The Best Guide on Studying Actuarial Science in Malaysia and the Pathway to Become a Professional Actuary
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The pathway to become a professional actuary in Malaysia can be long. A normal actuarial science bachelor degree is 3 years. Thereafter, completing the professional exams could take another 3-7 years if you’re working full-time while studying. Students should choose the best university in Malaysia for actuarial science to prepare them well to face the professional exams.
Given the expected continuous growth in the insurance market, it is anticipated that the demand for actuaries in Malaysia will continue to grow in the next few decades. Future regulatory developments (e.g. requirement for certification of IBNR) and the increasing need for risk management are likely to result in significant increase in demand for actuarial services by general insurers. Salaries for actuaries are one of the highest in Malaysia as well as globally.
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Education Pathway to Become a Professional Actuaries in Malaysia
Actuaries build and use mathematical models based on statistical data to calculate the appropriate amount of premiums to charge policyholders. This will require projections of how events will unfold in the future. In calculating the right amount of premiums, the actuary will need to project how large potential claims will be and when they will occur.
Such projections are incorporated into the models to calculate the premium required. At the same time, judgement, business acumen and experience are required to understand and logically interpret the results of the model before finally coming up with a solution to the problem. Actuarial science is a combination of science and art!
Calculation of premiums is only one of the many contributions of actuaries to insurance companies. In addition to pricing decisions, actuaries are involved in designing insurance products, formulating investment strategies, determining reserves to be set up to meet future claims and recommending distribution of profits to shareholders after taking into account the insurance company’s future obligation to policyholders.
The pathway to become a professional Actuary in Malaysia
The path to becoming an actuary involves going through a well-structured education plan. This involves university-level education and post-university examinations, as well as other requirements.
Students after SPM, can go for the Foundation and then degree programs in Actuarial Science with exemptions from the professional papers. Upon completing the degree, students can then begin to take the professional exams.
How long does it normally take to become an Actuary in Malaysia?
A normal bachelor degree takes 3 years (+1 year if you consider an Honours degree in Australia). Thereafter, writing the professional exams through the Institute (London) or Faculty (Scotland) of Actuaries or Society of Actuaries (US) or Institute of Actuaries of Australia takes an average of 3-7 years (working and studying) after the degree.
Actuarial Science/Math Degree (3-4 years) + Professional Papers (3-7 years taken part time as you work)
Qualifying to become a professional Actuary in Malaysia
No specific degree is mandatory, but like most good jobs, graduating from university will give one a certain edge and credibility. Most practising actuaries today have a degree in mathematics, actuarial science, statistics or computer science. Similar to accountants, graduates must also pass professional exams, before they become recognised as an actuary.
In Malaysia, to be recognised as an actuary, one will have to be a registered member with the Actuarial Society of Malaysia (ASM).
What kind of support do local and foreign companies provide?
Most, if not all local and foreign companies support their actuarial students by having actuarial development programs with the following incentives:
- Study and exam leave
- Full/partial reimbursement on costs of study material
- Salary increment and/or bonus upon passing of exams
Which actuarial professional bodies are recognized in Malaysia?
Malaysian insurance regulator, Bank Negara Malaysia and the Actuarial Society of Malaysia (ASM) recognize Fellows of the following organizations as qualified actuaries:
- Society of Actuaries (U.S.)
- Institute and Faculty of Actuaries (UK)
- Faculty of Actuaries (Scotland)
- Institute of Actuaries of Australia
- Canadian Institute of Actuaries
- Casualty Actuarial Society (U.S.)
Currently, the ASM does not conduct any of its own exams, but aspiring actuaries in Malaysia can choose to take the exams conducted by one of the above professional bodies.
The Best Universities in Malaysia to Study Actuarial Science
Students can consider studying the BSc (Hons) Actuarial Science at UCSI University or Asia Pacific University graduating with the BSc (Hons) Actuarial Studies. The Actuarial Science degree at Asia Pacific University (APU) has been awarded full accreditation from the Institute and Faculty of Actuaries (IFoA) (UK). APU is among the 7 universities in Asia to receive such worldwide recognition. In addition, APU is the first and the only Malaysian university that has all the six preliminary exams (P, FM, IFM, LTAM, STAM & SRM) and all the three VEE topics listed in its SOA UCAP profile.
