broker. Heuse the bank oan money to buy the VCPin cash. Of course, ater Mr S i not paythe oan instament to the bank anchange his resience. Bank trie an

faie to recover the oan, anutimatey the oan account ascose as ba ebt in the recorsof the bank. In insurance, forgeocuments are create shoing

age proof, income proof, meicareports—hich ook ike

originas. Insurers i be force to paythe caims by eath, ater.

erefore it is necessary for actuaries tounerstan fraus an get invove ithbusiness anaytics an o goo ork tominimize such risks face by the insurers.Figures o not ie, iars gure! Be anexpert on ERM!

MANY HAPPYRETURNS OF THE DAY

the Actuary India wishes many more years ofhealthy life to the fellow members whose

Birthday fall in February 2015

(Birthday greetings to fellow memberswho have attained 60 years of age)

EnterpriseRisk Management

FROM THE EDITOR'S DESK

Mr. K Subrahmanyam


6/20


Toay most ectures an acaemic

aresses are eivere ith a

presentation in the backrop.

Appropriate presentation content

is necessary, but the structure an

packaging even the more. Presentations

have the uncanny attribute of being

passe on in the future; the presenter’s

speech is not. Such a potent too nees

to be tene ith care. is artices

attempts to share tips on structure

an packaging of presentations to an

actuaria auience.

A usefu start is the PCG Step.

P - Presentation Design

It is hepfu to pan the esign of the

presentation before creating sies. list

the agena items to appear in a smooth

o. ese pu the auience’s attention

an set the founation to the presentation.

C - Slide Content

Make notes of contents in each sub-

heaer by consiering the oring ength.

It shou be short, precise an visibe.

Overing your presentation ith text

i o more harm than you can imagine.

G - Slide Graphics

Oen peope fa into the trap of oaing

each sie ith coorfu graphics, ancing

heaers an niy animation. is cou

efeat your purpose an you i ony en

up entertaining your auience.

It is important to maintain baancebeteen ispaying Contents an

Graphics of sies; too much content i

ea to overing an too much graphics

i ruin the purpose. Restrict to such text

hich nees to be communicate through

PPT, rest can be verbay communicate.

Exampes incue a) Converting

paragraphs into a brief summary, an b)

Keeping at east 60% of the sies bank.

Remember than open space aso conveys

expanse!• An ‘agenda slide’: is is essentia

to en structure, an the auience

i kno hat to expect an for

ho ong. Using SmartArt, you can

create an agena

sie an to make

it more attractive,

keep highighting

sub-heaers each

time henever

you jump to

next sub-heaer

in your agena

structure.

• Slide Master: As the nomencature

suggests, this sie is a master of a

the sies. You on’t have to eit each

sie’s font, theme, backgroun stye,

footer an/or a page number, ogo

(if you ant to pace somehere on

the sie) on each sie. Hoever,

by structuring an esigning Master

sie you can have a these features

on each sie as per your master sie,

hich as e saves your time.

• An image speaks louder than

words: e rst sie shou have a

poerfu image to represent your

subject. Aer a, a picture can paint

a thousan ors, but a or of text

is just that - one or. Use imagesoccasionay an carefuy to enote

particuar sub-heaers in your sies.

A D D PO W E R TO YO U R

PO I N T

STUDENT COLUMN


7/20


e onsie of a bay chosen

image cannot be overstate: eter

from inserting an image hen in

oubt!

• Slide itle: e tite shou be at east

35-40% arger in font size than the

boy.

• Contrasting Colors: If the auienceshou get attracte to the content, be

generous ith the contrast beteen

the text coor an the backgroun

coor. Any combination can be

preferre: ight backgroun an ark

etters or ark backgroun an ight

etters.

• Use graphics instead of just texts:

Instea of using sies that ony

contain text use SmartArt, Images,

Cips, shapes an graphs to engagethe auience.

• Pointer on the slide: To use the

mouse as a pointer, press the

combination CTRl+P.

• Key that enables eye contact: is

is a too hen the presenter ishes

to stress eye contact. By pressing the

aphabet (B) or perio key (.) on the

keyboar, the screen i turn back

an the presenter can communicate

points to the auience. do notunerestimate the eect of eye

contact in communication.

• Footer: e footer can be eectivey

use to convey a core message in each

sie. Make sure your Footer is not

croe. Oen hen the onership

or copyright of your year 2015 ork

nees to be emphasize, a footer

‘Copyright © 2015’ is appropriate.

• o create backdrops: Go to design

Tab (in Poer Point)Backgroun Stye Format

Backgroun Fi

Seect Picture or texture

insert picture from e. e right

backrop can eiver a tremenous

message.

• Actuarial or mathematical

notations: Notation such as

summation, imits, right ange cap

in enoment assurance cannot be

create in PoerPoint. erefore, thetrick is to rite in MS wor initiay

an then be paste in PoerPoint.

Spreasheets, the actuary’s hany

companion, can be embee in the

presentation, so one nee not shi

across ierent appications to open

a spreasheet.

• Avoid Bullets, use Words in ables

(Wi): Peope beieve that buets

hep break up u text. wrong!

Buets are u text. ey are

unmemorabe, unappeaing, o not

visuay i points from ocuments

an are oen incompete. wiT

invoves summarizing a point an

proviing heaer in the tabe. wiT

gives carity, impact an immeiacy

to your thoughts much more than

buets oes.

Ref:http://b.riskaters.com/goba/actuary/igita/Actuary_0110_Moon.pf

Beo is the snapshot of a report on

business strategy of the XYZ Company.To kno in hich area the company has

panne to ork on i ony be knon

by reaing a the pointers carefuy (Box

1). Box 2 recuperates the same thing

but ith more insight an much more

appreciabe as it improves the reca of a

the strategies by its heaer on the e sie

of the tabe.

Box 2: Slide reformatted as a Wi

What we will do

Market leadership we i focus on

proucts an markets here e are or

can be in the top three

Organic Growth we i gro

organicay, not by acquisition, uness

e see a great acquisition opportunity

Synergies we i ony incue

companies in our Group if they have

synergies ith other parts of the Group

Investment we i invest seectivity to

strengthen an bui our businessesOn-shore locations we i keep our

cient-facing operations on-shore

• Conclusion: If a succinct concusion

oes not capture the intent, much of the

ork is ost.

Abraham lincon ha remarke, “I spen

ony a thir of the time thinking hat I

ant to say, but to-thirs on hat the

auience ants to hear.”

e concusion part shou be bereof bes an histes rather it shou be

business-ike. In fact, the presentation

esign surey benets if the presenter is

cear about the concusions at the outset.

Focus on the key pointers you ant to

sen across the participants. Engage

participants in the concusion part ith a

vie to stimuate a iscussion.

