Kathmandu: As Nepal’s insurance industry begins adopting global regulatory standards such as risk-based capital (RBC), concerns are mounting over the limited capacity of actuarial analysts to effectively support these reforms.
A recent study highlights that while these professionals are actively involved in key functions like solvency reporting, actuarial valuation, and product pricing, they lack sufficient expertise in advanced modelling, the backbone of modern actuarial practice, raising questions about the successful implementation of such frameworks.
Actuarial science is currently taught in Nepal through the School of Mathematical Sciences, and actuaries play a critical role in evaluating insurers’ financial health, determining bonus rates, preparing annual financial statements, and designing new insurance products.
However, demand for actuarial expertise extends well beyond insurance companies and the regulator, reaching institutions such as the central bank, finance ministry, securities board, provident fund, citizen investment trust, and social security fund. As financial systems grow more complex, the scope of actuarial work continues to expand.
Despite this growing demand, Nepal still relies heavily on foreign actuaries, which often delays key processes such as risk assessment, product development, and bonus determination. With 2 reinsurance companies, 14 life insurers, 14 non-life insurers, and 7 microinsurance firms currently operating, the shortage of domestic actuarial expertise is becoming increasingly evident. Both insurers and the regulator depend on external actuaries for product approval, further slowing the rollout of new insurance offerings.
The study identifies several underlying challenges, including the absence of clear guidelines, insufficient training opportunities, and the outflow of talent seeking better education and career prospects abroad. Although the regulator introduced the “Actuary Appointment Directive, 2024” to formalize the profession, participation remains limited due to gaps in structured learning and professional development.
Based on surveys of 37 supervisors and 40 actuarial analysts, the findings reveal a mixed picture. Supervisors generally rate analysts positively in terms of technical ability and professionalism, but analysts themselves express dissatisfaction with compensation and career growth. Training remains largely informal and inconsistent, contributing to only moderate levels of job satisfaction. Coordination with actuaries also varies significantly across institutions, limiting equal learning opportunities.
The study further notes that most analysts are student members of the UK’s Institute and Faculty of Actuaries, with only a small number progressing toward full fellowship. Many are still in the early stages of qualification, having passed just a handful of exams. Their roles are largely confined to mid- or junior-level positions, focusing on valuation, risk management, product development, and research, with limited involvement in areas like claims management or policy approval.
While most analysts report satisfaction with their supervisors and workplace experience, dissatisfaction remains high when it comes to training, career advancement, and remuneration. Only about 60 percent maintain formal work logs, and just half receive on-the-job training from appointed actuaries—most of whom receive less than 10 hours of training. Although direct communication between analysts and actuaries exists in many firms, only two-thirds incorporate actuarial feedback into performance evaluations.
To address these gaps, the study recommends clearly defining roles and responsibilities based on experience, exam progress, and performance. It also calls for transparent promotion criteria, structured career pathways, and compensation systems linked to professional qualifications. Without timely intervention, Nepal risks a growing shortage of actuarial professionals, which could undermine the implementation of RBC and similar regulatory systems. If current trends persist, the outmigration of actuarial talent is likely to intensify, adding further strain to the country’s evolving insurance sector.
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