Perspectives bring the best out of most things in life and I do hope that is what my outsider's perspective will do regarding the current state and future direction of actuarial services and actuaries in Nigeria.
Up till 2001, we could readily count the number of actuaries in Nigeria, and the active ones were actually less than five, leaving many analysts wondering what direction countries that had hundreds and thousands of them were pushing their economies. Today, it has become obvious that we need to build an army of actuaries to better respond to the requirements of International Financial Reporting Standards (IFRS), the new global accounting system, which has since replaced the International Accounting Standards (IAS).
It would be recalled that the insurance industry, globally, became the "testing ground" for the new IFRS leases even before other financial services including the banks were added for implementation.
By testing IFRS in insurance, unknown to the insurance industry, the role of actuaries was shifting to auditing firms, and it is no surprise that today, the "Big Four" auditing firms, along with many others, have full fledged actuarial services units/divisions employing qualified actuaries and student-actuaries to offer their services to all their clients, unabated by any law or regulation.
Interestingly, there is evidence at the legislative arm of government, House Committee on Insurance and Actuarial Matters to validate the relationship between the two professional areas.
Developing the Actuarial Services Profession in Nigeria
Undoubtedly, actuarial science as a course of study in higher institutions has been associated with insurance for centuries and till date, globally and, in Nigeria. Very few higher institutions offer it, as actuarial science continues to be perceived as a rare course, and its graduates or certificate holders as rare professionals.
Not quite understood for the essence it brings to the process of the valuation of companies, only few Nigerians saw the need to pursue the completion of the stages of qualification, while it was already considered as one of highest paying professions in the world.
Till date, unlike the insurance professional certification which can be obtained from the Chartered Insurance Institute of Nigeria (CIIN) and recognized elsewhere in the world, only the certificates obtained from the Society of Actuaries, either in the United Kingdom or the United States of America, would be acceptable, from Nigerians, even in Nigeria.
Nigerians that have been interested in obtaining the professional status of Actuaries often had to travel out of the country to study and upon completing the examinations, get job opportunities abroad that would not let them consider returning home. This is notwithstanding the fact that two leading professional bodies for Actuaries, Nigerian Actuarial Society (NAS) and Institute of Actuaries of Nigeria (IAN), have existed for decades.
As the importance of actuarial services became more obvious, thanks to IFRS, the need for proper regulation and licensing of individuals and organizations have equally become imperative and compelling. Prior to this present time, the role of actuaries was as pronounced by the Insurance Act 2003, which required insurance companies, particularly Life companies, to submit Actuarial Valuation Report once every three years, unlike what obtains now where the report is required annually, even for companies transacting only General Business.
Section 29 Sub-section 1 of the Insurance Act 2003 states thus "An insurer transacting life insurance business shall in respect of its life insurance business once in every period of 3 years, cause an investigation to be made into its financial position by an actuary appointed or secured by the insurer."
Incidentally, the National Insurance Commission (NAICOM) that is responsible for the implementation of the law, conscious of the gap in the demand-supply situation of Actuaries, last year announced its decision to fund the training of 100 persons as Actuaries.
This move, whilst expected to recover the authority for overseeing and coordinating the profession and business of actuarial services, does not seem to have checked the rush of the auditing firms to take over actuarial services space.
Why Regulation and Licensing of Actuarial Services Providers is Necessary
As difficult as it is to earn the qualification and status of Actuary, many Nigerians have got it, however, they are being snapped up by the "Big Four" and other auditing firms that have access to and influence over their clients, who are not given much choice than to accept their offer of actuarial services.
Here is the first reason why I think it is necessary to issue licences and regulate the actuarial services in Nigeria: so that Auditors or auditing firms do not annex what is originally part of the insurance industry. The latter is yet to forget the loss of pensions and workmen compensation to the National Pensions Commission (PENCOM) and National Social Insurance Trust Fund (NSITF) respectively.
The migration of actuarial science or actuarial services from the insurance industry is indeed on course now, if not stopped forthwith, as the auditing firms are busy offering graduates of actuarial science juicy remunerations to scoop them from insurance companies.
Secondly, and importantly, unlike auditing which can by law be released to another auditor/firm after the statutory years allowed, there is no law that can cause actuarial valuation to be moved to another actuary/firm, thus this can remain for the life of the company.
The implication of the above is obvious as Nigerian Actuaries will become less engaged as the auditing firms would be unable to accommodate their growing number into the future.
Understandably, more businesses beyond insurance companies need the services of actuaries, so without stringent rules of engagement, by way of licensing, the likelihood of these rare professionals swelling the rank of unemployed persons is reasonably high.
Lastly, even as we expect that the Insurance Consolidated (Amendment) Bill 2020 would address some of these concerns, there is the need for a "warning notice" to be dished out by NAICOM, so Actuaries do not suffer any negative impact on their career paths in future.
Hopefully, my outsider's perspectives and suggestions have stimulated some thinking around the subject matter that holds so much for the insurance industry in Nigeria as we approach the digital experience, which would leapfrog the insurance sector into relevance as we consider the long term interests of stakeholders.
Can we look forward to licensed individuals and organizations as Actuaries?