Orhun Emre Çelik, Chairman of the Actuarial Society of Turkey: “We became a full member of International Actuarial Association in 2016, and aim to become a full member of Actuarial Association of Europe next year.”

Since when has the Actuarial Society been operating in Turkey? Could you inform us about your fields of activity?

Our society was founded in 1951 with 12 founding members under the name “Turkish Actuarial Community (Türkiye Aktüerler Cemiyeti)”. It was closed for a brief time in 1980 and restarted its activities in 1981 under the leadership of Prof. Dr. Kenan Ural with the name “Actuarial Society (Aktüerler Derneği)”. The purpose of our society is written in our bylaws as expanding the actuarial profession, contributing to the development of actuarial sciences in Turkey, increasing the know-how of the members of our profession, protecting their interests, ensuring their cooperation with each other and helping them resolve their conflicts fairly; while supporting the professional development of students studying actuarial sciences, conducting and encouraging researches and analyses about the actuarial field, and helping real and legal entities, judicial and other official bodies in fulfilling their actuarial requirements. We conduct many different activities within the framework of these purposes. We support academic articles, researches and analyses; collect documents and records; organize conferences, seminars, and conventions regarding the field of actuary.  We attend to professional meetings organized in Turkey and other countries, while establishing communication and cooperation with national and international organizations. We became a full member of International Actuarial Association in 2016, and aim to become a full member of Actuarial Association of Europe next year.

 
How do you evaluate the importance of actuarial profession in insurance business? How do actuaries contribute to the insurance market?

Actuary is a profession that establishes models and determines the risks about all manner of circumstances influencing the life and properties of people, estimates the financial impacts of those risks, and finding alternatives in order to avoid them. In this sense, actuarial studies constitute the backbone of insurance business. An insurance company that fails to keep the actuarial basis of its business robust cannot survive within today’s increasingly competitive business environment.

Therefore, actuaries ensure that insurance products are offered to consumers with accurate premiums through their pricing activities, while providing insurance companies with a safe journey towards the future by helping them estimate their liabilities accurately through their reserve studies. They also provide guidance for risks unassociated with insurance by aiding risk management activities on a corporate level.

Can you inform us about the number of actuaries working in Turkey? What are the conditions of becoming eligible to being an actuary?

Registration number of the latest actuary listed in the records of the Undersecretariat of Treasury is 135. In addition to a bachelor’s degree from a university, one needs to pass a three-phase examination and have acquired a certain level of experience. Of course, as a natural requirement of our business, one should not have been found guilty of major crimes such as embezzlement and bribery. Honesty and justice is an indispensable part of our jobs.

What are the specific phases awaiting people who wish to become actuaries? Can you give us some tips about the challenges and important points of this profession?

First, one should complete a 3-stage examination consisting of 13 different tests. Our society has become a full member of IAA by proving that these tests comply with the international minimum training standards. Therefore, going through such an examination system is actually an indicator that the candidate has a significant amount of know-how concerning this profession. Apart from the exams, a professional experience of 3 years is necessary. This ensures that a person listed in the registry of actuaries complies with certain standards in terms of knowledge and experience.

Of course, it not that easy to reflect that knowledge and experience onto real life: Making estimations for the future based on models supported by serious analyses is extremely challenging under an intense time pressure, generally with unsatisfactory data, and in a highly uncertain environment in parallel with the rapid changes of legislation, economic framework and political agenda. This does not only require numeric skills but also a serious amount of intellectual accumulation of knowledge. An actuary that can achieve this instantly becomes a significant resource for their company and for the insurance sector. Comprehensive knowledge of all business processes, a deeper and better reporting skill than many professional reporters, and more importantly, a chance to see the connections and relations between the inputs and outputs of all the different departments make actuaries a significant part of the decision making process for companies that are wise enough to take advantage of those skills.

Are there any operational, educational or practical differences between the actuarial practices around the world and Turkey?

As I have mentioned earlier, our current examination system complies with IAA standards. We are also organizing several events to improve the areas that are said to be insufficient, such as ethics and professionalism. Although there are some steps required to be taken for continuous training, we can say that our training standards are in parallel with the rest of the world.

