KATHMANDU: Due to the absence of training and teaching in ‘actuarial science’, Nepal is left with no option other than being dependent upon the services provided by India in this field mostly used by the insurance companies — both general and life insurances.

Actuarial science is a complex discipline which employs mathematical methods and skills of statistics to assess risk in insurance, finance, and other such industries and organizations. It involves expertise in order to venture ‘asset to liability’ analysis used by financial and insurance companies so that they manage to have the funds to pay required liabilities in events of exigencies and emergencies. For example, actuarial analysis is needed in devising insurance and retirement investment products.

Since Nepal does not have a pool of such skilled manpower with possessing professional competence in actuarial science, insurance companies of Nepal are dependent upon the services provided by Indian actuaries.

An actuary is a business professional trained in analyzing the financial consequences of risk. Actuaries use concepts, theories and perspectives derived from mathematics, statistics, and finance to study uncertain future events, particularly those which relate to insurance and pension programs. Actuaries undergo rigorous training to acquire competence by passing several levels of professional examinations. Since Nepal does not have a pool of such skilled manpower with possessing professional competence in actuarial science, insurance companies of Nepal are dependent upon the services provided by Indian actuaries.

Before insurance companies launch financial products in the market for customers in Nepal, it is mandatory to get them devised, analyzed and examined by actuaries. No insurance company can operate in the market without getting its financial and insurance products framed and approved by actuaries. Indian actuaries have been providing their services to Nepalese insurance companies for several decades. Beema Samiti (Insurance Board), established in 1992, is the line ministry of the Ministry of Finance, Government of Nepal which acts in the capacity of ‘Insurance Regulatory Authority of Nepal’.

In recent years, actuaries working in several audit companies of Nepal have been looking after the 41 Nepalese insurance companies. Even ‘Citizen Investment Trust’ (Nagarik Lagani Kosh) is dependent upon Indian actuaries for its operation in Nepal. Rameshwor Shrestha, Chief Executive of Maha Lakshmi Insurance Company, said services of Indian actuaries are required as Nepal has not yet worked on setting up institutes and departments in various universities for training and teaching ‘actuarial science’.

Nepalese actuaries, though available in few numbers, do not prefer to work here as they are paid several times higher a salary what they get in Nepal, adds Shrestha. “Every year we are paying 20 million Rupees to Indian actuaries as we don’t have skilled manpower in this field. At some occasions, Indian actuaries, because of their own professional commitments, do not meet the deadlines as a result of which some of our insurance products do not get launched in Nepalese market in time”, concludes Shrestha.

Raj Raman Poudel, Joint Director of Nepal Insurance Board, confirmed that there is a long tradition of getting services from Indian actuaries for insurance companies in Nepal including the famous Life Insurance Company (LIC). As Nepal does not have a higher level of skills in actuarial science, Indian actuaries, employed in a range of Indian companies, come forward to lend their services to Nepalese Insurance companies, explains Raj Raman Poudel. He suggests, “It is required of Nepalese universities to introduce the academic course of actuarial science without delay and call back Nepalese actuaries working abroad particularly in India to impart this skill to Nepalese youth.”

“The Nepal Insurance Board receives several complaints of stealing of insurance policies and the same are launched later in Nepalese market in the form of forged policies. It happens because insurance companies do not have actuaries to devise ‘original policies and plans ‘ for insurance companies and hence forgery of such a kind continues. Nepalese insurance companies fret over the presence of such dishonest people forging and stealing the insurance policies. Since Nepal Insurance Board has authorized insurance companies in Nepal to employ Indian actuaries, forgery and stealing of insurance policies in Nepal never come to light,” discloses Poudel.

Each insurance company spends usually 1.5 to 2 million in a year to Indian actuaries for their services. Based on this estimation a total of 80 million exits Nepal every year to pay Indian actuaries.