Will Actuaries be Needed in The Future?

A big Yes. As long as insurance will be useful in the future, actuaries will be useful. However, the following will act against this:

  • Improvements in analytical tools and technology will likely lead to less and less actuaries being required per Rupiah or Dollar-insured.
  • Relaxing of laws on pension & There is a talk, including in Indonesia, to allow retirees access to their lump sum pension savings as opposed to strictly requiring them to buy insurance for retirement (annuities etc). This may reduce the size of this part of the insurance market and therefore the need for actuaries.
  • National pension funds (such as BPJS Ketenagakerjaan) have been increasingly moving towards Defined Contribution (DC) designs rather than Defined Benefit (DB) design. The former requires less actuarial work as the final pension you get depends on how much you contributed and the investment returns these have earned.
  • Some of those sectors that still seem safe, e.g. general insurance (e.g. motor insurance) are the ones seeing a lot of advances in smart solutions (e.g. car tracking connections that allows the insurance company to see exactly how you are driving and price your insurance on a day to day basis). This takes us back to #1 above.

Having said this, actuaries are branching off into new areas as well. Recently, actuaries have sought to reassert themselves in the world of general risk management by emphasizing their quantitative skills in assessing and managing all types of risks. In some countries like Indonesia, where the size of local consumptions (family & company) are very high, the role of actuaries in designing a proper credit or mortgage insurance pricing is crucial to manage the non performing loan (NPL) ratio of creditors or Bank and to help the insurance sector on healthy financial condition. So, actuaries have always worked on quantifying and assessing uncertainty. Let’s hope they will rise to the task and together strategise on the best course for their survival.

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