• Edit and re-edit: Revie the hoe

presentation an a to the text reevant

visua or auio cips. is i make theinformation more engaging an easier

to unerstan. Carry out many revies

unti satise.

Proucing eective presentations nees

a process an practice. An the one ho

enjoys the process is ikey to eiver a

orthy communication.

BOX 1: SAMPlE SlIdE USING BUllET POINTS

e ve key strategies

• To focus on proucts an markets here e are or can be in the top three

•Groth – Organic, not by acquisition, uness an opportunity arises to o a ea at

acceptabe risk-rears eves

•Buiing a portfoio of businesses in hich e beieve there are or i be sustainabe

an ientiabe synergies beteen them

•Businesses to be investe in seectivity in orer to strengthen an bui them in

their chosen areas of expertise

• Our cient-facing operations are to be kept on-shore

Karim Gilani

is a stuent member of Institute

of Actuaries of [email protected]

ABOUT THE AUTHOR


8/20


(i) Starter:

Moeing is a branch in Actuaria Science

eaing ith simuation of rea or

situations (athough moeing is use in

many other nancia es, e are

restricting the usage to the e of actuaria

stuies). Financia moeing is the task of

buiing an abstract representation (a

moe) of a rea or nancia situation.

Anatomy is a branch in Meica Science

eaing ith unerstaning of the

functions of the organs an structures of

the human or any bioogica boy.

Anatomy is the scientic stuy of the

structure of organisms incuing their

systems, organs an tissues.

(ii) Main Course:

Indispensability:

Both are indispensible for their

respective subjects. without anatomy,

meica science ou have to just be

restricte to giving remey to smaer

aiments. A the ierent approaches that

exists toay viz., Ayurvea, Acupuncture,

Aopathy, homeopathy, Naturopathy or

hateverpathy (humor intene) have

Anatomy as their pivotal points.Study of model is the bedrock for all

purposes in Actuarial work irrespective

of the iscipine viz. life Insurance,

Genera Insurance, Pension, Heath, etc.

without moeing, Actuary ou have to

restrict onesef into the ream of

preiminary eve statistics. Most of the

avice given by the Actuary invariaby

epens on Moes.

Purpose:

Both the branches provide known

solutions to known risks.

Forty minutes ak per ay reuces the

risk of many aiments that are cause by

seentary ife stye. In fact, regular

Physical exercise is one the golden rules

that a octor i consier hie avising

any patient. Te pivotal point in such

advice is an in-depth understanding of

anatomy .

In nance, Diversification of asset classes

& of ierent companies ithin asset

casses is one of the golden rules.

Although the above assertion is proven

by theorems, it is only strengthened &

validated through application of Model.

we cannot vaiate the theorem in rea ife

by asking one investment manager to

iversify & other not to. e cost invove

in such an exercise ou be heavy

consiering the knoege obtaine from

such an exercise.

Aiments reate to heart are better

unerstoo by knoing the inkages from

heart to other organs. For exampe:

Suen seating may be a sign of

imminent heart attack. Cear

unerstaning of anatomy is paramount

in identifying symptoms of heart attacks

since anatomy tes us the eect on other

organs from a eak heart.

Simiary, hen an insurance prouct has

high Investment guarantees, the prouct

i be subject to more pruence in its

parameters hie reserving or higher

require sovency capita (assuming risk

base capita). Higher Provision for

Averse eviation or increase in require

sovency capita may be a symptom of

mismanage Asset iabiity position.

Investing in assets ith matche timing &

oer voatiity (ex: moving toars

bons) reuces the risk for the company.is soution in better unerstoo from

creating a stochastic moe. Further,

quantifying the eve of reuction of risk is

aso possibe using the moe.

angibility:

If someone asks us to imagine an anatomy

of a heart, e immeiatey ou go back

into our bioogy cass of our schoo ife &

envisage this:

No, if someone asks us to imagine an

actuaria moe & if e try to go back into

hatever e have stuie (A CT series

papers) & try to imagine any moes then

e may probaby visuaize fe variabes &

equations. At the most, if e try to image

a picture of a moe from our ay-to-ay

ork, e may probaby get this:

we can see ceary that, at the most,

picturisation of an actuaria moe is

imite to a picture of an exce sheet (on

page 9). It is very icut to visuaize a

moe in rea or. It is abstract &

amorphous.

While anatomy as a branch is tangible in

nature, financial model is intangible in

nature. we cannot bame moeing for its

intangibiity as Moeing erives its

intangibiity from its ink to nance &

Actuaria Science hich mainy eve into

future uncertainties.

Limitations of the usage:Precise replication/Exact Prediction

Financia Moes have been eveope

hich give possibe change in future

scenario if certain parameters are change.

we have to unerstan that in rea or,

the number of parameters is innumerabe

& the uncertainty invove in parameters

make the precise replication impossible.

But Models at least provide a base to

understand multiple aspects aecting

future reaities in orer to take strategicecisions.

Simiary in meica science, eveopment

of articia anatomy hich truy repicates

Financial Modeling – Anatomy of Actuarial Science

Introduction:

It may be surprising for few

to find Modeling & Anatomy

being in the same context

but the ensuing article is a

humble & an earnest attempt

to find some similarities

between the two in relation to

their respective subjects. The

article tries to prove, albeit

in a generalized manner,

that Modeling in ActuarialScience is as important (or

unimportant) as anatomy is to

medical science.

STUDENT COLUMN


9/20


the changes in human boy upon

changing certain parameters is impossibe.

For exampe, articia anatomy hich

precisey reect the eect of acoho on

iver is icut to bui since human boy

is not a machine & there are many other

factors hich inuence iver an further

acoho may have varying eve of eect

upon ivers of ierent persons. Anyway,

study of anatomy leads the Physician to

take decisions to solve medical problems.

For exampe, knoing the exact size &

pace of iver & its ink to the stomach in

the human boy is of paramount

importance to unerstan various

igestive aiments aecting the igestion

process.

Torough study & subsequent receipt of

expert level knowledge in Anatomy will

not make a Doctor an expert in solving

every ailment that haunts human life.

Anatomy merey provies a founation on

hich the buiing of other branches of

meicine can be buit hich in turn

attempt to provie remeies to many

sickness & aiments.

Similarly, precise Study of Models &

expertise in Modeling will not make an

actuary an expert in predicting future.

Moes merey provie the founation to

earn about ierent forms of risks that a

rm can face & aso hep the Actuary to

see (or foresee) the eects of any action

that management takes toay. It aso

provies a too to unerstan a the

knon risks. But foreseeing unknon

risks & knoing pethora of risk

management toos are much bigger

spheres of Actuaria science.Spurious Accuracy

e reaction of the patient if the octor

asks for compicate tests ithout

preiminary iagnosis of the patient ou

be same as the reaction (irritation? Or

repusion?) of the senior management if

the Actuary insists on unarrante

compex moes.