Students will receive a dual award University of the West of England, UK degree at Taylor’s University for the BSc. (Hons) Actuarial Studies. Taylor’s University offers a 3-year and a 4-year Actuarial Studies degree programme. The 1-year internship is offered in the third year of the 4-year programme, students have the opportunity to broaden their knowledge and gain industry exposure that will help them excel in their final year of studies.
UCSI University’s degree in Actuarial Science is exempted from the VEE papers. In addition, UCSI University’s actuarial science students have completed the partially or all of the 5 preliminary exams during their degree studies at UCSI. In light of this, UCSI University is one of the best private universities in Malaysia offering the actuarial science degree that is able to prepare students well to handle the professional papers from the Society of Actuaries (SOA).
The best university in Malaysia for Actuarial Science would be Heriot-Watt University Malaysia where students can get 8-paper exemptions out of 15 needed to qualify as a Fellow at the Institute and Faculty of Actuaries (FIA), UK.
What are the passing rates like?
Passing rates are generally low compared with other professions.
For the Institute, Society or Faculty professional exams, passing rates as low as 15% – 25% per subject are not uncommon.
What about exams and qualifications for Actuary?
- The ASM does not conduct its own exams but actuarial students in Malaysia have a choice of taking any of the USA, U.K. or Australian exams from the above professional bodies.
- The current structure for 2 of the more popular exam series in Malaysia is briefly described below:
- Society of Actuaries (U.S.)
- 5 Preliminary Exams
- Validation by Educational Experience (VEE) – 3 subjects
- Fundamental Actuarial Practices (FAP) – 8 modules + 2 assessments
- Associateship Professionalism Course
- FSA Module – 2 Modules
- FSA Exams – 2 Exams
- Strategic Business Management Module
- Fellowship Admissions Course
- Institute of Actuaries (U.K.)
- CT series exams – 9 papers
- CA series exam – 3 papers
- ST series exams – choose 2 papers from 6 areas of specialization
- SA series exam – choose 1 paper from 6 areas of specialization
- Professionalism course
- Experience requirement
- Society of Actuaries (U.S.)
The Job of an Actuaries in Malaysia
Actuaries also estimate the amount of future claims by analysing past data or experience to assign probabilities to events such as death, sickness, disability, loss of property or even loss of business profits. Actuaries provide solutions to today’s insurance and financial problems that properly take into account the financial impact of future events. With the actuaries’ expert knowledge in financial matters, they are often key advisors to the Board of Directors.
An actuary’s job is not just boring desk-bound number crunching. Actuaries are faced with challenges of the ever-changing economic environment in which they have to constantly update their techniques of assessment and calculation. It is an intellectual challenge to analyse current trends and predict the future as we live in a world where the unexpected (e.g. the SARS outbreak, September 11 etc.) can happen.
Due to the demand for actuarial technical skills and knowledge, there are vast career options and opportunities for an actuary. Traditionally, actuaries worked only in the insurance industry.
However, with the growing acknowledgement and recognition of actuarial skills today across the various financial sectors, the potential employment opportunities of an actuary have expanded to encompass banks, investment companies, security and commodity broker firms, regulators and even lecturing in the education sector. With such demand, there is an ever-increasing need for actuaries all around the world.
In Malaysia, most actuaries are still working in the traditional life and non-life insurance industry. However, based on trends worldwide and the rapid growth of the Malaysian financial industry, it is expected that more and more actuaries will ventured into the non-traditional areas as mentioned above.
For an actuary, being good in mathematics is a must. However, actuaries must also have good verbal and written communication skills, strong computer skills, time-management skills, as well as possess good judgement, imagination and clear logical thinking.
They also should have a knack for problem-solving, be self-confident, and possess the ability to work under pressure. Sharpness, creativity, practicality coupled with good business sense are also some of the key personal attributes. An actuary who has devised a brilliant solution to complex problem must be able to explain his solution to non-actuaries!
By and large, the rewards are good. It is no secret that an actuary is one of the higher paid jobs. Of course, salaries can vary according to company policy and market forces of supply and demand. Actuaries have excellent promotion opportunities as they gain more experience and advancement to higher management levels will usually come rapidly with good job performance.
Summarising it all, don’t even think about being an actuary if one, you hate numbers and two, you don’t enjoy problem-solving! En route to full qualification, there are many hurdles to overcome. But for those who persevere and qualify, the rewards are well worth the effort and self-satisfaction plenty.
