Actuarial science and Actuaries- An Interview session with Dr Gaurav Khemka

The discipline that calls for in-depth mathematical and statistical methods and calculations to assess risk in insurance, finance and other related industries and professions is none other, but Actuarial Studies. Actuaries are those professionals who are qualified in this field through rigorous education and experience. In many countries, actuaries must demonstrate their competence by passing a series of professional examinations.  As Dr Khemka says, “Considering its vast range of prospects and job potential, one, who is extremely diligent and very good with numbers must opt for Actuarial Studies. There are less than 300 hundred actuaries in India.”

Read to find out more about Actuarial Sciences as an academic subject, as Dr Gaurav Khemka gets candid on the topic. He is currently working as a Senior Lecturer in the Actuarial Studies at Australian National University, Canberra, Australia. Hailing from Kolkata, West Bengal, Dr Kemaka completed his undergraduate programme in Economics (Hons) from Jadavpur University, Kolkata; completed both his Postgraduate and Doctoral studies at Australian National University, Canberra, Australia. Dr Khemka is engaged in a wide range of consulting and research activities and his research interests span the domains of Life Insurance and Superannuation. His focal area of research is optimisation of lifetime decision making, particularly the application of stochastic dynamic programming in lifetime utility maximisation context.

Q> Dr Khemka, tell us something about Australian National University? Why would an Indian student opt for higher education in Australian National University(ANU)?

Dr Khemka: Australian National University, commonly known as ANU is ranked 20 in the world ranking. Originally it was designed as a research University and not until the 1950s we started enrolling students from various academic streams. There is a strong focus on research.

We have over 20,000 students and a high staff to student ratio. More than 20% of our students live on campus. We have six noble laureate staff and student alumni including our Vice Chancellor who bagged the noble prize for Physics. There are 42 universities in Australia out of which only seven have actuarial accreditation; with ANU being one of them. Moreover, it is one of the very few that offers an exemption for a Part Three subject in Actuarial Studies. Accreditation of an actuarial degree is the process where a university’s actuarial degree counts towards exemptions for actuarial exemptions. The accreditation process is a very involved process. This requires creating courses and exams and having them approved by the actuarial society/institute such that they meet the appropriate standard. There is an annual review and every second year a comprehensive evaluation of the programs and courses offered by the university.

Doctoral Studies in ANU is a lucrative option for all bright students. At ANU, PhD scholars get 100 percent scholarship + stipend to sustain themselves in Australia. Nevertheless, the aspirants should have a record of excellent studies and one individual research paper in the top journal. GRE is not required but applicants will have to undergo multiple rounds of Skype interview. To encourage the Indian students, ANU has declared India specific scholarship for the undergraduate students up to 25 percent of tuition. We are in the process of designing a few more scholarships for Indian aspirants.

Q> What prompted you to opt for Actuarial Studies after completing your undergraduate studies in Economics?

Dr Khemka: My desire to become an actuary can be traced down to my formative years. During school, I was moved by a presentation on Actuarial Studies. Further research made me realize that Actuarial science is what I wanted to pursue. While I was still a student, I appeared for the actuarial exams with the Institute of Actuaries of India. Having completed my undergraduate degree, I flew to Australia and pursued both Postgraduate and Doctoral studies in Actuarial Science at ANU. I received an opportunity work as a Lecturer during my PhD. Then, I went to Bond University to start the Actuarial programme. I helped the university to get accreditation for 11 subjects and returned to join ANU in January 2017.

Q> What are the different levels of Actuarial Studies?

Dr Khemka: There are 15 or 16 level of exams depending on where you pursue the course. It is much akin to Chartered Accountant curricula. According to the UK system, which is now followed by Indian Institutes, there four major parts, namely Core Technical, Core Application, Specialist Technical, and Specialist Application. In Australia, the course content is categorised into three parts; the Specialist Technical and Application is merged into one.

The concept building aspect is covered in the Core Technical Part which focuses on the basics resulting in rigourous mathematical, statistical calculations. The eight modules under the Australian system pertaining to Actuarial Studies are Statistics (Basic and Advanced), Economics, a combination of Accounting and Corporate Finance, Options Pricing, Investment markets, Life Insurance, General Insurance module.

Q> Could you please trace the career path/how to grow in the field of Actuarial Studies?

Dr Khemka: If an aspirant has Mathematics as a subject combination in +2, then he/she can safely opt for Actuarial Studies in ANU; for that matter, in any of the institutions worldwide. While a lot of statistics is involved requiring an excellent base with numbers, the amount of Economics required is fairly less. Altogether, there are 15 exams that need to be cleared to become an Actuary. For Postgraduate studies at ANU in Actuarial Science, a candidate needs to obtain at least 60 – 80 percent in his undergraduate studies and a valid score of English Proficiency Test, IELTS(Academic)/TOEFL/PTE. For IELTS, an aspirant needs to score overall 6.5 and each section should have at least 6.

The English proficiency is never a challenge for the Indian students. My department has Finance Actuarial and Statistics; currently, about 40 Indian students are pursuing courses across the three disciplines.

Q> What is Superannuation? Why do you think Superannuation is a pertinent topic for research?

Dr Khemka: This is the term typically used in Australia which implies retirement savings. My interest lies in Superannuation as it is of utmost priority in Australia. How do you prepare and save for retirement? Retirement is a topical subject worldwide. In Europe, they call salary for life. They receive a predetermined proportion of the salary after they retire from service. I feel we need to understand the importance of retirement savings and start planning early.

Q> What are the professional avenues for an Actuarial professional in India and Abroad?

Dr Khemka: Being an Actuary, does not imply that one has to work in the traditional actuarial field. Many of the ANU undergraduate students have landed in Investment banking sector, Finance, Banking, Data Analysis, Climate modelling, Health modelling, Forecasting sectors as well. The scenario which is quite prevalent in India is that students complete five subjects and start hunting for jobs. Eventually, they settle down and discontinue their studies. There are employers who pay for clearing the other parts. Moreover, for Part three exams they pay for two attempts.

Q> How many Indian students are currently pursuing studies at ANU across domains?

Dr Khemka: There are currently 397 India students at the ANU, 176 at the College of Business and Economics (CBE) and 39 in Research School of Finance, Actuarial Studies & Statistics (RSFAS).

Q> Briefly explain the India specific scholarships offered to UG/PG students at ANU.

Dr Khemka: There are currently five India specific scholarships. These can be found here. It is to be noted that four of the five are for CBE students out of which two are for RSFAS students. (Please note that RSFAS India High Achievers Scholarship is for partner institutions, and cannot be applied to).

Q> Is it a rewarding profession in terms of compensation?

Dr Khemka: To get your first job, you need to toil hard to prove yourself but after you have gained three-four years experience, agencies help you get jobs. All individuals who are in the Actuarial field must adhere to the code of practice and maintain professional ethics, else one can be barred from practice and degrees can be forfeited. It is a highly rewarding profession in terms of compensation. 

The hierarchy of an Actuary stands as Student Member followed by Associate Member (Cleared 11 subjects, evidence of 2 years of work experience and attend a professional course), Fellow (Cleared all the 15 exams, work experience of 2 years and clear the professional course). If a graduate student gets employed with the Big Four companies starting salary ranges between AUD 55,000 – 65,000 per annum. If the candidate is bright, the sky is the limit!