Just ike the ay doctor i not prescribe

compicate meica tests for sma fever,

Actuary i not pursue superuousprecision hie moeing a future

scenario. Spuriousness of accuracy i

aays be viee against the backrop of

cost & benet of such pursuit of accuracy.

(iii) Dessert:

Even though both Anatomy & Moeing

are crucia in their respective subjects, it is

imperative that knoege seekers o not

get too much attache to these branches

an o not negect other branches of

subjects.

At ast, not the east e can ask a quaie

octor as to hich as the toughest

subject to stuy & the anser ou

generay be Anatomy. Simiary, e can

ask an Actuary as to hich as the

toughest topic to stuy & the anser

ou generay be topics reate to

Actuaria moes.

K. Arumugam

[email protected]

ABOUT THE AUTHORS

Deepak Veerbhadra

[email protected]

are currenty orking in lIC in

its centra oce. ey are stuentmembers of Institute of

Actuaries of Inia.


10/20


Concept behind the Product

A term assurance is a contract to pay a

benet on the eath of the ife insure

ithin the term of the contract. is

prouct can be use to provie guarantee

eucation to chiren.

In Inia, average cost of eucation

from preschoo ti Senior Seconary isINR 7,00,000 to INR 10,00,000. Term

assurance can be use as a prouct

that guarantees the competion of the

eucation of the chi in case of parents’

eath. is provies a great ea of

security to parents regaring their chi’s

eucation in case of any uncertainty. e

premium charge for this type of contract

is very o as compare to other proucts

ith same benets. e o amount of

premium charge is basicay because of

the fact that there is no benet pai incase the poicyhoer ho is parent in this

case, survives ti the en of the poicy.

For a poicy hose benet ranges beteen

INR 7,00,000 to INR 10,00,000, premium

ranges beteen INR 800 to INR 1,200

per annum. due to o premium, such

poicies are aorabe an serve the nee

for security for parents of every cass of

society.

Key Points that makes the Product

Attractive

One of the most attractive features of

this prouct is o amount of premium

charge. ere are many proucts hich

aos parents to save for the grauation

an post grauation of the chi, but this

prouct aos to make sure that their

chi competes the eucation ti Senior

seconary in case of any uncertainty.

Example to explain the Product

A parent age 30 ith a chi reay to

join per schoo takes this poicy. e

poicy guarantees to pay for the eucationexpenses of the chi in case of eath of

the parent from the ate of eath ti the

GUARANEED EDUCAION O ALLere are various life Insuranceproucts in markets that satisfy amosta nees of the consumers. Prouctsike enoment insurance ao theconsumers to save for future an asohave a security in case of uncertainty.like many proucts there exists aprouct “TERM ASSURANCE” hich

is very unique.

chi competes the Senior Seconary

(12th) eucation.

e poicy has term of 15 years as this

the uration of the schooing of the chi.

during this perio, the premium is pai

by the parent unti the earier of eath or15 years. e benet pai is the monthy

eucation expenses of the chi from the

ate of eath of the parent ti the en

of the contract i.e. competion of chi’s

eucation. In case the parent survives

the hoe perio of the contract then no

benet is pai at the en of the contract.

Graphical Representation

is graph shos the premium hich

is INR 1,000 for each year ti 15 years.

e eucation cost hich is the benet

associate ith the prouct is shon by

the green ine above. is graph shosthat ith the premium of just 1,000 this

type of poicy can cover risk of eucation

hich is huge.

Risk for Insurance Company Associated

with the Product

ere are fe risks for the insurance

company associate ith the prouct.

Mortality Risk: e main risk for the

company associate ith the prouct arises

from the mortaity. e company assumes

the mortaity rate for each poicyhoer

at each age. ese assumptions are base

on the past experience of the company

or overa experience in the insurance

market. If the actua mortaity experience

of the company is higher than hat as

assume, the company has to pay higher

caims than expecte an i incur

osses on the poicies. Hoever, in this

particuar case, the group that is insure

is homogeneous. us, the mortaity risk

is very e iversie an the chances

of the company incurring osses ue to

mortaity minimizes.

Withdrawal Risk: In this particuar case,

as the poicy progresses the sum assure

reuces because there i ess years e

for the competion of eucation of the

chi thus ess benet nees to be pai.

due to this, the poicyhoer has ess an

ess incentives to continue ith the poicy

an pay premiums uring the en years ofthe contract.

Variations in the Product

ere can be various versions of such

a type of poicy. is epens on the

poicy esign. Insurance companies

can ink the benets ith ination as

eucation cost is expecte to increase in

future. A pre-etermine

constant amount may not

be enough to meet the

eucation expenses. Aong

ith Senior Seconary,Insurance companies can

provie benets to cover

expenses for Grauation or

Post grauation. is i

surey increase the premium

amount but the Sum assure an Term

secure i aso increase.

ere are various types of insurance

proucts avaiabe in the market but using

them in an innovative manner i hep

the insurance market to gro an prosper.It eas to increase trust of poicyhoers

on the insurance companies. ese types

of poicies that serve basic nees ike

eucation may act as a socia security

mechanism for the citizens.

Paras Bhandari

is invove in actuaria vauation

of pension pans. He is stuent

member of IAI an is orking

at Mercer Inia Pvt. lt. He

grauate in Commerce from

dehi University.

[email protected]

ABOUT THE AUTHOR

STUDENT COLUMN


11/20


As an actuary, our job invoves measur-

ing nancia risks an quantifying their

impact. we sice an ice every bit of

avaiabe ata to ecie the best possibe

course of action to get the maximum re-

suts ith minimum risk. But can risk becompetey remove – guess no, hich

e me to pen on this artice as to ho

our behavior toars risk aects us in our

aiy ife (beyon the nancia numbers)

What exactly does Risk Averse mean?

”e traitiona approach to an unknon

risk, hether nancia or otherise, is

avoiance”

It is oen argue that Inians are Risk

Averse. Is it the conformity? Or is it in-

herent? Or oes it creep in ith time an

situation?

Even our ancient scriptures preach

against risk-taking – they speak of Yud-

hishtira ho took huge risks in the game

of Chaupar an ost everything an sho

ho that one incient cause the biggest

ar of those times. e 2008 recession

an Inia’s stabe situation in it, reative to

other economies, has given us even more

reasons to praise it. we shy aay from

oans, e save for the future, e invest in

go (consiering it to be highy rear-

ing), e bui stabe persona careers, an

e ove MNCs.

