Department of Statistics,Jahangirnagar University

1. WELCOME

2. Presentation on
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3. Prepared by
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4. Presentation Outline
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Reference

5. Actuarial Science Overview
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Actuarial science is the discipline of using mathematical and statistical methods to
analyze risk in insurance, finance, and related fields. Professionals who work in the field
of actuarial science are called Actuaries. Actuary is consistently ranked among the top
careers in the country due in part to the well above average salaries, the
challenging/rewarding nature of the work, and the tendency to receive great benefits
from employers. Most actuaries are employed in the insurance industry, specializing in
life and health insurance or property and casualty insurance.
Actuarial Society of Bangladesh (ASB) established in July2007 to assist students in the
course of their actuarial studies with the objective
To promote the study program on the actuarial, economic and allied aspects of
insurance, employee retirement benefits, Social Security, finance and investment and
any other areas of application where actuarial principles are applicable, with particular
reference to Bangladesh.

6. Formal Definition of Actuarial Science
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Actuarial science applies Statistics,
Mathematics, Economics, Finance,
Government policies, Business
management principles to assess risk in
the insurance and finance industries.

7. Who are actuaries?
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Actuaries are professionals who use
their knowledge of statistics, finance,
and business to define, analyze and
solve business problems involving the
cost of possible future events.

8. Role of Actuaries
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9. Scope of Actuarial Science
Life Insurance
Marketing management
Health Insurance
Pricing management
General Insurance
Financial Service
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Broken Management
Pension management
Valuation System

10. Life Insurance/Assurance
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Life insurance is a
protection against
financial loss that
would result from the
premature death of
an insured. Then life
is covered by a policy
for a fixed term.

11. General Insurance
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The purpose of general
insurance is to cover
yourself against the loss
of material possessions,
like a house and its
contents, to accidents
like fire, theft and natural
disasters.

12. Health Insurance
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Health insurance is
provided in the form of
policy protection in
exchange for the
payment of a monthly
or annual premium.

13. Financial Service
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Financial services are the economic services provided by the
finance industry, which encompasses a broad range of
businesses that manage money, including credit unions,
banks, credit card companies, insurance companies,
accountancy companies, consumer-finance companies, stock
brokerages, investment funds and some government-
sponsored enterprises. Actuaries are the unsung heroes of
these industries. They are responsible for compiling and
analyzing statistics about risks and the individuals who are
exposed to risk.

14. Pension management
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The cash contributions that are made to the pension plan. Pension
funding is governed by laws described in the Internal Revenue Code
(IRC). An actuary takes the plan’s pension formula and determines
how to reflect the cost of the plan over each participant’s working
lifetime.

15. Broken Management
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16. Marketing management
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Marketing actuaries play a critical role in
assisting with the sales of
complex, technical, custom-made products
and services to consumers. Products
and services can vary widely and may involve
reinsurance, employee benefits,
pensions, software, research and consulting.
Attendees gain valuable insight into
the different aspects of a marketing actuary's
job.

17. Pricing management
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If an insurer is to be successful in
the long term, its products must
be priced adequately to produce
profits. At the same time, prices
must be competitive with those
offered by other insurers and, for
some types of products, non-
insurance alternatives.

18. Valuation System
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An actuarial valuation is an type of appraisal which requires making
economic and demographic assumptions in order to estimate future
liabilities. The assumptions are typically based on a mix of statistical
studies and experienced judgment. Since assumptions are often
derived from long-term data, unusual short-term conditions or
unanticipated trends can occasionally cause problems.

19. Present situation of Actuarial Science in Global
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In 1889 the total actuarial population on this continent numbered between 80 and 100 persons.
Five of these-four company actuaries and one consulting actuary–having decided amongst
themselves to create an organization, invited selected others to become charter members. The
initial complement of the Actuarial Society of America was 38.The profession's heritage in North
America, then of about 80 years duration, had been built upon European foundations dating back
to the establishment of probability theory in the mid–seventeenth centuryThe first company
actuary to practice in North America was Jacob Shoemaker of Philadelphia, a key organizer in
1809 of the Pennsylvania Company for Insurances on Lives and Granting Annuities .Other life
companies soon followed in the Pennsylvania Company's footsteps.Many of today's most
pressing public policy issues require the sound application of actuarial principles.
The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator of
securities firms doing business with the public in the U.S. . It oversees about 4,250 brokerage
firms, about 162,155 branch offices
and approximately 629,525 brokers.

20. Present situation of Actuarial Science in Bangladesh
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Bangladesh became independent in 1971. In 1972 Insurance industry
was nationalized and controller of Insurance was established. That
time Government invited late Mr. Shafat Ahmed Choudhury - FIA from
London and appointed him as the chief controller of insurance to
reforms the insurance rules and regulations. In 1984 Government
decided to establish the private sector insurance. In that time 6 Life
Insurance and 9 Non-Life Insurance companies were approved to
operate insurance business in private sector.The Actuarial Profession
became mandatory in the Life Insurance Company by the Insurance
Act. 2010 which is a historical steps and mile stone for the
development of the actuarial profession in Bangladesh.

