Watchdog responsibilities

IRDA member (actuary) P A Balasubramanian discusses the roles and challenges the actuarial supervisor has to take into account

P A BalasubramanianChennai: "The role of an actuary in a regulator's office is two-fold — protecting the policyholders by ensuring the insurer's solvency, and equitably treating all policyholders," says P A Balasubramanian, member (actuary), Insurance Regulatory and Development Authority (IRDA).

Balasubramanian says the insurer's solvency is ensured through the mechanism of minimum solvency margin — the difference between the value of assets owned by a life insurer and the value of all its liabilities — calculated by a factor-based formula. As to the equitable treatment of policyholders, the actuarial aim is to achieve a broad equity among the different classes and groups of policies by controls while minimising unintended cross-subsidies.

Starting his insurance career as an assistant administrative officer with Life Insurance Corporation of India (LIC) in 1965, Balasubramanian steadily rose to the level of appointed actuary and executive director before joining IRDA.

"In a public sector one cannot expect geometric progression," says this statistics graduate, who an Actuarial Society of India (ASI) fellow and an Institute of Actuaries, London, associate.

At present he assists the IRDA chairman in regulating and promoting the orderly growth of the Indian insurance industry (primary and reinsurance) through various regulations and monitoring the insurers.