CIA (e)Bulletin/(e)Bulletin de l'ICA
Past Issues |  
September 2017

Actuaries on the World Stage: Indonesia

Print Print this Article | Send to Colleague

By Bonnie Robinson

The actuarial profession is firmly established in developed countries as an essential component of their economies, particularly in the areas of insurance, pensions, finance, and risk management. For emerging economies, building and sustaining the profession is a huge challenge. International partners can help, but they need to be prepared for a multi-decade commitment.

The Actuarial Profession in Indonesia

Indonesia, a member of the G20, is the largest economy in Southeast Asia. With industrialization and rapid growth, the country's financial infrastructure has struggled to keep pace, and the actuarial profession was often overlooked in the beginning.

While the Persatuan Aktuaris Indonesia (PAI), Indonesia's actuarial society, was founded in 1964, one year earlier than the Canadian Institute of Actuaries (CIA), the PAI initially struggled to attract members and people to work in the industry.

“In Indonesia, children are encouraged to be engineers or doctors,” says Jean Lowry, project director for READI (Risk Management, Economic Sustainability and Actuarial Science Development in Indonesia). “Those are high profile careers, being an actuary is not.”

READI Partnership

For the past two years, Ms. Lowry, Stefan Steiner (principal investigator), and Bill Duggan (field director) have led the READI team in working with Indonesia's financial services authority (Otoritas Jasa Keuangan) to help with the challenges that the actuarial profession and actuarial education in Indonesia face. Financial support for the $17M project comes primarily from the Government of Canada via Global Affairs Canada ($15.3M), with additional funding from Manulife Indonesia ($1M), and Sun Life Financial ($500K).

READI's programs include short courses by University of Waterloo (UWaterloo) professors who travel to Indonesia to teach, mentorship opportunities, undergraduate and master’s scholarships, applied research grants, math outreach, and co-op education opportunities. As well, the program offers an accelerated 12-month master's degree at UWaterloo for Indonesian lecturers interested in obtaining actuarial expertise.

Over 30 Years in Indonesia

The READI program follows a decades-long partnership between Canada and the Indonesian actuarial profession. In 1985, CIA member Yves Guérard travelled to Jakarta to meet with the Indonesian minister of finance as the country started writing pension law. “The minister of finance wanted to promote private pension programs and make sure they would be properly funded to deliver the promised benefits,” says Mr. Guérard.

Yves Guérard

“Since Indonesia inherited civil law from its former Dutch colonial government, an actuary familiar with that code was a natural fit,” he says. “As they were looking to North America as a model, that would need to be someone from Louisiana or Québec.” From 1985–1995, Mr. Guérard made regular visits to Indonesia, applying his extensive actuarial skills and expertise to social security, insurance, pension, and benefits.

From 1996 to 2001, Mr. Guérard—then a consulting partner at Ernst Young—was project director for a financial sector reform project (known as FISEK from its Indonesian acronym), a technical assistance project intended to strengthen the non-banking financial sector in Indonesia. Global Affairs Canada's predecessor, the Canadian International Development Agency (CIDA), provided the funding. The CIA also provided additional financial support earmarked for actuaries.

Developing Home-Grown Actuaries

As Indonesia's regulatory and financial infrastructure developed, Mr. Guérard turned his attention to the lack of home-grown actuaries needed to support it. “There was increasing demand, but not enough people to meet the huge potential pension and insurance market,” he says. “Actuaries had no real professional status in Indonesia, because Indonesian universities had no actuarial science courses. With courses, actuarial science would be recognized as a profession and universities would be able to attract students who would now see actuarial science as a viable career.” Thus in 1997, with the support of Dr. Dorojatun Kunjoro-Jakti, dean of the faculty of economics, FISEK launched an actuarial master’s degree program at the University of Indonesia, the top state university in Jakarta.

After a long actuarial career, including a 13-year stint as secretary-general of the International Actuarial Association (IAA), Mr. Guérard retired in 1999, but continues his work in Indonesia. “In Canada, I am a has-been,” he laughs. “In Indonesia, I am an ‘international expert’.” He can speak some Indonesian and has international connections, including at the World Bank and the Asian Development Bank. “Every year there is something to do,” he adds.

Great Progress, but More to Do

Mr. Guérard is proud of the progress Indonesia has made and of Canada's involvement in the country. The pay gap for actuaries is closing (while accountants still earn higher salaries, the disparity is much smaller than it once was). More Indonesian students are turning to actuarial science as a field of study. From only 130 Fellows in 2007, the PAI has seen its ranks grow to 256 Fellows and 256 Associates. According to a recent article in the Jakarta Post, Indonesian insurance companies alone will need 800 actuaries over the next few years. In 2007, after years of improving and aligning its training to international actuarial standards, the PAI qualified as a full member of the IAA.

Indonesian math students at a Think about Mathematics event by
READI's Math Outreach Team.

To sustain its economic growth, Indonesia will need to develop ever more sophisticated and durable insurance, financial, and complementary infrastructure; that won't be possible without a robust home-grown actuarial community. The efforts of Mr. Guérard and others and of programs like READI demonstrate how a long-term, sustained commitment can help an emerging economy realize its full potential.

Bonnie Robinson is the manager of communications at the Canadian Institute of Actuaries.


Back to CIA (e)Bulletin/(e)Bulletin de l'ICA

Share Share on Facebook Share on Twitter Share on LinkedIn