Interview with Nikita Prabhu - General Insurance Actuary

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Ques 1: Why did you choose Actuarial Science as a career? Ans: I came to know about Actuarial Science when I was in high school from my father who is an insurance agent. He showed me the Ready reckoner for premium rates and told me that ‘actuaries’ were behind the mathematics of it. I researched the profession and found it quite fascinating. I could apply the knowledge gained from the study of mathematics, statistics, economics, and finance to solve a range of real-world problems. It seemed highly rewarding. Ques 2: How is it like to work in both consulting and core Insurance based company environments? Ans: I was fortunate to start my career in consulting with Ernst & Young. Early on in my career, I got exposure to the different fields that actuaries work in, such as life insurance, employee benefits and general insurance. This initial experience aroused my curiosity towards general insurance (GI) and hence I chose to become a GI actuary. In a consulting firm, you get the
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Do you know the types of risk faced by a Life Insurance company ?

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 Hey Guys

If interviewer ask any case study question or any situation based question then try to role play that situation in your mind and then try to answer that question.


Risks: We can divide it into various types such as

  • Market risks
  • Credit risks
  • Liquidity risks
  • Operational risks
  • Business risks
  • External risks
It will be quite theoretical but i will focus on some main risks for you guys in a layman terms.

Mortality risk:
  • It is the risk of policyholder dying earlier than expected or more deaths occurred in a portfolio than expected.
  • It will be a risk or not depends on the product that we as an insurer are selling into the market
  • For ex, HDFC life insurance sells term assurance policy where the payout is based on the death of the policyholder within a given time.So, in this case company has a mortality risk that if policyholder dies within that period they have to pay the money

  Longevity risk:
  • It is the risk of policyholder dying later than expected
  • It will be a risk or not depends on the product that we as an insurer are selling into the market
  • For ex, HDFC life insurance sells annuity policy where the payout is based on the regular basis as long as policyholder is alive. The more he lives, the more number of series of payments has to be made by our beloved HDFC in this case.

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Now i will try to list down some other risks for you not in detail but it will be easily understood




  1. Expenses of company being higher than expected
  2. Policyholder didn't renew their policy (majorly related to General insurance company where policyholder has to renew their policy for example your motorbike)
  3. Investment return earned being less than expected (so Policyholder will pay you money then you have to invest it somewhere and you just got hit by bad stock market)
  4. Fraud, embezzlement in the company
  5. Credit default
  6. Company has a cashflow problem
  7. Sales people are not trained
and many more......... Just do the roleplay :)

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Comments

  1. FM Financial Group29 October 2020 at 14:39

    Enjoy reading the article above , it really explains everything in detail, the article is very interesting and effective. Thank you and good luck for the upcoming articles. compare life insurance

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  2. Rozer Baine19 November 2020 at 15:38

    Enjoy reading the article above , it really explains everything in detail,the article is very interesting and effective.Thank you and good luck for the upcoming articles. best health insurance Miami

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