Actuaries analyze risk and uncertainty to help businesses, individuals, and other organizations manage the future. They evaluate financial information to estimate the likelihood of a specific event happening, and they develop strategies to deal with those events.
Actuaries may work for insurance companies, banks, hospitals, or consulting firms. They also work for government agencies, where they assess the risks associated with natural disasters, pandemics, or other catastrophic events.
To do their jobs, actuaries must be good at math and have strong communication skills. They must be able to think creatively and analytically, and have excellent research skills.
Actuary Job Duties
Some common duties for actuaries include:
- Preparing reports for upper management about risk levels
- Working with employees to explain risks and help them understand how they can mitigate those risks
- Analyzing past data to determine future risk factors for an organization or industry
- Developing models to predict the financial impact of certain events or occurrences
- Provide consulting services to insurance companies, employers, and other organizations to assist them in determining premiums for policies, or other costs associated with insurance
- Working with clients to set goals and develop strategies that meet their needs
Actuaries often work in insurance companies, but they can also be found in government agencies, nonprofit organizations, hospitals, financial institutions, or corporations. They are involved in all aspects of finance including investment management and planning.
Actuary Salary & Outlook
The median annual wage for actuaries is $124,789. Those earning higher wages tend to work in the insurance industry, and the top earners are making over $190,000 per year.
The employment of actuaries is expected to grow much faster than average over the next decade. This is due to an increase in health care costs and life expectancy that will place additional demands on insurance companies. As they adjust premiums based on risks, actuaries will be called upon to determine how much risk they can tolerate given their assets under management.
Actuary Job Requirements
The requirements for actuaries are as follows:
Education: Most employers prefer that candidates have a bachelor’s degree in mathematics, statistics, or actuarial science. Some employers may also require a master’s degree in one of these areas.
Certification: The Society of Actuaries offers several certifications to demonstrate expertise and experience in the field. Candidates must pass an exam and meet other requirements such as continuing education.
Experience: Experience in the insurance industry and familiarity with its methods and terminology is important. Candidates also need good analytical skills and problem-solving abilities.
Actuaries must have the following skills:
Advanced math skills: Actuaries use complex math to estimate risks and financial outcomes. These calculations are necessary for the creation of financial models that determine how much a company should charge for insurance premiums, as well as whether an insurance policy is likely to be profitable.
Expertise in data analysis: An actuary must have the ability to analyze data from different sources and find patterns or anomalies. He or she must also know how to interpret this information to determine what impact it will have on business decisions.
Knowledge of statistics: This skill is important because actuaries use statistical methods to help them assess risk and determine optimal pricing strategies.
Business knowledge: In addition to being able to calculate costs and benefits, actuaries must understand the broader business environment in which they work. They need a good understanding of corporate finance, economics, accounting, law, and other business-related topics.
Communication skills: An actuary must be able to clearly communicate his or her findings to others.
Time and project management: Actuaries must be able to manage both time and projects well.
Actuary Work Environment
Actuaries work in an office setting. They spend the majority of their time at a computer working with numbers and analyzing data. Actuaries use computers, spreadsheets or financial software to capture information such as client demographic data, insurance policy limits and payout tables, and claim patterns. They may also have to spend time on the telephone or in meetings with clients and agents.
An actuary’s job allows them to be their own boss and work independently. The hours are irregular, but they typically require long days. Some actuaries may occasionally travel. They usually wear conservative business attire.
Actuary Career Advancement
Actuaries who advance in their careers may move into senior positions such as chief actuary, chief risk officer, or chief financial officer. The chief actuary, or chief underwriter, analyzes, estimates, and manages risk. The chief risk officer is responsible for setting the direction and policy for the entire risk management department and ensuring the company is at a low and acceptable risk level. The chief financial officer is in charge of the company’s finances and is the person who reports directly to the chief executive officer.
Here are three trends influencing how actuaries work. Actuaries will need to stay up-to-date on these developments to keep their skills relevant and maintain a competitive advantage in the workplace.
Increasing Importance of Data Science
As insurance companies have shifted their focus towards using data to improve their decision-making processes, the demand for professionals with data science skills has increased significantly.
These professionals are in high demand, as organizations in this field are looking for experts who can design systems that allow them to use data to streamline processes and optimize efficiency.
Job Growth in the Life Insurance Industry
The life insurance industry is growing steadily as people increasingly seek to protect their family’s financial security.
With the passage of the Affordable Care Act, Americans were required to purchase health insurance or face a fine, which has encouraged more people to take advantage of life insurance benefits.
This increase in interest in life insurance means that actuaries will be needed to help determine premiums and offer services related to life insurance for both individuals and companies.
Diversification of Investment Options
A few decades ago, it was rare for people to own more than one type of insurance policy—for example, you might have a home owner’s policy in addition to auto or life insurance. Today, however, the rise of alternative investments has made it more common for people to have several different types of policies at once. For example, many people now own traditional insurance policies as well as some type of investment-based product that they use as an asset.
This diversification of investment options makes it increasingly important for those in the industry to understand the various benefits and drawbacks associated with each type of policy and help customers choose which one is best suited for their needs.
How to Become an Actuary
1. Planning Your Career Path
If you’re interested in a career as an actuary, it’s important to think about the path that got you here. Many people begin their careers in this field by getting their bachelor’s degree in mathematics or statistics; others start with an associate’s degree and then work their way up through entry-level positions.
Regardless of your education level, if you want to become an actuary, it is important to consider what areas of business interest you most. For example, someone who loves math might be drawn to the analytics side of the industry while someone who enjoys working with people may find that project management is more their speed.
2. Writing a Resume
The best resumes for actuary positions should emphasize your analytical thinking skills, attention to detail, and ability to work with numbers.
When describing your past jobs in the work history section of your resume, include specific examples of any problems that you were able to solve with math. To highlight your analytical thinking skills, you may want to explain how you collect information and draw conclusions using logic. If possible, try to show how your experience has prepared you for the position being applied for by including examples of projects where you used particular skills or techniques.
As an actuary, you will likely use a variety of software packages for your work, so list all of the programs that you are proficient in. You should also include any professional designations or certifications that you have received as well as any continuing education courses that you completed during the past few years.
3. Applying for Jobs
It’s a good idea to reach out to people who work in the field on LinkedIn. Take some time to go through their profiles and see if there are any projects or experiences that you have in common. Then ask specific questions about their careers and job experiences so that you can relate it to your own. While you’re waiting for the right position to open up, volunteer for jobs that will get you exposure to more experienced actuary professionals. Look for positions at universities, colleges, nonprofits, government agencies, or private companies.
4. Ace the Interview
Prepare for any technical questions an interviewer may ask you. To do this, consider the company and what they look for in a candidate.
In addition to answering specific questions related to technical knowledge, an interviewer will be looking to see how well you communicate as a whole. Most of the time, your interview will include some conversational questions as well as behavioral questions that give insight into how you work with others and how you might fit into the company culture.
To prepare for this part of the interview, think about your past experience and show off some of your best skills and attributes. As with any interview, it’s important not only to respond well to questions but also to ask good questions yourself. Demonstrate that you know what your audience wants and needs—and demonstrate your ability to solve their problems!