Growing Global Actuarial Capacity to Support Sustainable Economic Development
Please note: This piece is written by Milliman and published by the Actuaries Institute Australia. The articles aim to stimulate discussion on important, emerging issues related to ICA2023. Opinions expressed in this publication are the opinions of the articles' author and do not represent those of either the Actuaries Institute Australia, the International Actuarial Association or the 2023 International Congress of Actuaries Organising Committee, or its members, directors, officers, employees, agents, or that of the employers of the authors.
Milliman has embarked on an aspirational effort with the United Nations Development Programme (UNDP)’s Insurance and Risk Financing Facility (IRFF) to build actuarial capacity in the developing world. This is a multi-year effort to support economic development in developing nations. The Global Actuarial Initiative, or GAIN, aims to enhance and strengthen the actuarial profession in multiple target countries. The initiative will include contributions from many in the actuarial community. Milliman employees are already working with the UNDP to lead the GAIN effort and we hope to include many others outside Milliman. GAIN will build on prior work and ultimately will rely on local leaders to continue the work into the future.
GAIN Connection to Sustainable Economic Development
Sustainable economic development is core to the UNDP’s mission. The UNDP works with developing countries across the globe to eradicate poverty and reduce inequality, focusing on sustainable development, democratic governance and peace building, and climate and disaster resilience.
In recent years, the UNDP has recognized the importance of effective risk management in sustainable development and the critical role of insurance in achieving this goal. A key component underlying risk management and insurance is actuarial capacity. However, in most developing countries, actuarial capability is weak or non-existent. There is also a lack of data, particularly on populations most at risk and on emerging climate risk. This combination of limited actuarial expertise and data can lead to mispriced insurance products that may be unaffordable for the majority, providing little value for much of the population. GAIN is focused on improving these deficiencies.
Ultimately, GAIN efforts are focused on the goal of sustainable economic development by advancing effective risk management in developing nations. The UNDP-Milliman GAIN effort was launched in 2022 and announced at the 77th United Nations General Assembly on September 18, 2022. Milliman is committed to significant pro-bono services to support GAIN through at least 2025. Actuarial societies and/or other local entities in targeted countries are central to advancing the GAIN efforts over this period and will continue to lead efforts beyond 2025. The GAIN team has engaged other stakeholders in the process, including insurers, regulators, universities and global actuarial associations. We are in regular meetings with leaders of the International Actuarial Association (IAA), as well as the Actuarial Society of South Africa (ASSA), Casualty Actuarial Society (CAS), Institute and Faculty of Actuaries (IFoA) and Society of Actuaries (SOA) and we hope to engage many actuaries outside Milliman to support GAIN interventions.
Potential Improvement Interventions
The interventions we embark on through GAIN will vary by country, reflecting the current actuarial landscape of the country and what we see as opportunities for improvement, and more importantly what the local stakeholders see as the most useful activities.
We expect some interventions be unique to specific countries. Others may apply across many countries. Potential interventions include the following:
- Promotion activities to attract more candidates to the profession
- Support to university actuarial programs to pursue accreditation or take on other actions to enhance curriculum and/or student outcomes
- Tutoring support and resources for actuarial exams
- Career mentoring support
- Advocacy to insurers to hire and grow actuaries
- Technical support to actuaries on specific career issues or challenges
- Work with regulator to increase the visibility and requirements for actuarial roles in insurance
- Support to regulators to enhance internal actuarial capabilities
- Advocacy to employers to implement measures to increase retention of actuaries
- Support to identify and improve data resources for actuaries
- Support to begin or enhance actuarial roles in climate resiliency work
- Advocacy to promote actuarial capacity in public social insurance programs.
Milliman employees will lead some of these interventions, while local stakeholders will lead a majority of these interventions. For many, we also expect to engage additional global resources outside of Milliman. We will work with international leaders at the IAA and other global actuarial associations, as well as insurance supervisor’s groups, universities, and others to solicit interest in these interventions. We hope others will join in this massive effort.
While it is early in the GAIN timeframe, we have recognized multiple challenges to overcome to meet the long-term goal of sufficient and sustainable actuarial capacity across the globe. These include, but are not limited to, the following:
- Lack of awareness in the actuarial profession – while this can be the case in developed economies as well, it is generally more acute in developing nations
- Financial challenges in the actuarial examination process
- Limited experienced support resources for actuarial exams
- Limited experienced actuaries to provide guidance to junior actuaries
- Limited knowledge among insurers, regulators and public institutions on the value actuaries can bring to their organization
- Retention of experienced actuaries who may leave for greater compensation and opportunities in other countries
- Limited data resources
- Limited actuarial capacity within the insurance regulatory authority.
These challenges did not come as a surprise, although in some cases the extent of the challenge is greater than we had expected. Leaders at the IAA and other bodies who have taken on efforts to build the profession have shared their experiences with several of these challenges. We will continue working with these bodies to address the challenges.
A Vision for Sustainable Capacity
Ultimately, the interventions are aimed at (1) increasing the supply, expertise and experience of actuaries, (2) increasing the demand for actuaries and key roles for them, and (3) improving resources and support so that actuaries thrive in their roles and provide increasing value to their employers and the broader economy. Through these interventions we are working towards the overarching goal of improving risk management in these countries, supporting sustainable economic development.
Milliman and UNDP are honored to work together in this important initiative. We will need the help and support of the global actuarial community as we go forward, and particularly to enable ongoing and sustainable changes in the selected countries. Look for opportunities to support GAIN and help as make this vision a reality!
If you are keen to find out more about GAIN from UNDP Administrator Achim Steiner and Chairman of the Board of Milliman Ken Mungan, please join us for the virtual session hosted at the International Congress of Actuaries on June 1st, 2023 at 10:00am AEST time.
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