Most stuents in Inia take or are aske to

take the conventiona path of “meicine”

an “engineering” in the ure of assure

returns. Reasons might be that Inia is an

emerging economy, not a eveope one

yet, so a ot of us have seen our parents

in constraine nancia situations in our

chihoo. In orer to avoi simiar if-

cuties an because continua suppy of

money is an important factor for us, e

Pain from loss, pleasure fromgain – the cost of risk aversion

we have consiere every

potentia risk except the

risks of avoiing a risks

ourseves opt for the conventiona “safe”

path an avoi the perceive risks in en-trepreneurship. Just aer this year’s 12th

ISC resuts, my “orrie” chacha cae

me enquiring about the courses that his

son can pursue. like a responsibe e-

er sister I guie him an my cousin

about the vast range of careers that he

can take up an the ‘bright’ future there-

aer. Knoing his forte – mathematics, I

stresse upon my on course “Actuaria

Science” (oh, my prie attache to it!)

One of the highest paying professions?

Ticke, stimuate an keen they ante

to kno more an there I as bestoing

a my knoege on them. Aer an hour

of ‘gyan’ they seeme convince an my

cousin appeare to be registering on the

spot. Aer a month he cas again an

hat I hear? “Beta, can you pease n a

goo engineering coege for my son in

Pune….”

was it the presume “risk” of not cear-

ing the actuaria exams? Or the “risk” of

not getting a job easiy? whatever risk it

as they’ve forgone the “goo returns”

fooe by these risks.

In my father’s generation, parents ante

their kis to join the pubic sector orga-

nizations (stabe job, pension, perks ike

housing an phone) so i my day, he

as a banker in State Bank of Inia; he

retire recenty an is no enjoying his

pension. ere are fathers ho ou sti

ant their aughters to get marrie ony

to ‘secure’ government job empoyees.

Narayana Murthy, co-founer of Infosys,

in an intervie spoke about his eary ays.

His father-in-a in’t ant to marry

his aughter to a guy “ho ha no job”.

Peope thought he as crazy to give up his

job to start a company.

If a grauate goes for entrepreneurship,

e a ten to beieve that it as because

he as unabe to an himsef into a goo

job. e above reasons combine to createa vicious circe – since some career paths

have been pursue more, they have be-

come more eveope an hence more

prot-making. For exampe, the probabi-

ity of a CA earning a high saary is higher

than that of an artist, just because the art

scene in Inia is sti in its initia stage.

Peope ho are highy eucate in Inia

ant to join companies rather than stat

companies. In US, peope ho start com-

panies an fai are highy vaue (for their

experience at managing every aspect of

the company), unike in Inia, here they

are ooke upon as incompetent ith no

future vaue.

ere is a onsie of being risk averse;

e are groing at a much soer rate an

it has been the reason hy Inia has ha

imite returns in the past. Inians be-

ieves in stabiity. what e fai to reaize

is the eect of our risk averseness. ough

e have ensure no lehman Brothers in

Inia, e have aso kie the possibiity of

“coege rop-outs” create Appe, Micro-

so an Facebook.

Hoever, some of the argest business

houses have taken enormous risks. Tata

group by acquiring companies ike Corus,

Jaguar-lan Rover or Aitya Bira Group

taking over Noveis. ere are mutipe

success stories of companies having ac-

quire businesses far bigger than them-

seves an making it reay big.

Recenty many peope from non-privi-

ege backgroun have feature in the IAS

merit ist. eir parents have so their in-

herite an an other vauabe assets for

a fe bucks to get their chiren in goo

coaching centres. Seing their ‘nite’ as-

sets for someone as poverty-stricken as a

rikshaaa is enitey a huge risk. Ha

their parents been risk averse an ere

they not iing to take such risks they

ou have never ha this unbrie joy.

Ho oen o our potentia creations get

mute by our fears? As iniviua contrib-

utors e have many ieas that fantasize us

but e o not share in fear of the “risk” of

faiure or the “risk” of being cae a foo.

From my itte ork experience I ou

say that henever I have overcome this

fear an spoken out my heart, no matter

the iea as a success or a faiure, taking

this risk has aays instie a sense of re-

ief in me. An never as I cae a foo!

So, on’t et your risk-fear ki your inno-

vation. Because hen your story coses,

you’re going to n out that it’s not hat

STUDENT COLUMN


12/20


you i that you regret the most, it’s hat

you i not o!

I on’t say take any an every risk. Re-

search, assess, eigh the upsie potentia

an the possibe orst case scenarios.

Take the ones here the upsie outeighs

the onsie.

discaimer – you i not n too many ofsuch risks in casinos!

You ish to ask someone for a ate? Go

ahea! donsie? One time embarrassing

rejection. On the contrary, you may en

up in a ife-ong reationship. But, on’t

be a staker; the onsie i competey

overshao your expectations.

Starting this artice as again a risk for

me. what cou have been the orst case

scenario? waste of some of my time. But

hat as the upsie? Change peope’s per-

ception an ecisions for better!

A pessimist sees the icuty in every

opportunity – an optimist sees the op-

portunity in every icuty. e key is to

chaenge status quo, not be content ith

meiocrity, an are to ream. Yes – the

risk aversion streak i caution an re-

strain us but the conviction an har ork

can hep us sai through an n istant

shores. Our eaership team at AXA BS

perhaps resonates this phiosophy an

thus the eorts to create an aiative en-

vironment through enabers ike the “Bue

Cuture” & “Vaue Creation” initiatives. It’s

an opportunity for each one of us – hat

e utimatey ecie i be governe byour iniviua aversion quotients. e

journey e take ecies here e reach –

as Robert Frost sai:

I sha be teing this ith a sigh

Somehere ages an ages hence:

To roas iverge in a oo, an I–

I took the one ess travee by,

An that has mae a the ierence

2nd Workshop on Employee Benefits

Te Seminar would focus on the following topics:1. Public Sector Valuations: Ho can e move toars strengthening Pension Benetliabiity?2. Actuarial Practice Standard (APS) 26: what changes are require?3. Ensuring consistency of actuaria vauations4. leave Vauations5. Provient Fun Vauation

Brief on each topic is available at : IAI website- Upcoming Seminars ithin Inia -workshop on Empoyee BenetsWho Should Attend? e seminar is ony for IAI members ho ish to enhancetheir skis in Pension an Empoyee Benets omain.

General Points:

■ Participation Fees: 7500/-(+ 12.36% Service Tax)■ CPD Credit for IAI members: 4 hours, as per APS 9■ Registration : Start date - 7th February, 2015 & Cose date – 4th March, 2015.■ Capacity: Limited to 30 on rst-come-rst serve basis subject to receipt of payment.■ Register at: http://actuariesindia.org/seminarRegistration.aspx (Kiny Register

iniviuay to provie accurate information ith respect to the topic seection.)

