CAIRO: Is it worthwhile to think whether that percentage cut from your salary every month for social security will eventually amount to a decent retirement benefit?
This might also be the same question that many of us ask ourselves when taking the step of getting life insurance of any kind.
We keep flipping it around in our minds, fearing that the value of the currency and the cost of living will change by the time we retire; meaning that we will receive peanuts instead of what we thought would have been a handsome amount of money.
For those who continue to be puzzled by such thoughts, actuarial science should provide the key to understanding the complicated business of insurance policies worldwide.
Actuarial science is the analytical backbone of a society s financial security programs. It is based on evaluating and protecting it against uncertain future events.
While the science has only recently been introduced to some of the business curricula in Egypt, for the last decade it has been part and parcel of the insurance industry in the West.
In the US there are some 19,000 actuaries compared to less than 10 in Egypt, most of whom have studied abroad.
The latest news, however, is that the American International Group (AIG), a leading international insurance and financial services organization, is supporting the actuarial science major at the American University in Cairo (AUC). They will do this by providing funding estimated at $240,000 for a leading professor or actuary to spend a full academic year teaching at AUC through the AIG s distinguished professorship program.
The actuarial science major was established at AUC in 2004. It aims to reduce the gap between supply and demand for actuaries in Egypt and the Arab region and develop a partnership between the AUC and financial institutions.
Only ten students are accepted to do the major every year, revealed Ali Hadi, vice provost and director of the actuarial science program.
Hadi added: The reason why few students are accepted is that the science requires special abilities that range from advanced mathematical skills to the readiness to dabble in the study of business and commercial law and to develop knowledge of languages and communications skills.
Not all candidates can claim to combine all these elements; selection, therefore, should be carried out with the utmost care and accuracy, noted Hadi stressing that the funding will provide students with a high quality educational program. It incorporates teaching from a broad range of disciplines including mathematics, probability, statistics, economics, finance, business law, accounting and marketing.
Hadi pointed out that the science had not been considered earlier because only four insurance companies were operating in Egypt.
This was why there was no direct need to promote it. Today after many such companies has started to play a vital role in people s lives actuaries are filling an essential gap.
Responding to a comment about whether, in the light of the new science, some insurance companies might revise their old policies or decisions, Hadi said: We shouldn t rule that out. An insurance company might reintroduce a policy informing some categories of insurers of the new improvements added to avoid risk or loss that could have been incurred as a result of maintaining an old policy.
For Hadi several problems encountered in the field have triggered the need for setting up the study locally.
One of these is reliance on foreign expertise in that field. The other is that the decisions that had been taken by some companies were not based on sound actuarial knowledge.
Today the companies never recruit an actuary unless he or she is highly qualified and is licensed by the organization that regulates the work of insurance companies.
