Actuarial Alchemy: Unveiling the Supply-Demand Dynamics Across North America, Europe, and Asia

As the global business landscape evolves, the demand for actuaries has witnessed significant increase across different regions. In this article, we will delve into the supply and demand dynamics for actuaries in North America, Europe, and Asia, and explore the factors influencing these trends.

The actuarial occupation boasts a venerable history spanning over a century, yet its visibility and appeal remain disproportionately scant. Globally, there are an estimated 1.8 million individuals holding the title of chartered accountant, while the count for Certified Financial Analysts (CFA) stands at approximately 190,000; however, the number of actuaries totals a mere 76,510¹.

Remarkably, a substantial 75% of actuaries worldwide are concentrated in the regions of North America and Europe, leaving the remaining 25% scattered across the rest of the globe. Considering the critical role of population density in determining insurance risk, it's noteworthy that the continents boasting the highest concentration of actuaries, namely North America and Europe, account for just 17% of the world's populace. In contrast, a staggering 83% of the global population resides in regions beyond North America and Europe. Consequently, it emerges that a mere 25% of actuaries are tasked with directly managing insurance risks for this vast majority of the world's inhabitants. The distribution of supply of actuaries is also skewed by country as top 10 countries account for 77% of the total actuaries².

North America

The supply and demand for actuaries in North America are influenced by a myriad of factors, including industry growth, regulatory changes, and educational pathways. Some of the demand factors in North America are:

• The insurance industry is a primary driver of demand for actuaries in North America. As the sector continues to expand, companies require actuaries to assess and manage risks associated with various insurance products, from life and health insurance to property and casualty coverage.

• Actuaries are in demand within the financial sector, particularly in investment and pension planning. The complexity of financial instruments and the need for accurate risk assessments contribute to the rising demand for actuaries in financial institutions.

• The regulatory landscape, especially in the United States, has seen significant changes in recent years. Actuaries are crucial for ensuring compliance with regulations such as the Affordable Care Act (ACA) in the healthcare sector and changes in US GAAP in the insurance industry.

Similarly, some of the supply factors in North America are:

• North America boasts a robust network of universities offering actuarial science programs. Institutions in the United States and Canada provide students with the necessary education and training to pursue careers as actuaries.

• Actuaries typically undergo a rigorous certification process. Professional bodies such as the Society of Actuaries (SOA), Casualty Actuarial Society (CAS) and the Canadian Institute of Actuaries (CIA) set high standards for qualification, contributing to a well-trained and certified actuarial workforce.

• Despite the existence of quality education programs, there are concerns about a potential talent shortage. The demand for actuaries is outpacing the rate at which new professionals are entering the field, leading to competition for skilled individuals.

• The integration of technology, including data analytics and artificial intelligence, into actuarial processes is reshaping the profession. Actuaries need to adapt their skill sets to embrace technological advancements, presenting both a challenge and an opportunity for the industry.

• Efforts to promote diversity and inclusion within the actuarial profession are gaining traction. Encouraging individuals from underrepresented groups to pursue actuarial careers is essential for addressing talent shortages and fostering innovation. The supply side, however, faces challenges. Actuarial science requires rigorous education and professional certification. While North America boasts several prestigious universities offering actuarial programs, there is a concern about the limited number of students pursuing this field. This has led to a talent gap, with employers sometimes struggling to find qualified actuaries to meet their growing needs.

Europe

In Europe, the demand for actuaries varies across countries due to differences in regulatory environments and industry structures. Western European countries, such as the United Kingdom, Germany, and France, have well-established insurance markets that drive the demand for actuaries. The implementation of Solvency II and IFRS17 regulations have further increased the need for actuaries to ensure compliance and effective risk management. Eastern European countries are also witnessing a growing demand for actuaries, albeit at a slower pace. As these economies develop and financial markets expand, the importance of actuaries in managing risks and supporting strategic decision-making is becoming increasingly recognized. We seek to dissect the intricate balance between supply and demand for actuaries in the diverse European region, shedding light on the factors influencing this dynamic interplay.