■ Contact: Quintus Menonca at [email protected] for any assistance.■ For information on Accommodation at Subsidized Rate visit http://www.actuariesindia.org/subMenu.aspx?id=255&val=Accomadation_details

Date: 13th March, 2015 Venue: The Plazzio Hotel, Gurgaon.

Anupama Katariya

is orking as a

Senior Actuaria Anayst,

Actuaria department in

AXA Business Services Pvt. lt.

[email protected]

ABOUT THE AUTHOR

J o in us f o r t his unique e v e nt w it h ac t iv e inv o lv e me nt f r o m all t he p ar t ic ip ant s. T he r e ar e v e t o p ic s ar o und w hic h t he w ho le e v e nt is p lanne d. W hile r e g ist e r ing t he de le g at e has t o se le c t t hr e e mo st ap p r o p r iat e t o p ic s in t he o r de r o f p r e f e r e nc e . A c c o r ding ly small g r o up s w ill b e f o r me d t o de lib e r at e and disc uss t he sub j e c t s. Eac h g r o up w ill p r e se nt t he ir t o p ic and t hus t ak e Q & A f r o m t he o t he r p ar t ic ip ant s.


13/20


LUCKY DRAW DURING17 TH GCA

The lucky draw on 3rd February 2015 was drawn at 5.30 pm at the close of student event in

presence of the students, IFOA team and Executive Director of the Institute. The lucky coupons

were taken out by Mr. Dilip Chakraborty Chairperson The External Affairs and Research Committee.Three Apple I pads Air with wi were given as a prize.

The three winners of lucky draw are:-

1. Mr. Pankaj Khetan membership ID 19254

2. Mr. Arun Kumar Tanwar membership ID 10594

3. Mr. Mohit Bhalotia membership ID 1078

The following students whose name was called as lucky draw prize winner were not present sothey could not get the prize and draw for two more persons was done. This was the condition of

the lucky draw that the student has to be present to take the prize otherwise the prize will go tothe next winner. The persons who could not be given the prize are:-

1. Ms. Lakshmi Ramaswamy membership ID 7520

2. Mr. Ramanan Senthil membership ID 5525

BEST ARTICLE AWARDS 2014

SHRUI SHEYTopic: An Inconsistent & Avoidable Carve Out

Issue: Actuary India December 2014

AKSHAY PANDITopic: Effects of Current Indian

Economic Scenario use of

Discounting Rate under AS 15 R(G Sec Rate) For the Valuation of

Employee Benefits As on 31-03-2014

Issue: Actuary India March 2014

MAYUR ANKOLEKAR

RIDHI PALIWALopic: 5th leaership deveopment

Programme

Issue: Actuary Inia december 2014

ADII GOELopic: Concurrent Sessions on

life Insurance

Issue: Actuary Inia March 2014

BEST REPORTAGE AWARDS 2014

1st 2nd

2nd1st


14/20


Congratulations! Ms. Shagun

Malhotra for being the opper in

the CA2 Exam held in October 2014.

ell us about yourself, your educational

background and your hobbies

ank you very much!

I am presenty orking as an Actuaria

Consutant ith KPMG Goba Services

in Gurgaon. I joine the company in

2011 just aer competing my Masters

in Actuaria Science from Cass BusinessSchoo, lonon. I have ceare 12

Actuaria examinations an am no

preparing for my ast fe exams.

I i my grauation in Mathematics

(Hons.) from Jesus an Mary Coege,

dehi University an it as at this point

that I chose to get into the Actuaria e.

As most stuents in this profession i

unerstan an agree, amost a our time

is taken up shutting beteen ork an

books! Hoever, I o take an occasiona

breather by getting back to my hobbies

- paying the piano (I have ceare 5

exams in Soo Piano from Trinity Coege,

lonon) an baking cupcakes!

How did your parents, family

and friends contribute to your

success?

In this e particuary, it is important

that everyone aroun unerstans the

chaenges invove hie stuying an

orking together. I am fortunate to have

famiy, coeagues an friens ho have

been, not ony unerstaning, but aso

very supportive an encouraging.

My parents have been ike piars,

ho have, at every step, inspire an

encourage me to iscover my potentia

an abiities, to have faith in mysef, to

never ose focus an to put in my very best

in hatever I o.

I aso oe a ot to my team eaer, stuy

mentor an coeagues at ork, ho

have paye a very important roe in my

journey this far. I truy appreciate their

constant support, guiance, vauabe tips

an avice.An of course, my friens ho have

toerate my moments of tears an fears

uring exam preparations an have pue

me aay from my books to give me the

much neee breaks in beteen!

How many hours of study on

average per day did you put in to

top the CA2 result where only 17

candidates passed?

like for most exams, it is the quaity

of stuy rather than the quantity that

matters most. I began preparing as soon

as I registere for the examination.

I aays keep Robert Coier’s ors

in min, “Success is the sum of smallefforts, repeated day-in and day-out.”

It as reguar stuy for short perios

amost every ay that mae a ierence.

Hoever, coser to the exam, I put in

about 2-3 hours per ay on an average.

How much time do you think one

requires for serious preparation

for this examination?

ActE recommens about 50 hours to go

through the course notes an aitiona

time to attempt past papers.

like I mentione earier, it heps tostart stuying in avance an, most

importanty, to keep practising questions

as CA2 is not so much about memory,

but about practica appication of topics

areay stuie in the past.

Did you face any difficulty while

studying this subject?

is exam is quite unike the other

Actuaria exams an there is never just one

correct anser to any question. So, I as a

bit unsure on ho to best equip mysef for

this exam. Aso, since the question coucover a ie spectrum of topics from

any of the CT exams, it as important

that I ooke through the summaries of

each of the exams, hich as fairy time

consuming, but e orth it.

CA2 is a 7.5 hour long exam

which examines documentation,

analysis and reporting skills of the

candidates within the given timeframe.

What was your strategy to cover all these

aspects while preparing for the exam?

Accoring to me, the key strategy as

managing my time eectivey. For this, I

practise a fe past papers uner exam

conitions, hich hepe me immensey

in tacking a the aspects of the exam. I

aso mae sure that I rea the questions

a fe times over an unerstoo ceary

hat as require before attempting the

ansers an trust me, it as e orth

the time spent!

Further, I kept remining mysef that

I nee to enjoy the entire process ofstuying for the exam, knoing that this

preparation i enitey be rearing

in terms of gaining knoege an

experience, irrespective of the resut of the

examination.

How has this exam help you at a

professional level?

Exce is a part of my aiy actuaria ork.

Preparing for this exam has sharpene

my skis on ho to turn a basic actuaria

probem into a spreasheet moe an,

very importanty, ho to communicatethe soution eectivey to the cient. An,

of course, cearing CA2 brings me one

step coser to the ‘nish ine’!!

