The regulation is warranted, as the amendment to Section 2(1) of the Insurance Act 1938 required IRDA to define the term actuary through a separate regulation. However, the entire draft — the definitions and other provisions — turned out to be contentious.

The regulation defines an actuary as an individual who is:
1. A citizen of India
2. A fellow member of the Actuarial Society of India (ASI)
3. Not less than 21 years of age
4. Registered as a member of ASI with his/her name entered in its register as its fellow member

In case an individual is a non-Indian, then s/he should be a citizen of a country, which is friendly with India and with whom reciprocal arrangements exists. According to the regulations, reciprocity means that if the government of a country recognises a fellow of ASI (FASI) without any conditions then the recognised fellowship(s) of that country shall be recognised in India, too.

Explaining further, the regulation states that if country A recognises FIA (Fellow of Institute of Actuaries, London) and also recognises FASI without laying down any conditions, then FIA too shall be recognised in India by IRDA. Indeed a strange way of defining reciprocity.

The draft also states that IRDA will not recognise a person as an actuary if s/he does not follow the prescribed code of conduct. IRDA will take such a decision only after allowing the concerned person an opportunity of being heard in this regard.

Apart from timing and its need, IRDA's draft throws up issues like:
(a) should the mutual recognition of qualification/disciplinary proceedings be the domain of the regulator or that of the professional body
(b) Indian versus foreign actuary

Questioning the need for the draft, an actuary argues: "The definition of actuary is relevant to IRDA only where an actuary has a statutory signing role like an appointed actuary. The draft is an unnecessary confusion when the Actuaries Bill 2002 is pending and also when there is a regulation governing the appointed actuaries."

The appointed actuaries' regulations do not define the term actuary. But it states that only an actuary to be appointed as appointed actuary subject to other conditions. Hence the definition the term actuary in the latest draft regulation assumes significance.

Commenting about the definition of the term actuary, ASI president Liyaquat Khan says: "At a time when foreigners are heading insurance companies, insistence of Indian citizenship for an actuary is unwarranted." Today many foreign actuaries are working in insurance companies as appointed/chief actuary.

Seeing his turf being encroached upon by IRDA in respect of mutual recognition to equivalent courses/institutes and professional misconduct by actuaries Khan says: "Reciprocal recognition of qualification and disciplinary proceedings against an actuary are always the domain of the professional body and not the function of the government or the regulator."

According to him ASI will soon sign a mutual recognition agreement with the Institute of Actuaries, UK. "The UK institute has agreed to exempt all but one of the 15 subjects. The one subject that a FASI has to write to become a FIA is UK-specific." A similar agreement is expected to be signed with the Australian actuarial institute.

Life made easier for foreign actuaries
Curiously, in September 2003, ASI paved an easy route to foreign actuaries to become its fellow members by diluting the conditions. Strong lobbying by foreign actuarial bodies is said to be the reason for the sudden rule change.

As per the new conditions, a foreign actuary to become a FASI should acquire one year's work experience in India and attend a three-day course on Indian legislation to be conducted by ASI.

Earlier s/he could only enter only as an affiliate actuary without signing and voting power. S/he will be admitted as a FASI only after acquiring one-year jurisdictional experience and passing of two exams conducted by ASI. The two papers are India-specific — 305 and one out of two subjects in the 400 series.

The subject code 305 or India Specific Legislation, Environment and Practices deals with insurance, taxation and accounting laws, while the two 400 series subjects (Investment & Asset Management and Life Insurance) are about application of the knowledge and demonstration of skills, professionalism and judgement in a practical situation.

Around three foreign actuaries have passed the 305 subject and some are finding it difficult to clear the same. And no foreign actuary has appeared for the 400 series papers. "If someone wishes to work in a statutory position like an appointed actuary, then an in-depth knowledge of Indian laws and environment is essential and not just desirable," says former ASI president Nalin Kapadia.

Defending the rule change, Khan says: "Many foreign actuaries are in influential positions in domestic insurance companies. And if they are not under the ASI fold, then the professional code of conduct will not be applicable. And this is not a desirable aspect. Hence we have changed the rules to bring them under our fold."

Sums up an actuary: "There has to be a transparent and consultative process within ASI."