Europe has a rich tradition of actuarial education, with numerous universities offering specialized programs. The quality of education and training provided by institutions in the United Kingdom, Germany, and other European nations contributes to a well-prepared pool of aspiring actuaries. Professional bodies such as the Institute and Faculty of Actuaries (IFoA) in the UK and the Deutsche Aktuarvereinigung (DAV) in Germany oversee the certification process. These organizations play a crucial role in maintaining high professional standards, ensuring a competent and certified actuarial workforce.

Some European countries face challenges related to the aging demographic of the actuarial profession. Encouraging younger individuals to pursue actuarial careers is vital to bridging the potential talent gap and maintaining a vibrant actuarial community.

The supply and demand dynamics for actuaries in Europe reflect a complex interplay of regional variations, regulatory frameworks, and industry structures. As the European landscape continues to evolve, collaboration between educational institutions, professional bodies, and industry stakeholders becomes paramount. By addressing challenges related to demographics, technological integration, and regional imbalances, Europe can ensure a resilient and well-equipped actuarial profession ready to tackle the challenges of the modern financial and insurance landscape.

Asia

The demand for actuaries in Asia has been growing steadily, driven by the rapid expansion of insurance and financial markets. Countries like China, Japan, and Singapore are experiencing increased demand for actuaries as businesses seek to manage risks and comply with evolving regulatory frameworks.

In China, the insurance sector has undergone significant growth, leading to a surge in demand for actuaries with expertise in risk assessment and pricing. Japan, with its aging population, has a unique set of challenges, including pension and retirement planning, which further boosts the demand for actuaries. Risk Based Capital RBC frameworks following similar principles to Solvency 2 are also in place in major Asian economies like the C-Ross in China. IFRS17 is also set to be implemented in most Asian countries. Japan is an exception as it follows GAAP rather than IFRS. But this doesn’t mean that Japan is the only exclusion. A lot of countries are in Asia that are too small or undeveloped that have not implemented IFRS in the first place. So, in those countries, IFRS17 by default will also not be implemented.

It is indicative to compare the presence of actuaries in the population as the anticipated size of insurance industry is directly proportional to its population. It is this population who are the direct beneficiaries of the Insurance industry. Hence it can be interpreted as when the insurance penetration increases, the need of professionals to take up the actuarial profession also increases. In 2022, the global insurance penetration was around 6.7%, while it was highest in the USA at around 11.6% and on the lower side below 4% in many countries. As the awareness about protecting life and ensuring the financial safety of economic activities is spreading, industry is expected to grow by 2.3% in 2024-25. About USD 2.3 trillion of savings premiums were written globally in 2022³.

Countries with high population density like China, India, Indonesia and Pakistan witness smaller number of actuaries in their respective country. These countries will need a greater number of qualified actuaries to serve the growing demand. It is expected that by the year 2030, India alone will need 25,000 qualified actuaries while currently there are around 575 actuaries in the country⁴.

While the demand is on the rise, the supply of qualified actuaries in Asia faces challenges. The field is relatively nascent in some countries, and there is a need for more comprehensive education and training programs. Collaboration between governments, educational institutions, and industry stakeholders is crucial to bridge the gap between demand and supply in the region.

The supply and demand for actuaries in North America, Europe, and Asia are influenced by a complex interplay of factors, including industry growth, regulatory changes, and educational infrastructure. As businesses continue to navigate an increasingly uncertain world, the role of actuaries in managing and mitigating risks will only become more critical. Addressing the challenges on the supply side, such as attracting and training new talent, is essential to ensure a well-balanced actuarial profession that can meet the evolving needs of industries and societies across the globe.

1. Report by DD Consulting “Global data of actuaries and the looming talent shortfall”. This report considered 80 countries as sample and relied upon the database of International Actuarial Association and Actuarial Society of respective countries as primary source of information.

2. Report by DD Consulting “Global data of actuaries and the looming talent shortfall”. This report considered 80 countries as sample and relied upon the database of International Actuarial Association and Actuarial Society of respective countries as primary source of information.

3. Report by DD Consulting “Global data of actuaries and the looming talent shortfall”.

4. Report by DD Consulting “Global data of actuaries and the looming talent shortfall”.