Building Actuarial Capacity in Indonesia

Q&A with Bill Duggan, field director of the University of Waterloo’s READI Project

Photo: iStock.com/DNY59

Bill Duggan
Bill Duggan

Tell us about yourself.
I am a Canadian development worker who has spent most of the last 35 years working on projects and programs focused on capacity building in various sectors. I have worked in Pakistan, India, Nepal, Sri Lanka, Bhutan, Thailand, Egypt, Jordan, parts of southern Africa and, mostly, in Indonesia. This has included quite a lot of work “embedded” in government departments to help improve strategic focus and budgeting priorities, such as helping district-level BAPPEDAs (regional development planning agency in Indonesia) prioritize high-impact, most-needed government programs like maternal health and agriculture extension programs.

I also have supported strategic planning within professional organizations like Persatuan Aktuaris Indonesia (Society of Actuaries of Indonesia, PAI) and worked with district governments in various parts of Sulawesi, and with the Agriculture, Animal Husbandry and Irrigation departments in Bhutan. I currently work with the University of Waterloo as the field director for the Risk Management, Economic Sustainability and Actuarial Science Development in Indonesia (READI) project.

What is the READI project, and how did you get involved?
The READI project was designed by the University of Waterloo in 2014, and it was approved by Global Affairs Canada and launched in late 2015. The project idea initially was suggested by Manulife Insurance Indonesia, a company that was acutely aware of the shortage of actuarial expertise in Indonesia. Manulife approached the University of Waterloo and suggested that the university design a project to help increase the number and quality of actuaries in Indonesia.

Manulife provides co-funding for the READI project. A complimentary project, supported by Sun Life Financial, facilitates research on strengthening actuarial science. The Indonesian Financial Supervision Authority (Otoritas Jasa Keuangan, OJK) is the Government of Indonesia partner agency for the READI project.

I was first approached by the University of Waterloo to consider the field director’s job in May 2015. At the time, I was busy running another project in Indonesia and was not able to take the position. The opportunity came along again in April 2016, when the timing was better for me, so in September 2016 I moved to Jakarta to coordinate the implementation of the READI project in Indonesia.

When you started, were you worried about not being an actuary, or did it end up being an advantage?
I initially worried about not having any academic background in actuarial science. This has been the only project I have ever worked on where I could listen to an expert delivering training and understand every word said, but still not understand the meaning! But as a project director, my main role is to work with the READI team—who are all very capable—and our Indonesian partners to identify capacity-building priorities and then focus on developing or strengthening those capacities in a step-wise and results-focused manner. So, my job was really to help bring out the best ideas and efforts from everyone involved in the project and to monitor progress and results, making changes and tweaks where necessary.

I think the most important thing is to surround yourself with smart, practical people and then help them do their work. I don’t need to be the smartest person in the meeting; I just need to be the one who can help optimize the use of expert knowledge and skills possessed by others and help the various stakeholders cooperate and collaborate. We constantly try to forge win-win initiatives.

What has the READI project achieved, and how has it grown over the years?
READI has been a very successful project, which can be attributed to:

  • The fact that the project was designed to respond to a HR capacity deficit identified by the local industry. In other words, the project was demand-driven.
  • Our key project partners, which include many leading universities, insurance companies, PAI and several Indonesian government ministries, are all excellent. They all are very keen and actively participate in the project.
  • A dedicated and committed University of Waterloo team.

When READI began in late 2015, there were no undergraduate actuarial science programs in Indonesia. Now there are 16, including programs offered in Sumatra, Java and Sulawesi. To increase the knowledge of our actuarial lecturers, on top of offering coaching, training and seminars, we held intensive actuarial science short courses (three to four per year). We also encouraged lecturers to complete mentorships (with durations of one to four months) or an intensive three-semester master’s degree in actuarial science at the University of Waterloo in Canada.

