IAA Meetings May , 2006 Paris, France Introduction to The Society of Actuaries of Indonesia by Rianto A. Djojosugito

2 Contents Where is Indonesia? How is the Local Economic Condition? The Society of Actuaries of Indonesia >> Organization >> Membership >> Role of Organization >> What do the Actuaries do? >> Where do the Actuaries work? >> What are Major Roles of the Actuaries? >> Challenges Ahead

3 Where is Indonesia? Situated in Southeast Asia Archipelago with about 13 thousand islands Population size is about 230 million Of various ethnics (majority are Malay tribes), and of various religions (majority are moslems) Got its independence in 1945 (effectively in 1950, from Netherland) Capital is Jakarta, situated in the island of Java Other cities and islands are for examples: Banda Aceh and Medan (in Sumatra), Surabaya and Bandung (in Java), Denpasar (in Bali), Pontianak and Banjarmasin (in Borneo), Makassar and Menado (in Celebes), and Jayapura (in Papua)

4 How is the Local Economic Environment? Banking industry and real sector are open to international players Capital Market, Insurance and Pension Fund industries are open to international players and supervised by the Ministry of Finance (of the Government) There are about 50 life insurance companies (with penetration to only about 5% of the population) and 150 general insurance companies in the local insurance market Actuaries work in life insurance companies (mostly), pension and employee benefit consulting companies (increasingly), reinsurance companies, the Ministry of Finance, and universities (on part-time basis) Demand for actuaries can be expected to increase in the future especially in the general insurance industry, pension and employee benefit consulting industry, and social security area

5 The Society of Actuaries of Indonesia >> Organization Professional body for actuaries in Indonesia, founded in 1964 Indonesian name is “Persatuan Aktuaris Indonesia” Full member of the International Actuarial Association (IAA), with education system improvement (underway) as condition Board members are elected through Member General Meeting for a three-year term of office (term of current Board is from 2005 to 2008) Current Board consists of President, Vice President (also serves as General Secretary), Treasurer, and six Working Commissions on areas of Code of Ethics, Standard of Practice, Curriculum and Examination, Continuing Education, Insurance, and Employee Benefits

6 The Society of Actuaries of Indonesia >> Membership The Society of Actuaries of Indonesia has now 324 members (134 Fellows and 190 Associates) – compared to only 33 in 1990 Its membership growth can be described as follows: Year 1990: 24 FSAIs, 9 ASAIs, 33 members Year 1993: 33 FSAIs, 16 ASAIs, 49 members Year 1996: 53 FSAIs, 28 ASAIs, 81 members Year 2000: 96 FSAIs, 133 ASAIs, 229 members Year 2003: 118 FSAIs, 183 ASAIs, 301 members Year 2006: 134 FSAIs, 190 ASAIs, 324 members

7 The Society of Actuaries of Indonesia >> Role of Organization Represents and regulates its members for the benefit of the profession and in the public interest Regulates standards of practice, and codes covering conduct, ethics and technical matters Runs own curriculum and examinations for new entrants Conduct seminars and workshops for member continuing education and professional development Create and maintain cooperative relationship with Government, business community, and other professions

8 The Society of Actuaries of Indonesia >> What do the Actuaries do? Financial institutions: life, health, and general insurances, pension funds Public programs, including long-term health services Deposit insurance and guarantee fund Financial reporting and other statutory requirements Prudential requirements Market conduct Regulation and supervision Public policy

9 The Society of Actuaries of Indonesia >> Where do the Actuaries work? About 85% of practicing actuaries are concentrated in life (and health) insurance companies Remaining majority work mostly in pension and employee benefit consulting firms Around nine work for pension and insurance directorates of the Ministry of Finance (of the Government) Around ten work in the fields of reinsurance, general insurance and other financial sectors combined No full time actuary is on the staff of any university

10 The Society of Actuaries of Indonesia >> What are Major Roles of the Actuaries? Major roles of pension (and employee benefit) actuaries are to perform statutory valuations, plan design, plan documentation, conversion and liquidation, training, and expense calculations for accounting purpose  Demand for role of actuaries is growing, in particular on expense calculations for accounting valuation Major roles of life (and health) insurance actuaries are to monitor financial condition and solvency of companies and to advice to their boards, in particular  Identify and monitor any risks run by the company which may impact company’s ability to meet its liabilities to policyholders  Design and price products, and sign and certify statutory liabilities

11 The Society of Actuaries of Indonesia >> Challenges Ahead Creating better education system for new entrants and better continuing education and professional development system for existing members Meeting market demand More involvement in the traditional fields Competing with other professionals in non traditional fields Acquiring tools and methodologies to meet improvements in technology and social economic condition Maintaining highest quality of work and professional ethics Gaining recognition, internally and externally

12 Thank You