• Monday, July 22, 2024
businessday logo

BusinessDay

FRC sets up Nigerian actuarial development programme to bridge skills gap

Risk-based approach as an imperative for insurance market development in Nigeria

The Financial Reporting Council (FRC) has launched the Nigerian Actuarial Development Programme (NADP).

The initiative aims to boost the number of skilled actuaries in the country and enhance awareness of the profession. Actuaries are experts who analyse financial risks using mathematics, statistics, and financial theory to study uncertain future events, especially those of concern to insurance and pension programs.

Read also: IFRS 17: Shortage of actuaries, auditors impedes insurers’ compliance

“We intend to reach the secondary school level to create awareness and collaborate with the National Universities Commission (NUC) to increase the number of universities offering degree programs in actuarial science; currently, only four out of 273 universities do,” said Rabiu Olowo, Chief Executive Officer of the FRC.

Speaking at the 2024 annual industry conference organised by the Nigerian Actuarial Society (NAS), Olowo highlighted the pressing need for more actuaries to ensure Nigeria’s economic stability. He emphasised that the country’s Gross Domestic Product (GDP) requires over 3,000 actuaries for proper financial management and stability.

“What we need to do is to be intentional about increasing the number of skilled and qualified actuaries in Nigeria. The number today is very disheartening. We have 50 qualified actuaries in Nigeria, whereas our South African counterpart has about 2,000. Given the size of our GDP, we need more than 3,000 actuaries to manage financial stability and the professional work that actuaries do to improve financial stability in our country,” Olowo explained.

Read also: Insurance industry begins new initiative to close skills gap in actuarial profession

To combat the shortage, the FRC has revitalised two key directorates—actuarial and valuation—which paved the way for the creation of NADP. This program is set to champion awareness and development of the actuarial profession across all levels of education.

“NADP will ensure the availability of physical and virtual tuition houses for those writing external professional examinations, support them financially and materially, and collaborate with renowned professional bodies to reduce exam fees for Nigeria,” Olowo added.

The FRC has also sought assistance from international bodies to aid in certification processes and reduce the cost of examinations, making it more feasible for aspiring actuaries in Nigeria to achieve their professional qualifications.

By taking these steps, the FRC aims to significantly increase the number of qualified actuaries in Nigeria, ultimately contributing to the nation’s financial stability and economic growth.

Artificial Intelligence (AI) will not replace professional actuaries in Nigeria, assured Olowo, adding that AI will not be registered to replace human actuaries, despite advancements in technology.

Read also: Data gap puts FG workers’ insurance benefit at risk

“From a regulatory point of view, let me assure you that no matter how complex and powerful AI becomes, the human element of actuarial practice can never be obliterated. For clarity purposes, I mean, no matter how perfect AI may be, the FRC will never register AI to replace professional actuaries in Nigeria. So, the jobs of our fellows among us are safe,” Olowo stated in his keynote address.

The theme of this year’s conference was ‘Actuaries and AI: Strengths, Weaknesses, Opportunities, and Threats’. Olowo acknowledged the potential impact of AI on the actuarial profession but maintained that professional actuaries’ roles are secure. However, he urged associates to prepare for changes as AI could affect their positions.

“Associates must brace up for the evolving landscape because it is capable of taking over their jobs. Let me also sound a note of warning that AI is a moving train which every practising actuary must not be left behind,” Olowo cautioned.

Olowo also highlighted the need for regulatory checks due to AI’s increasing application in actuarial work, raising concerns about ethical issues and potential biases in AI algorithms.

“The application of AI by professional actuaries will bring about further regulatory checks, including ethical issues and concerns about bias in AI algorithms and decision-making processes. Therefore, we must upscale our use of AI in reviewing and inspecting practitioners’ work or reports. Both regulators and practitioners will incur costs related to acquiring AI applications and upskilling staff,” he added.