Public awareness and student demand for actuarial science programs have increased dramatically. We have held hundreds of workshops and seminars, organized campaigns on social media and provided scholarships. We also work with the Indonesian General Insurance Association and the Indonesian Life Insurance Association to design and deliver educational events across universities. By doing this, we increased enrollment in undergraduate actuarial science programs by 1,000 percent (we started with 70 students per year and have grown to 750 students per year). Almost 50,000 Indonesian high school students and thousands of mathematics teachers and guidance counselors have participated in READI workshops and seminars. This has triggered strong student demand for actuarial science programs, with leading universities reporting 1 in 60 acceptance rates. These acceptance standards are constantly rising and rivaling those of students entering the medical field.

READI has successfully introduced the cooperative education (work-integrated learning) approach for actuarial science programs and other specializations. Several leading universities now offer intensive study-work-study programs, which are implemented in collaboration with dozens of private sector and government entities. The students are working in many types of industries, including insurance, financial management, information technology (IT), pharmaceutical, food processing and state-owned enterprises. This has precipitated the development of the Government of Indonesia’s Merdeka Belajar: Kampus Merdeka (“Free to Learn: Open Campuses”) program, which is revolutionizing the way in which higher education is delivered in Indonesia.

Additionally, READI has worked with the Indonesian Mathematics Society (INDOMS) and READI partner universities to develop the Minimum Curriculum Standards for Undergraduate Actuarial Science Study Programs. We also have helped strengthen the organizational capacity and continuing professional development (CPD) offerings of the Society of Actuaries of Indonesia.

What was the main challenge you encountered in developing the actuarial science field in Indonesia?
The major challenge that faced the project when we began was a lack of qualified lecturers. Indonesia has lots of highly qualified mathematicians and statisticians, but almost none had a background in core actuarial science topics like risk modeling, predictive analytics and life insurance contingencies. To help overcome this challenge, READI provided scholarships to support Indonesian actuarial science lecturers who wished to complete a one-year intensive master’s in actuarial science degree at the University of Waterloo. The project has also delivered more than a dozen short courses to help lecturers increase their knowledge and confidence to teach core actuarial science topics.

What is most important to focus on when developing actuarial science in a region?
In Indonesia, the first priority was increasing the capacity and number of qualified actuarial science lecturers. A second priority is increasing the quality and quantity of actuarial science-applied research. At present, very little research is being undertaken, and the quality of this research is still suboptimal in most cases. Strengthening the operational capacity of the Society of Actuaries of Indonesia is also very important, as Indonesia is forecasted to have the largest actuarial society in Southeast Asia by 2030.

You mentioned actuarial research as a priority. What kind of research do you want to do in Indonesia, and how can universities and the industry work together to conduct it?
The READI project has supported various research with topics that have a linkage or application to actuarial science. Examples include:

  • Enhancing Paddy Farmer Income Sustainability With Crop Insurance Policy
  • A Multiple State Model for the Infection, Re-Infection and Survival Probability of Dengue Fever in Indonesia
  • Obesity, Longevity and Insurance in Indonesia
  • Modified Unit-linked Life Insurance With an Asset Value Guarantee
  • Modeling Old-age Mortality to Mitigate Longevity Risk on Indonesian Pension Plan
  • Modified Copula Expected Shortfall: A New Coherent Risk Measure and Its Application in Energy Risk
  • Special Morbidity-Mortality Table Construction for Jaminan Kesehatan Nasional (JKN)

Any research related to actuarial science will be useful. Research to help identify viable models and products for crop insurance is very important to help support Indonesian farmers and rural households.

Major improvements that could help universities work more closely with industry on applied research include:

  • Industry providing researchers (faculty and students) with access to data sets (even if it is masked or coded data, or old data)
  • The financial supervision authority (OJK) providing public access to masked or coded data sets
  • More actuarial science academics undertaking consultancies within industry
  • Industry approaching university researchers and actuarial science students and lecturers to develop ways to collaborate on useful research
  • Someone to bring together industry and universities to encourage their common interest in undertaking more joint research

Looking back, are there things you wish you had done differently?
We should not have wasted our time trying to help insurance companies develop and launch in-house actuary development programs (similar to the Manulife model), as companies simply were not interested in doing so—mainly due to the cost of providing a comprehensive in-house program. Also, we should have lobbied harder and more persuasively for OJK and the Ministry of Finance to develop dedicated actuarial departments or teams. As it stands now, actuarial capacity within OJK and the Ministry of Finance remains extremely limited.