How do you think you can add

value to the Actuarial Profession?

Stephen Covey once sai, “Life is

not about accumulation, it is about

contribution.” Yes inee, our journeys

are not just about gathering egrees an

quaications, but more about giving back

an utiizing our knoege an skis in

the best possibe manner.is e has given me a great opportunity

to earn an ork simutaneousy. It

is eepy satisfying to use knoege

gaine through stuies an transate it

into fruitfu practica ork soon aer.

I hope to keep earning, orking an

contributing, putting in my best eorts

toars the groth of my epartment, my

organization an the Actuaria profession.

What was your purpose while

selecting this course - Core

Application Model Documentation,Analysis and Reporting?

Besies being a prerequisite to quaifying

as an Actuary, I foun the subject very

interesting. As teams an resources

become more goba, a course ike

this heps to hone the skis require

to eectivey communicate one’s

technica contributions. e exam heps

eveop a more ‘roune’ business ski

here the prime emphasis is on goo

communication. is is of immense

vaue an I kne that this course oucertainy go a ong ay in heping me

gro in my profession.

SUCCESS STORY

[email protected]

CA2 TOPPER October 2014SHAGUN MALHOTRA


15/20


Congratulations! Mr. Chinnaraja

Pandian for being opper in CA2

Exam held in October 2014. ell us about

yourself, your educational background

and your hobbies

anks for the ishes an ith this I ha

ceare a my paper to quaify as Feo

Actuary. I as born an bought up in

dharavi, Mumbai an currenty orking as

Assistant Vice Presient ith Goba Risk

team of Nomura.Aso I am FRM (Financia Risk Manager

from GARP) an PRM (Professiona Risk

Manager from PRIMA) certie ith

backgroun in Master of Management

stuies an Mechanica Engineering from

Mumbai University.

I starte of my career ith Nationa Stock

Exchange of Inia here I conceptuaize

an eveope Asia’s rst Voatiity inex,

Inia VIX an cross margining system.

Aso I ha esigne the methooogyan risk management system for traing

erivatives on Inia VIX.

My hobbies are istening music, atching

movies particuary Tami an spening

time ith my aughter, Nithisa.

How did your parents, family and

friends contribute to your success?

My parents are not much eucate an they

o not unerstan hat actuary is about

but they ha aays supporte me. I oe a

ot to my parents for a my achievements.Aso my ife an aughter ha been of

great support for aoing me to aocate

eeken an hoiay for stuies.

How many hours of study on

average per day did you put in to

top the CA2 result where in only

17 candidates passed out?

I eicate aiy about 2 hours for aroun

10 ays an 8 hours for coupe of ays just

before the exam to take the mock exam.

How much time do you think one

requires for serious preparation

for this examination?

e exam is not easy as one thing hie

going through the sampe paper an

one nee to practise a ot. e eve an

amount of practise require epens

on ho famiiar one is ith exce an

moeing. As this comes in hany for

preparing the exam ith esser eorts. I

ou suggest approximatey one nee to

aocate aroun 30-50 hours of focuse

preparation.

Did you face any difficulty whilestudying this subject?

A the information require for preparing

the exam as given in the stuy materia

an assignment. Ony icuty as to

n time from ork an persona ife.

CA2 is a 7.5 hour long exam

which examines documentation,

analysis and reporting skills of the

candidates within the given timeframe.

What was your strategy to cover all

these aspects while preparing for exam?It is a engthy exam an one nee to be

focuse an ho his nerve for eight

hours. e exam not ony evauates the

technica aspects but aso consiers ho

the stuent is communicating the moe

etais. To be successfu one nee to touch

base a the key aspects ike purpose,

assumption, methooogy, auit trai,

resuts, summary an next step.

My strategy as to keep the exce moe

simpe ith breakon of each step ofcomputation aong ith the reasonabe

checks an auto checks in pace for

vaiation. Best strategy ou be to

take a coupe of mock exam an target to

compete the moeing part in the rst

haf of the exam an evote time for auit

trai an report summary in the secon

haf. One can juge the time require for

each section base on the experience of

mock exam.

How this exam has helped you at

professional level?

I aays fet comfortabe in exce

moeing but this exam ha mae me

reaise the importance of communicating

the moe. It ha hepe me to sharpen

my skis in ocumenting an presenting

the resuts to stakehoers in a better ay.

No I ha buit the habit of incuing

reasonabe checks an auit trai in a my

moes.

How do you think you can add

value to the Actuarial Profession?

Actuary profession in Inia is synonymous

to Insurance even though it covers a ie

e of appication. I am from Investment

banking an ha ceare a actuary feo

paper ith speciaization in Finance an

investment. But I fee actuaries are not

given much importance in es other

than Insurance in Inia even thought

they have an expertise in quantitative,

statistic, mathematic, vauation an risk

management. So I ou eneavour to

increase the marketabiity an positioning

of Actuary Feo in investment banking.

As a part of my effort I had published

the following articles with the Actuary

magazine of London and India.

A Copua Approach to Voatiity Inex

in Inia - e Actuary Magazine

lonon

Voatiity Inex demystie: From

Measure of Uncertainty to an AssetCass - e Actuary Inia Magazine

(March, 2014) Pg 45.

I Hope to continue my ork of pubishing

artice ith the appication of actuary

toos in Investment an Finance.

Aso happy to say that I am going to

become a Feo Actuary from “dharavi”

hich ou be of great honour to

my ocaity an ou be ooking for

opportunity to contribute my society from

an actuary perspectives.

What was your purpose while

selecting this course - Core

Application Model Documentation,

Analysis and Reporting?

is as my ast paper require to be

ceare for quaifying as a Feo Actuary

an it as compusory. But I fee even

though it as not compusory one shou

appear for this paper hich shapes you in

buiing an ocumenting moe hich

are the key areas of any actuary ork.

A the best for a the aspiring Actuaries

an ets manage the unexpecte risk!

SUCCESS STORY

[email protected]

CA2 TOPPER October 2014CHINNARAJA PANDIAN


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Aroun 130 eegates attene the

biennia conference of the Ne Zeaan

Society of Actuaries. is as he in

dunein beteen 19 an 22 November

2014. irty one presentations ere sprea

over seven penary an seven concurrent

sessions. Teve of the presentations ere

accompanie by papers (1).

It as not a ork in dunein ith three

evening functions an activities on one

aernoon.

e Richar Bruyne memoria prize

for best conference paper is chosen by a

committee. Seven papers ere shortiste

in december. Notabe papers covere

topics such as setting risk-free iscount

rates, cimate change, Canterbury

earthquakes, ecumuation in retirement,

private heath insurance costs in ast year

of ife an roe of actuaries in the efare

system. e inning paper is expecte to

be announce in February.

e ne Counci for 2015 comprises:

Richar Beauchamp (Presient),

John Smee (Secretary), Anne lor

(Treasurer), Pau Rhoes, Anrea Guyas,

Greg Bir an Jonathan Nichos.