References Ravinderen, K.E., “A day in the life of risky business”, The Malay Mail, pg. 15, November 12, 2001 . Chen, Mary, “What does an actuary actually do?”, Sunday Mail, pg. 47, April 18, 2004 .
What does an Actuary do?
Basically an Actuary calculates the amount of premiums to charge to a policy
holder using mathematical models based on statistical data from the past. Since we are not able to predict the future, the actuary has to use mathematical models to make projections as accurate as possible on the chances that disease, accidents or death will occur to a person at a particular age and the potential for claims.
Then the insurance company is able to charge the premium for the financial protection. For example, a premium for a young male driver would be higher as the risks are higher as compared with an experienced driver or the premium for a non-smoker is lower because of the lower health risk.
In short, actuaries use and analyse historical data using mathematical models to come up with projections on the chances of something happening in order to formulate the pricing.
Actuaries are also involved in designing insurance products, formulating involved in designing insurance products, formulating investment strategies, determining reserves to be set up to meet future claims and recommend distribution of profits to shareholders taking into account the insurance company’s future obligation to policyholders.
What are the examples of actuarial work?
The traditional areas in which actuaries operate are: consultancy, investment, life and general insurance and pensions. Actuaries are also increasingly moving into other areas of the financial sector where their analytical skills can be employed.
Actuarial consultancies offer a whole range of services to their clients on issues such as acquisitions, mergers, corporate recovery and financing capital projects. Many also offer advice to employers and trustees who run occupational pension schemes. In fact, such consultancies are probably the biggest employers of actuaries in the UK.
In the area of investment, actuaries are involved in a range of work such as: pricing financial derivatives, working in fund management, or working in quantative investment research. Often investment actuaries work in fields where their understanding of insurance or pension liabilities helps them to manage the investment of the corresponding assets.
The work carried out by actuaries in insurance includes designing new insurance policies, setting premium rates, calculating a company’s financial status (based on the policies already sold), and answering technical queries from policyholders. Insurance actuaries also undertake detailed investigations of different experiences; such as how assets and expenses have performed and the extent of different types of claims for different types of insurance policies (eg death claims for life insurance or car theft for motor insurance).
Pensions & Employee Benefits
In the pensions field, actuaries are usually involved in designing and advising company pension schemes, especially where a value needs to be placed on a scheme’s accumulated pension promises. Actuaries are also involved in designing schemes for employee benefits.
Future job prospects for actuarial science professionals in Malaysia
The Actuarial Society of Malaysia observed that with the expected continuous growth in the insurance market, the demand for actuaries in Malaysia will continue to grow in the next few decades. The rewards for an actuary is good and is one of the higher paid jobs. There is a demand for actuaries in Malaysia.
- Given the expected continuous growth in the insurance market, it is anticipated that the demand for actuaries in Malaysia will continue to grow in the next few decades.
- Future regulatory developments (e.g. requirement for certification of IBNR) and the increasing need for risk management are likely to result in significant increase in demand for actuarial services by general insurers.
- With only 100 qualified actuaries in Malaysia, the market for actuaries can perhaps still be considered unsaturated.
What are the rewards for actuarial science graduates?
- Financially, qualified actuaries have significantly higher salaries than most other professionals in the financial services industry. In addition, due to increments commonly offered for exam progress, actuarial executives can expect to outperform their peers in other sectors even before qualifying.
- Intellectually stimulating – actuaries are rewarded for their problem solving and analytical skills. As such, job satisfaction comes from working in an intellectually stimulating and challenging environment. This encourages continual growth in one’s technical skill and ability, paving the way to involvement at senior levels of all organisations.
- Employment opportunities – due to the constant demand for actuaries exceeding supply, there is rarely ever a shortage of demand for actuaries. Many actuaries have also successfully transitioned to other non-traditional areas such as corporate finance and investments, where their analytical and quantitative skills are highly sought after.
Am I suited to Study Actuarial Science?
Not all people are suited to study actuarial science as it is a very challenging course and requires a long time to become a professional actuaries. Students after SPM or UEC with As in Maths and Add Maths can consider a career in actuary.
Actuarial Science is a very comprehensive course in the way that it covers Mathematics, Finance, Economics, Accounting, Business Models, Computer Programming and Risk Management. As such, a high aptitude in Mathematics is highly required.
