Giri (my better half) always chides me for attempting to show things in poor light. But I cannot help it, can I? Even as I plan my annual trip to the US in February, I thought I must share certain happenings that will definitely be in the interest of the larger public. I know that Moneylife stands in the forefront when it comes to issues such as these, as part of its exemplary efforts in setting a new journalistic trend.
My nephew, who is based in Mumbai, was keen on his son pursuing a course in actuarial science. He sought my help, since he, somehow, believed that a seasoned academician like me will be of great help to him. I had already forewarned him about my activist instincts. Despite being a senior citizen, I have still managed to maintain my contacts in academia. It always helps. Thanks to social media networks, I have managed to stay connected.
As I began talking to one person after another, the real truth behind an actuarial science course started coming to light. It was, indeed, a shocker for me! Anyway, readers must have heard/ read about how an actuary is a most sought after person in the insurance industry and how actuaries draw huge sums of money as salaries and bonuses. Actuaries are responsible for using statistical methods to compute the amount of insurance premium. This is the main function of an actuary, though they have other roles like risk modelling, etc.
When I contacted Satish Nair (not his real name) through one of my acquaintances, he dropped a bombshell. Since pursuing an actuarial science course from India was next to impossible (I will come to it later), his daughter pursued a two-year actuarial science course from UK wiping out half of Satish’s retirement funds. When she returned to India, hoping to land a plum job, there were no takers. After waiting for close to six months and twiddling her thumbs at home, Satish’s daughter managed to get a job in an insurance call centre (of all places) in Pune. Satish was fuming so much that if a kettle of cold water had been kept before of him, it would have heated up in no time.
So where is the problem? Why is doing an actuarial science course in India not such an exciting proposition? There are very few educational institutions that impart an actuarial science course in India. Of these, 50% offer courses that are not recognised by the industry. Gullible students get attracted to all the marketing nonsense being dished out by these institutions and end up wasting money, time and effort. Some of them end up ruining their career too.
Actually, there is a coterie that exists in an unofficial form. In one of the well-known institutes in India’s business capital that offers an actuarial science course, an outstanding student will take at least seven years to get a degree in actuarial science after his graduation—provided, he doesn’t lose interest halfway through the course. One can imagine the plight of other not-so-bright students who may (if at all they manage to complete) get their degree in actuarial science in 9-10 years.
The evaluation pattern of the actuarial science course is contrived. Rather than having a reasonably efficient system that passes meritorious students, the system is so flawed that the barely 3% of students pass. This is done deliberately to create an artificial hype around the actuarial science course. So, the benchmark passing percentage keeps on changing year on year. Let me give an example.
Deepak Kiran (not his real name) appeared for actuarial science examination in 2014. He did not clear the exam because he got only 65% and there were a couple of others who had managed to get 70%. So, the benchmark passing percentage was fixed at 70%. The next year, Kiran appeared for the exam and got 74%. He was still declared failed because some of the students had managed to score 80% and so the benchmark was changed. Some experts call it the ‘percentile’ system of evaluation. There are no prizes for guessing that Kiran had the sense to abandon something that he considered absolutely absurd. He wrote his GMAT and, today, he is pursuing MBA (masters in business administration) at a university in England.
So, I hope that readers now understand how the scoring system for actuarial science course is egregious. Insiders insist that this is the ploy of the members who belong to a so-called association that wishes to deliberately create a shortage of actuaries in India so that salaries of actuaries can be further hiked. But neither the regulatory body (IRDAI—Insurance Regulatory and Development Authority of India) nor the government seems to have any say in the matter.
I would hate to call it a scam but it is nothing short of that. Examinations are held to select students. In case of competitive examinations, to attract meritorious students, the entrance examination standards are set at a high level. This is understandable as the number of seats is limited; so, entries need to be curtailed to give preference to top-quality students who genuinely deserve the seat. This is the case with all the top-notch business-schools in India. However, once a student gets a seat, the examination process is the usual one—whatever you may name it. Nowadays, the grade point average (GPA) score is more popular. However, nothing can beat the so-called percentile system adopted by institutions offering the actuarial science course.
When I conveyed this to my nephew, he was glad that he had contacted me. As always, I had provided the right information to him, thanks to all my social networks. But I would like to make a sincere request to parents (I would rather call it as an appeal)—please do proper homework and help your child enrol in a good course that has job prospects as well as a proper examination procedure. It is essential that you check your child’s eligibility and mental make-up for a course that makes rigorous demands on their time.
I know of many parents who insist that their children pursue a course in chartered accountancy (CA) without knowing the effort involved in it. Some students can suffer a burnout with the constant running around. Coaching classes have mushroomed at all metros claiming that they impart world class coaching for CA. But the pass percentage is barely 6%-8%. These classes have hyped the course so much that there are students who abandoned their graduation for pursuing CA and, in the end, did not manage to achieve either. Parents need to think carefully—coaching classes will put immense pressure and dangle the carrot saying that the commerce student can finish CA along with their degree course. After completing it, the student has to anyway join the mad rush in the corporate world. Most of those who pursue a degree by correspondence end up lacking social skills that are so important in the corporate world. Thus, whether it is a chartered accountancy course or an actuarial science course, be forewarned about the risk elements. At the end of the day, it is a question of your child’s career.