Unfortunately, we still have a long way to go in terms of practice and operations. We see that actuarial activities are much more common in non-insurance areas, particularly banking. We rapidly need to train and raise many more actuaries. However, it is not possible to keep high educational standards and proceed rapidly at the same time. There are also some differences concerning the positions of actuaries in companies. When we compare the actuarial practices of companies operating in our country to those in developed markets, we can see that there are a lot of areas open for development. Moreover, Solvency II requirements in Europe are expected to expand this gap even further by deepening and diversifying this field. Actuarial function in other countries and in our country do not overlap in terms of concept definition, which is another reason for those differences. It is evident that the ultimate practice should be conducted by actuaries; however, we need to separate the individual actuaries and those working inside corporate functions from each other. Corporate functions require several actuaries to work in coordination to address different subjects. For the upcoming terms, we expect insurance companies to start seeing actuarial function beyond the current concept and as a part of internal systems such as risk management, internal control, audit etc. With the IFRS 17 requirements, actuaries will be undertaking bigger roles and responsibilities concerning financial tables. Therefore, we can say that actuarial profession will become much more critical in parallel with the new IFRS 17 studies.

In your opinion, what are the major problems of actuarial profession in our country?

This profession faces different problems in different areas. The fact that society is not well informed about this profession is a problem, which makes it difficult to attract qualified human resources. Unnecessarily being limited to the insurance market and the troublesome working conditions of insurance market, combined with an unprofitable market structure make it really challenging at times. Operationally, few existing actuarial departments have to deal with many operational tasks. As a result, we cannot easily reach the level of expertise of our colleagues working in other countries. In developed markets, we can see actuaries who have specialized in pricing, reserves, financials and broken that down to insurance lines such as health, life, liability and other non-life insurance. On the contrary, an actuary in our country is expected to interpret the data in all those areas. Even if it is not expected, an actuary generally ends up working on all of them. On the one hand, this is a big challenge; but on the other, it seriously broadens the perspective of the actuary.

Position of the actuaries working at companies and at the Undersecretariat of Treasury is another issue that we need to address. Actuaries are involved in critical processes within companies; while conducting provisional activities in an independent manner. The regulations prevent actuaries being promoted to senior management positions such as assistant general manager to maintain their independence; however, in practice, this puts actuaries in a position that does not guarantee direct contact with the Board of Directors. Therefore, the result can be the exact opposite of the purpose. Last year, we submitted a comprehensive report to the Undersecretariat of Treasury titled “Actuarial Function - Practices in Turkey and Other Countries” which included our opinions on these matters.

What are the activities of your society to improve the existing actuarial practices?

We can categorize the activities of our society under several groups:
We organize trainings and seminars for professional development. In 2016, we held a seminar with the topic of “Professionalism and Ethics”. In 2017, we hosted a regional conference in cooperation with IAA, which was attended by over a hundred participants and international speakers. This two-day conference included several presentations about the current agenda and panels were sector related developments were discussed. 
Plus, we organize many university visits to introduce our profession to students. We try to provide guidance to our students with the aim of raising better actuaries.
Our members also contribute to the preparation of actuarial exams by providing questions. 
We organize internal meetings where we analyze and evaluate the developments in our sector. Our society prepares reports about our professional opinions and submits them to the Undersecretariat of Treasury and other related functions. As I have mentioned earlier, we prepared a report on “Actuarial Function” with active participation of approximately 20 of our members and a much better attended survey set; and we submitted it to the Undersecretariat of Treasury.

We try to attend to international meetings and organizations. During IAA meetings, our members undertake active duties and make presentations in the committees and sections they participate in. Therefore, we can represent the actuarial and insurance standards of our country on international platforms; and we support the development of local practices by monitoring recent developments around the world.

The way to do a job in the right way is to evaluate the elements of that job accurately, analyze and interpret the potential developments of those elements, and revise your work through a continuous feedback process. Actuary is the profession that will execute this process most accurately for all organizations and companies engaged in risk management and data science, particularly insurance companies. Today’s hot topics such as “big data” and “artificial intelligence” are among the most commonplace of modelling alternatives for us actuaries for years. All organizations that create the environment for actuaries to reveal and use this know-how will reach much better positions in their markets. Anyone who focuses on what should be done about those areas rather than what is trending will definitely cross paths with an actuary along the way.