21. Area of Actuarial Science
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Traditional
Area
• Life Insurance
• Reinsurance
• Non-Life Insurance
• Health Insurance
• Defined benefit superannuation
(pensions)
• Investments/Fund Management

22. Area of Actuarial Science
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Non
Traditional
Area
• Banking and Finance
• Capital Market
• Enterprise Risk Management
• Environmental Finance
• Defined contribution superannuation
• Wealth management and financial
planning
• Social Security
• Media effectiveness
• Health financing

23. WHY ACTUARY?
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Top-Ranked. Actuary has consistently been rated one of the top jobs in the United States.
Head start. Actuaries earn great starting salaries that can double within the first five years.
Job security. Actuaries enjoy certainty in uncertain times. We're always in demand as the world confronts risk.
Impressive impact. Actuaries participate in high-level business decision-making and solve real problems in
every industry.

24. Salary Structure of the Actuarial Profession
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25. Limitations
Convincing the audience
Lack of homogeneity
Degree of uncertainty
Model specification
Appropriate modeling
Lack of available observation & prior experience
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Lack of familiarity with management field
Lack of accuracy due to environmental change

26. Limitation
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Convincing the audience :
One challenge faced by actuaries that they should be experts to make
understand often the audience who has the lack of necessary background to
readily understand an actuary’s testimony. Individuals who are unfamiliar with
actuarial concepts may be unable to understand communications that
presuppose basic actuarial knowledge, particularly if such communications are
presented using terms which they are unfamiliar. When an actuary testifies, it is
generally important to explain technical terms and concepts so that to the extent
practicable, the audience can understand them, particularly if the audience is not
sufficiently familiar with actuarial methods and assumptions to distinguish
testimony that is precisely accurate but ultimately misleading

27. Limitation
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Degree of uncertainty
Actuarial projections have a degree of
uncertainty because they are based on the
probability of occurrence of future contingent
events.

28. Limitation
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Appropriate modeling:
The selection of appropriate models and
assumptions is often difficult task for
actuary.

29. Limitation
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Lack of available observation & prior experience
The actuary depends on observation and wisdom
gained through prior experience. Actuaries use
these observations and experience to construct,
validate and apply models.

30. Limitation
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Lack of accuracy due to environmental change:
The degree of accuracy of a mathematical model
measures how closely values calculated using the
model reproduce observed values. As additional
data become available or the environment changes,
the degree of accuracy might change

31. Limitation
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Lack of familiarity with management field:
Actuaries solve business problems in which the mitigation
of negative consequences and the exploitation of positive
consequences of risk play major roles. Thus, actuaries
must be familiar with the principles of the management of
fields in which they work, including insurance, health care
and retirement systems, investment portfolios and the risks
individuals

32. Limitation
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Lack of homogeneity:
The accuracy of estimates of the economic
consequences of an actuarial risk tends to be
better for a risk-classification system that is
more homogeneous than another.

33. Limitation
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Model specification:
The model may that given by an actuary may misleading by
1. the inherent variability of the phenomenon
2. Knowledge based on incomplete information or inaccurate
representations of the probabilities of alternative sets of outcomes and
3.The risk that the model adopted is not a perfect, or even a good
representation of the underlying situation.

34. Conclusion
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Bangladesh is a developing nation and its economy is vibrating. The GDP growth
rate is 6.51% and GDP (purchasing power parity) $620.369 billion (PPP; 2016).Our
modern, fast-changing society faces many different risks. So we need a security
promise from all the aspects of life. Actuaries fulfil an indispensable role in modelling
insurance and investment risk. They are the architects of the plans that insure our
lives, health and property, and pave the way for financial security in retirement
Actuarial Science is also helping indicator for Product Designing, Pricing, Mortality
Investigation, Reserve Calculation, Valuation etc.
The Actuarial Profession is one the best prestigious profession around the Globe. By
CareerCast.com actuary is rated the best job of 2015 because it pays well and offers
abundant opportunities for advancement. So as a student of statistics you all can
dreamt a dream to be actuaries by making the financial and economical world
secured.

35. Reference
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• http://www.investopedia.com/
• https://en.wikipedia.org/
• http://the-insured.com/insurance-sector-of-bangladesh-the-ultimate-guide/
• “Actuarial StudyinBangladesh”byA KM EliasHossain,President,Actuarial Societyof Bangladesh
• Societyof Actuaries,International News,September2014 – Issue 63; Article titled“The Actuarial
ProfessioninBangladesh”byA K M EliasHossain,President,Actuarial Society of Bangladesh
• Dr. MohammedShamimUddinKhanand Md. NazimUddin Insurance
IndustryinBangladesh:Opportunities&Challenges Thoughtson Economics;Vol.23, No.04
• “The Insurance IndustryinBangladesh,KeyTrendsandOpportunitiesto2018” by ‘Researchand Markets’

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