By Erda Khursyiah Basir
SHIP set to produce qualified Bumiputera actuaries
KUALA LUMPUR: When talking about high-paying jobs, many automatically think of surgeons, lawyers, pilots or engineers, among others.
Rarely, if ever, do a career in actuarial science make the list. This is surprising considering that actuaries makes nearly RM20,000 a month.
“The lack of exposure to the career choice as well as the misperception that it is difficult to get a job in the field of actuarial science are the main reasons for this,” said actuary Syed Hamadah Syed Othman to Bernama.
He said that parents generally nudge their children towards careers in medicine, accountancy, engineering or the legal field.
“Until Dec 31, 2016, there were 156 qualified actuaries in Malaysia and of the number, less than 20 were Bumiputera,” said the 46-year-old partner at Actuarial Partners Consulting Sdn Bhd (Actuarial Partners). What does an actuary do? An actuary is someone who assesses the financial risk of a particular situation primarily using probability, financial theory and computer science.
“They are trained to identify and quantify financial risks in an organisation. Actuaries monitor experience of the risk factors that affect the financial health of the organisation, develop models to project future experience and recommend solutions to mitigate, minimise or eliminate such risks from the organisation.
“Actuaries are best known for their expertise in quantifying contingent risk and for providing advice to businesses and other stakeholders of financial institutions how to manage their risks. Actuaries also advise in the design of financial products for the insurance companies, pension schemes, healthcare plans and social security schemes,” he said.
For example, insurance companies could charge policy holders any premium they wish for a certain period but the figure might be over or undervalued.
“Let’s say the insurance company quoted RM500 a month for the benefit of RM1 million, meaning that if an unfortunate event occurs (such as death) RM1 million will be paid to the next of kin in return for the monthly premium paid.
“The risk lies in whether that amount tallies or not or whether the collection of premium can cover the death compensation. An actuary will come in and calculate whether the company will have sufficient funds to pay for the benefits,” he explained.
He said that overcharging for premiums would cause an insurance company to lose their competitive edge as potential customers would shift to other companies that offer similar benefits at lower premiums.
On the other hand, undercharging for premiums would deplete the company of financial resources for payouts.
“The services of actuaries are needed for the purpose of calculating the appropriate fee while considering the factors at play. These factors include the lifespan of men and women, their age and whether they smoked or not,” he said.
He added that actuaries are typically hired by banks, investment companies and finance consultancy companies, among others.
As an actuary with over 20 years of experience in pension, social security and worker benefits, Syed Hamadah admitted that it was not an easy career to pursue.
After earning a bachelor’s degree in Actuarial Science, a person would then have to choose one of three methods to earn the title of a qualified actuary. They could enrol in a course, study at a certified training centre or work while taking the professional examinations at the same time.
“The professional examination papers are very tough. Many usually study to take the exams while they are working and it will take them between three to 10 years to complete. There are about 10 professional papers a person must successfully complete before they can become a qualified actuary,” he said.
Passing each professional paper, however, helps strengthen the career and usually entitles the person to a salary raise.
An actuary can earn between RM15,000 and RM20,000 a month. Those with more than 10 years of experience usually earn more than RM20,000 a month.
In addition to having mathematical prowess and expertise, actuaries also need soft skills as the field deals with the protection of public interest.
“Actuaries are expected to ‘blow the whistle’ if they have reasonable cause to believe that rules or laws have been breached materially by related parties such as pension fund managers, trustees or even the sponsoring employers. Nevertheless their professional code requires the actuaries to follow proper procedures and channels in reporting any wrongdoings or incompliant practice.
“They are required professionally to act honestly and with the highest standards of integrity. They have to perform their professional duties competently, and with care and cannot allow bias, conflicts of interest, or the undue influence of others to override their judgement. They are required to comply with all relevant legal, regulatory and professional requirements, and are required to challenge noncompliance by others,” he said.
He said that the Super High Income Programme (SHIP) launched by Prime Minister Datuk Seri Najib Tun Razak in August should be utilised to be produce more qualified actuaries.
SHIP is a programme handled by the Bumiputera Education Steering Foundation (Peneraju) and aimed at encouraging Bumiputera participation in careers that pay more than RM20,000 a month.
Among the courses offered are in the financial services industry, health, maritime, business, aerospace and technology. Each course takes between three and five years and will be funded through an education loan by Bank Rakyat.
“The market is there and we actually have demand for actuaries. Takaful Company usually prefers Bumiputera actuaries as they are dealing with a Shariah board but the problem is that there are not enough qualified Bumiputera actuaries to fill the posts.
“It is also rather costly to take the professional exams and if they fail, they will have to repeat. Although employers usually bear the costs for the first exam, resits would have to be borne by the employees themselves and so financial restraints can often become an obstacle,” Syed Hamadah explained.
An Associate Director at the Peneraju Foundation Marina Mohamed Yusoff said applications for SHIP would be opened by the end of October and would favour the middle-income with related work experience. The first phase of the programme involves 50 beneficiaries with a maximum funding of RM10 million for the fields of finance (actuarial science), health (medicine) and technology (cybersecurity).
“Our target is those who are already working. Beneficiaries who successfully complete their studies and pass the professional exams will get a 20 percent discount off their loan, of which will be paid via a government grant,” she said, adding that further information could be retrieved from http://www. yayasanpeneraju.com.my/.
The next phase of SHIP will start in 2018 and will feature more industries and specialties. It will be introduced in stages and involve 250 beneficiaries.
Actuarial Partners is one of the largest actuary consultancy firms in Malaysia and offers the expertise and experience of six partners across a range of services including risk management and strategic consultancy in insurance, pension and takaful services.
The firm also provides industrial training for local universities that offer Actuarial Science Courses such as Universiti Teknologi MARA, Universiti Sains Islam Malaysia and Universiti Tunku Abdul Rahman.
Syed Hamadah is a partner at Actuarial Partners since 1996 and is also a Fellow at the Faculty of Actuaries in the United Kingdom and a Fellow of the Actuarial Society of Malaysia and holds a Bachelor’s Degree in Actuarial Mathematics and Statistics from the Heriot Watt University, Edinburgh.