The Institute of Actuaries of India (IAI) is in talks with the Department of Financial Services (DFS) in the Finance Ministry to set up an actuary department, said its President, Subhendu Kumar Bal.
Having a government actuary department would be useful for taking future public policy decisions. A centralised government department on actuary will help in better risk-based analysis and whether the proposal makes sense in terms of pricing or financial perspective.
“Before taking policy decisions, one has to analyse the past, assess the risk and look at the future. Actuarial skills can help the government in better decision-making,” he said.
For example, the actuarial analysis at the government department-level can help in assessing the pension liabilities of government enterprises that are taken up for divestments. Instead of worrying about it when divestments are about to happen, one could be better prepared if it went through the actuarial department much in advance.
Any financial cost or sustainable benefit design such as health insurance (Ayushman Bharat) can be ascertained through actuarial analysis and such department can help in design and pricing of products issued by the government, said Bal.
Climate change issues
Actuary department at the government-level could also help in addressing climate change issues and risk assessment for products such as Fasal Bima Yojana where liabilities depend on climatic changes.
“Any PSU-related pension, insurance and social safety net products, such a department can do actuarial analysis. The government decision could be better placed if data analysis is done. It could help on quantifying probability of natural calamities so that proactive decisions can be taken,” said Bal.
Bal said that IAI had set up a task force internally with four actuaries and tasked them to give a report on the government actuary department. They had submitted the report, which has been forwarded to the DFS in the Finance Ministry, said Bal.
IAI council, which has two government nominees and one IRDAI nominee, had discussed the report before sending it to DFS, Bal added.
Bal highlighted that internationally also the concept of government actuarial department is prevalent in several countries, including the US, the UK, Australia, Japan and Canada. South Africa is now looking to set up a government actuary department.