Degree students will also learn Calculus, Statistics, Probability, and Financial Mathematics. With this fundamental Mathematical knowledge graduates will be able to solve complex actuarial problems.
Being an actuary also requires you to master several computer programming languages such as Microsoft Excel, Microsoft Visual Basic, Microsoft Visual FoxPro, and most importantly, Prophet – an actuarial software designed to crunch a large database. If you do not enjoy learning programming languages or writing codes, actuarial science would not be the career for you.
Actuaries are professionals who like to solve complex problems. There are many factors impacting an actuarial solution that even one assumption is inaccurate, it would affect the whole solution and result.
Consequently, actuaries employ the actuarial control cycle – a problem-solving approach that applies equally well to the most broad and the focused actuarial problems. It is a model of actuarial practice in a wide range of fields and provides common grounding for all candidates.
Through the control cycle, all actuarial work is categorized into three main functions:
- Define the problem
- Design the solution
- Monitor the results
Because of their ability to analyse and solve complex problems, actuaries command a very high salary. In fact, it is one of the highest paid professions.
Who should become an actuary and what attributes would be of help?
To become an actuary, you will generally need to have a high-level of mathematical ability and an above-average level of intelligence. Important characteristics for an actuary to have would be as follows:
- Interest in solving complicated problems.
- Interest in business, finance and economics.
- Good oral communication skills.
- Good written communication skills.
- Perseverance (especially in tackling the exams!!!).
Where do most actuaries work in Malaysia?
Actuaries are normally found in the insurance industry. They also work in consulting, financial institutions, banks, investment,
brokerages, or as lecturers.
The American Society of Actuaries defines actuaries as ‘professionals who provide expert advice and relevant solutions for business and societal problems that involve economic risk.’ In Malaysia, one of the places where actuaries are often found is at insurance companies. Using mathematical models based on statistical data, they are the brains behind the calculation of the amount of insurance premium that a policyholder has to pay.
With their readily transferable skills, actuaries can also be found in many other fields. Besides the hugely popular insurance field, an actuary can work in finance, marketing, manufacturing or in the development of new products.
For example, an actuary might be hired by a business to help determine where it should invest its money based on risk and potential return analysis. Opportunities for actuaries range from the education industry to research work and even to government agencies. Because of the importance of their work, actuaries are respected throughout the business community.
In Malaysia, most actuaries can be found in life insurance companies, financial institutions such as banks, consultancies providing advice in the fields of employee benefits, life insurance and general insurance, Bank Negara Malaysia and public universities.
The areas of work for actuaries are not limited to insurance firms only. Instead, the horizon for this line of job is very wide. Below are some of the areas of work which actuaries do:
- Life Insurance / Family Takaful
- General Insurance / General Takaful
- Reinsurance / Retakaful
- Actuarial Consulting
- Investment and Financial Services
- Employee Benefit Industry (e.g. EPF)
- Government Sector (e.g. BNM)
- Colleges and Universities
What are the career options available to actuaries?
Actuaries have historically taken on the following positions in companies:
- Chief Executive Officer (CEO)
- Chief Risk Officer (CRO)
- Chief Financial Officer (CFO)
- Appointed Actuary / Signing Actuary
- Asset/Investment Consultant
- Management Consultant
The work of an actuary in Malaysia
Combining their skills in mathematics, statistics, economics and finance, actuaries are able to gauge and make expert financial predictions about the future.
Actuaries can specialise in the following fields:
- Traditional life insurance
- They focus on the analysis of mortality, the production of life tables and the application of interest to produce life insurance, annuities and endowment policies. It also includes credit and mortgage insurance, long term care insurance and health savings account.
- Health insurance
- They focus on the analyses of rates of disability, morbidity, mortality, fertility and other contingencies. Also of great importance are the effects of consumer choice and the geographical distribution of medical services as well as the procedures and use of drugs and therapies.
- Pension industry
- They measure costs of alternative strategies with regards to the design, maintenance or redesigning of pension plans. The strategies are greatly influenced by collective bargaining, the changing demographics of the workforce, changes in internal revenue code and financial and economic trends among others.
- Property and casualty
- They focus on data collection, measurement, estimation, forecasting and valuation tools to provide financial and underwriting data for management to assess marketing opportunities and the required degree of risk taking.
- Focus on designing and pricing reinsurance and retro-reinsurance schemes. Their responsibility also includes establishing reserve funds for known claims and future claims as well as catastrophes.