Rock star economy

last year, NZ as ubbe a “rock star”

economy an John Key on re-eection

for a thir term. GdP gre 2.9% in the

year to September 2014. labour force

participation as 69% of hich 5.4%

ere unempoye. Ination fe to 0.8%

for 2014, beo the target range of 1% to

3%. Before the Goba Financia Crisis,

such economic performance ou be

consiere peestrian.

Hoever, there are some signs of troube

ahea. NZ is the biggest exporter of

poere mik an prices have faen

steepy. A construction boom in Auckan

an Christchurch has been fuee by

arge increases in house prices. Rea estate

in other regions has been at. Retai saes

ere oer in december 2014 than 2013.

Vacancies have increase for retai an

commercia premises on the fringes of the

city centre.

Currency

despite the centra bank seing Ne

Zeaan oars an announcing it as

over-vaue, the exchange rates against

major currencies has kept on appreciating.

Centra banks may inuence ay-to-

ay movements in foreign currency but

cannot ho backs systemic market forces.

A cash rate of 3.5% ithin the OECd is

seen as attractive in a or orrie about

eation an ‘hot money’ chasing yie.

In december 2014, Reserve Bank of

Ne Zeaan (RBNZ) change its trae

eighte inex (2). Nine ne currencies

ere ae to US, UK, Austraia, EU an

Japan. e Renminbi became the secon

biggest currency ith one-h of the

ne basket. Many other Asian currencies

incuing the Rupee ere ae.

Ne Zeaan is no rmy in the Asia

Pacic bock. Historica ties to UK are

aning. is is symboise by a panne

referenum to change the ag. A union

jack atop the southern star consteation

cou be repace by a siver fern.

New solvency standards

On 17 december 2014, RBNZ upate

the set of insurance sovency stanars

for ife, non-ife, captive, run-o an oca

government (3). RBNZ has aso respone

to submissions about ata coection

an ra sovency stanar for exibe

annuities.

Quaifying criteria for capita instruments

incue permanence, oss absorption an

servicing charge restrictions. Reinsurance

is subject to a ikeihoo test of risk

transfer, restrictions on termination,

embee obigations an stress testing.

ere is aso a ne risk capita charge for

erivatives base on gross exposure an

the counter-party risk eighte charge.

Earthquake update

Prior to the February 2011 Christchurch

earthquake, houses ere insure for

fu repacement vaue. Insurers have

foun this to be expensive. lan sippage

requires founations to be strengthene.

Insurers have to supervise rebuiing to

buiing coe stanars an no orse

quaity pre-earthquake. Cost of hiring

buiers increases aer a natura isaster.

Poicies in a parts of Ne Zeaan are

no insure on an agree vaue basis,

aoing the insurer to pay the sum

insure an keep any savage.

Coverage for non-commercia properties is

provie by the Earthquake Commission

an Insurers. e former provies the rst

ayer of coverage for those ith insurance.

e courts rue that ne tremors are

treate as separate events, thus reucing

private sector exposure. Improve

coorination beteen insurers an

earthquake commission shou improve

poicyhoer experience.

References:

1. http://.conference.co.nz/nzsa14/programme-speakers/fu_paper

2. http://.rbnz.govt.nz/nes/2014/5960114.htm

3. http://.rbnz.govt.nz/reguation_an_supervision/insurers/reguation/inex.htm

NEW ZEALAND

John Smith

is the Appointe Actuary of

Fieity life the argest Ne

Zeaan one life Insurer.

He can be contacte at:

[email protected]

ABOUT THE AUTHOR

COUNTRY REPORT


17/20


THE ACTUARY INDIA – EDITORIAL POLICY Version 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 theInstitute 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;a. there is a growing emphasis on the globalization of the actuarial profession; b. there is an imminent need to position the profession in a business context which transcends the traditional and

specic actuarial applications.c. 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:

a. Members of other international actuarial associations across the globe b. Regulators and government ofcialsc. Professionals from allied professions such as banking and other nancial servicesd. Academiae. Professionals from other disciplines whose views are of interest to the actuarial professionf. Business leaders in nancial services.

D: The magazine also seeks to keep members updated on the activities of the Institute including events on the variouspractice areas and the various professional development programs on the anvil.

E: The Institute while encouraging stakeholders as in section C to contribute to the Magazine, it makes it clear thatresponsibility for authenticity of the content or opinions expressed in any material published in the Magazine is solelyof its author and the Institute, any of its editors, the staff working on it or "the Actuary India" is in no way holdsresponsibility 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 nancial services within ever demanding customerexpectations. Version history: Ver. 1.00/31st Jan. 2004 Ver. 2.00/23rd Jan. 2011

INSTITUTE OF ACTUARIES OF INDIA

List of Students Scoring Highest Marks in October 2014 ExaminationSr.No

Subject Subject Name Name of the Donor Name of the Candidates Membership ID PlacePrizeMoney