The SOA has worked with READI on a number of projects. Can you share your view on these projects, specifically on what you think about the READI-SOA relationship?
We have been very pleased with the READI-SOA interaction and collaboration during the project period.

  • The SOA presented at the Global Trends in Actuarial Education and Professional Development workshop in 2016 and the READI Actuarial Science Curriculum Review Workshop in 2019.
  • READI participated as a supporting organization of the SOA Jakarta networking reception in 2016. READI also presented at the General Insurance Roadshow in 2017 and the SOA’s Big Data Seminar in 2018.
  • READI sponsored regulators and major stakeholders to participate in the SOA’s Asia-Pacific Annual Symposium in 2019.

Most of our interactions have been organized in collaboration with the SOA’s Asia-Pacific lead, Wai Ling Yung. We’ve also worked quite a bit with William Soetrisno of Manulife Indonesia, who does a lot of volunteer work on behalf of the SOA and with SOA members based in Indonesia. Both of them are great to work with.

In September 2016, several SOA executive committee members participated in the Global Trends in Actuarial Education and Professional Development workshop that READI held. Their presence and presentations were very valuable and much appreciated.

From the perspective of the READI project, the interaction and collaboration with SOA representatives has been very beneficial. It has helped the project expose various READI partner groups—actuaries, actuarial science lecturers, actuarial science students, PAI executive members and general members, and Government of Indonesia representatives at OJK and Pusat Pembinaan Profesi Keuangan—to the international perspective and standards that the SOA represents. It has allowed the project to expose READI partners and stakeholders to world-class actuarial standards and learning opportunities, which is very important in Indonesia where some parties tend to think that they can do it all on their own. The SOA’s contributions to the discussions on updating the PAI syllabus (to bring it in line with the International Actuarial Association’s (IAA’s) new curriculum) were also very valuable.

What are the future plans for READI and actuarial study in Indonesia?
The READI project is almost finished. We will wrap up capacity-building activities in Indonesia by December 2020. A few Indonesian lecturers will be participating in the University of Waterloo master’s in actuarial science program until August 2021, by which time the project will be complete.

Good development projects should facilitate sustainable increases in local capacity—in this case, we made sustainable improvements to actuarial science education and strengthened the actuarial profession in Indonesia. To this end, READI has been working on handing over capacity-building responsibilities to suitable local partners; preparing and handing over supporting learning resources; and working with project partners to help develop national actuarial science study program standards, laws and regulations to promote dynamic, high-quality actuarial science programs.

If you were to give advice to other developing markets that plan on accelerating the growth of the actuarial industry in their respective country, what would it be?
Any initiative undertaken needs to be demand-driven, by which I mean there must be genuine demand and interest from the insurance industry and the national government. Ideally, local partners should prove their commitment by providing financial or in-kind support.

I also would advise them to focus on opening and strengthening undergraduate actuarial science study programs in several high-quality universities. It is important to work in a multipronged and diligent manner to upgrade the actuarial science teaching skills and credentials of actuarial science lecturers. Finally, work should be done to strengthen the operating capacity, profile and effectiveness of the local actuarial society.

Any suggestions for actuaries who are reading and want to support actuarial study in Indonesia?
The READI project is always seeking Indonesian actuaries, and other folks from the insurance and financial risk management sector, who are interested in being guest speakers for READI training and outreach events (READI activities continue online during the pandemic period). Interested actuaries or other risk management specialists can contact Ivonne Rawis, the READI field office manager.

In addition, many of our university lecturer partners are always looking for interesting problems to investigate, so anyone who has the need for some applied research, or is interested in mentoring undergraduate- or master’s-level students undertaking actuarial research, should also contact Ivonne Rawis.

Bill Duggan is field director of the READI program and has a master’s degree in international rural planning and development from the University of Guelph.

Copyright © 2020 by the Society of Actuaries, Schaumburg, Illinois.