1 CT1 FINANCIAL MATHEMATICS Shri R. Krishnaswamy Memorial Prize Fund Bhoomit Kirti Shah 28230 Mumbai 5000

2 CT2 FINANCE AND FINANCIAL REPORTING Shree Atma Ram, Shri Chhaju Ram and Smt ParvatiDevi Memorial Scholarship Endowment

Amit Kumar 29378 Kolkata 5000

3 CT3 PROBABILITY ANDMATHEMATICAL STATISTICS

Shri H V Krishnamurthy Prize Fund Nishant Agarwal 29183 Kolkata 5000

4 CT4 MODELS Shri R. Krishnaswamy Prize Fund Shryans Jain 21182 Delhi 5000

5 CT5 GEN. INS., LIFE AND HEALTHCONTINGENCIES

Smt. Vidhya Wati and Smt. Santosh Kumari MemorialScholarship Endowment

Avanish Sanjeev Bankar 24488 Nagpur 5000

6 CT7 BUSINESS ECONOMICS Prof R M Joshi Prize Fund Sanya Gupta 21863 Gurgaon 5000

7 CT8 FINANCIAL ECONOMICS Prof G S Diwan Centenary Commemoration Prize Avanish Sanjeev Bankar 24488 Nagpur 5000

8 CA1 ACTUARIAL RISK MANAGEMENT The Future Actuary Prize Fund Khalid Ahmad 24627 Mumbai 5000

9 ST1 HEALTH & CARE INSURANCE G S Diwan 100th Birth Anniversory MemorialEducation Fund

Sumita Maity 3734 Mumbai 5000

10 SA1 HEALTH & CARE INSURANCE Manish Hemnani 2554 Mumbai 5000

11 ST2 LIFE INSURANCE Late Shri Janardan Pundalik Nerurkar Prize Fund Ashish Hasija 2547 Bangalore 5000

12 ST4 PENSION & OTHER EMPLOYEE BENEFITS Shri K A Pandit Memorial Prize Fund None Passed

13 ST5 FINANCE AND INVESTMENT A Mr. Kamal Kumar Noranglal Podar Prize Fund Vamsidhar Ambatipudi 634 Hyderabad 5000

14 ST6 FINANCE AND INVESTMENT B Late D Basu Prize Fund Shubhankar Limaye 23242 Pune 5000

15 ST7 GENERAL INSURANCE - RESERVING ANDCAPITAL MODELLING

Mr. Peter Akers Prize Fund Parmeshwar L Shelke 5779 Hyderabad 5000

Rahul Khetan 7911 Jaipur 5000

16 SA2 LIFE INSURANCE Prof G S Diwan’s Memorial Prize Fund Ankur Saraf 5357 Gurgaon 5000

17 SA4 PENSION & OTHER EMPLOYEE BENEFITS Canada Life Scholarship Endowment Fund Viral Rajesh Raythatha 18717 Mumbai 5000

18 SA6 INVESTMENT Prof G S Diwan Memorial Scholarship Fund Vamsidhar Ambatipudi 634 Hyderabad 5000


18/20


IRdA toay sai ne payers have evince

interest in entering the insurance sector

aer the government increase the

sectora FdI cap to 49 per cent.

In december ast year, the government

through an orinance hike the foreign

investment cap in the insurance sector to

49 per cent, hich has been pening since

2008. Earier, this foreign investment imit

as cappe at 26 per cent.

Insurance Reguatory an deveopment

an Authority (IRdA) Chairman T S

Vijayan sai post the executive orer, ne

payers have shon interest in entering the

fray.

Some ne payers intereste in the sector

have starte preiminary iscussions ith

the IRdA, he to reporters on the sieines

of a goba conference of actuaries here.

"I hope that once the preiminary

iscussions are over, a number of ne

payers i appy for icenses."

He sai IRdA has starte ork on raing

a ne set of reguations as per provisions

of the orinance.

"we have to cover 14 reguations. we i

either make fresh reguations or amen

the existing ones. Some of them are very

critica an have to be one immeiatey."

e reguator i aso come out ith

a reguation on expense management,

Vijayan sai.

On his expectations from the Buget,

Vijayan sai he fees something on the

ines of Prahan Mantri Jan dhan Yojana

shou be announce for the insurance

sector as e.

Banks have opene 12 crore ne accounts

uner the nancia incusion scheme.

"One shou expect focus on the property

an catastrophe insurance," he sai,

aing insurance an pension funs

shou get more focus in the Buget for

their abiity to generate ong-term savings.

Ne payers eye Inian insurance sector, says IRdA chief Press Trust of Inia | Mumbai February 2, 2015 last Upate at 21:00 IST

17TH GCA PRESS RELEASE

About the propose nucear insurance

poo, he sai it is at iscussion stage. "we

shou be abe to provie insurance ithin

Inia. If one company can't provie it

then a number of companies can come

together to provie capacity."

e poo i have a number of

stakehoers to meet the nee of huge

nancia cover in case of a nucear mishap.

Earier, aressing the conference,

Vijayan spoke on protabiity in the

insurance sector. He sai in a scenario

here huge capita is invove, investors

have egitimate expectation on return of

capita they have epoye.

"ough there is a genera impression that

the protabiity in the sector takes a ong

time - 10 to 15 years - it nee not be the

case at a. Pricing of proucts shou be

the focus area for actuaries an those ho

are oing vauations of the inustry," he

sai.


19/20


We invite articles from the members and non members with subject area beingissues related to actuarial eld, developments in the eld and other related topics which are

benecial for the students of the institute.

The font size of the article ought to be 9.5. Also request you to mark one or two sentencesthat represents gist of the article. We will place it as 'break-out' box as it will improvereadability. Also it will be great help if you can suggest some pictures that can be usedwith the article, just to make it attractive. Articles should be original and not previously

published. All the articles published in the magazine are guided by EDITORIALPOLICY of the Institute. The guidelines for submitting the articles are available at

http://actuariesindia.org.in/subMenu.aspx?id=106&val=submit_article

[email protected]

SUDOKU No. 29 for the month of February 2015SUDOKU

SUDOKU

3 4 5

8 1 5

2 6 1

3 8 7 5

5 6 1 7 9 8

9 1 5

3 7 6

3 1 4

9 7

HOW TO PLAY Fill in the grid so thatevery horizontal row,every vertical column andevery 3x3 box containsthe digits 1-9, withoutrepeating the numbers inthe same row, column or box. You can't change the dig-its already given in thegrid.

- Sudoku Puzzle

by Vinod Kumar

Solution of Sudoku Puzzle No.28published in the

Month of January 2015

SOLUTION

9 3 2 6 5 4 1 8 76 7 5 1 2 8 9 3 41 8 4 9 7 3 5 2 62 1 8 3 6 7 4 9 53 5 7 4 9 2 6 1 84 9 6 8 1 5 3 7 27 6 3 5 8 1 2 4 95 2 1 7 4 9 8 6 38 4 9 2 3 6 7 5 1

PUZZLE

Puzzle No 229:

To pupis ere to be chosen at ranom

from a schoo of register to take part in

a competition. e probabiity that both

ou be boys are one-thir. Before the

choice cou be mae hoever, a ecisionas taken to incue pupis from the

register of another schoo in the baot

for the to paces. is other schoo ha

a register of 1,000 pupis, an the chance

that the to seecte pupis ou both be

boys as reuce to one-thirteenth.

Ho many pupis are on the register of the

rst schoo?

Puzzle No 230:

In a survey of or cimates, temperatures

ere recore in both Fahrenheit an

Cesius. At one particuar pace, both

the recore gures ere integers, an

both the prouct an quotient of the to

gures ere perfect squares. Given that

neither measurement as 00, hat as

the temperature?

SOLUIONS O PUZZLES:

Puzzle No 225:

6 2 1 7 4

6 2 9 8 0

---------------

12 5 1 5 4

Puzzle No 226:

Chances of inning ith 10 are one in

three.

Correct solutions were received from:

Puzzle No 225:

1. Shipi Jain

2. Graham lyons

Puzzle No 226:

1. Graham lyons

Submit your article [email protected]


20/20

Postal Registration No. - MCS/057/2015-17

Posting Date: 21,22 & 23 of every month

RNI NO. - MAHENG/2009/28427

Published on 16th of every month

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Documents

Actuary India February 2015