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Actuaries analyze the financial costs of risk and uncertainty. They use mathematics, statistics, and financial theory to assess the risk that an event will occur, and they help businesses and clients develop policies that minimize the cost of that risk. Actuaries’ work is essential to the insurance industry.Duties
Actuaries typically do the following:
Most actuarial work is done with computers. Actuaries use database software to compile information. They use advanced statistics and modeling software to forecast the probability of an event occurring, the potential costs of the event if it does occur, and whether the insurance company has enough money to pay future claims.
Actuaries typically work on teams that often include managers and professionals in other fields, such as accounting, underwriting, and finance. For example, some actuaries work with accountants and financial analysts to set the price for security offerings or with market research analysts to forecast demand for new products.
Most actuaries work at insurance companies, where they help design policies and determine the premiums that should be charged for each policy. They must ensure that the premiums are profitable yet competitive with other insurance companies.
Actuaries in the insurance industry typically specialize in a specific field of insurance, such as one of the following:
Health insurance actuaries help develop long-term care and health insurance policies by predicting expected costs of providing care under the terms of an insurance contract. Their predictions are based on numerous factors, including family history, geographic location, and occupation.
Life insurance actuaries help develop annuity and life insurance policies for individuals and groups by estimating, on the basis of risk factors such as age, gender, and tobacco use, how long someone is expected to live.
Property and casualty insurance actuaries help develop insurance policies that insure policyholders against property loss and liability resulting from accidents, natural disasters, fires, and other events. They calculate the expected number of claims resulting from automobile accidents, which varies with the insured person’s age, sex, driving history, type of car, and other factors.
Some actuaries apply their expertise to financial matters outside of the insurance industry. For example, they develop investment strategies that manage risks and maximize returns for companies or individuals.
Pension and retirement benefits actuaries design, test, and evaluate company pension plans to determine if the expected funds available in the future will be enough to ensure payment of future benefits. They must report the results of their evaluations to the federal government. Pension actuaries also help businesses develop other types of retirement plans, such as 401(k)s and healthcare plans for retirees. In addition, they provide retirement planning advice to individuals.
Enterprise risk actuaries identify any risks, including economic, financial, and geopolitical risks that may affect a company’s short-term or long-term objectives. They help top executives determine how much risk the business is willing to take, and they develop strategies to respond to these issues.
Actuaries also work in the public sector. In the federal government, actuaries may evaluate proposed changes to Social Security or Medicare or conduct economic and demographic studies to project future benefit obligations. At the state level, actuaries may examine and regulate the rates charged by insurance companies.
Some actuaries are considered consultants and provide advice to clients on a contract basis. Many consulting actuaries audit the work of internal actuaries at insurance companies or handle actuarial duties for insurance companies that are not large enough to keep their own actuaries on staff.
Actuaries need a bachelor’s degree, typically in mathematics, actuarial science, statistics, or some other analytical field. Students must complete coursework in economics, applied statistics, and corporate finance, and must pass a series of exams to become certified professionals.Education
Actuaries must have a strong background in mathematics, statistics, and business. Typically, an actuary has an undergraduate degree in mathematics, actuarial science, statistics, or some other analytical field.
To become certified professionals, students must complete coursework in economics, applied statistics, and corporate finance.
Students also should take classes outside of mathematics and business to prepare them for a career as an actuary. Coursework in computer science, especially programming languages, and the ability to use and develop spreadsheets, databases, and statistical analysis tools, are valuable. Classes in writing and public speaking will improve students’ ability to communicate in the business world.Licenses, Certification, and Registrations
Two professional societies—the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA)—sponsor programs leading to full professional status. The CAS and SOA offer two levels of certification: associate and fellow.
The CAS certifies actuaries who work in the property and casualty field, which includes automobile, homeowners, medical malpractice, and workers’ compensation insurance.
The SOA certifies actuaries who work in life insurance, health insurance, retirement benefits, investments, and finance.
The main requirement for associate certification in each society is the completion of exams. The SOA requires that candidates pass five exams for associate (ASA) certification. The CAS requires that candidates pass seven exams for associate (ACAS) certification.
Many employers expect students to have passed at least one of the initial actuary exams needed for professional certification before graduation.
In addition, both CAS and SOA require that candidates take seminars on professionalism. Both societies have mandatory e-learning courses for candidates.
It typically takes 4 to 6 years for an actuary to get an ACAS or an ASA certification because each exam requires hundreds of hours of study and months of preparation.
After becoming associates, actuaries typically take another 2 to 3 years to earn fellowship status.
The SOA offers fellowship certification in five separate tracks: life and annuities, group and health benefits, retirement benefits, investments, and finance/enterprise risk management. Unlike the SOA, the CAS does not offer specialized study tracks for fellowship certification.
Both the CAS and the SOA have a continuing education requirement. Most actuaries meet this requirement by attending training seminars that are sponsored by their employers or the societies.
Pension actuaries typically must be licensed by the U.S. Department of Labor and U.S. Department of the Treasury’s Joint Board for the Enrollment of Actuaries. Applicants must meet certain experience requirements and pass two exams administered through the SOA to qualify for enrollment.Other Experience
Because there are different types of practice areas, including health, life, pension, and casualty, internships may be helpful for students deciding on which actuarial track to pursue.Training
Most entry-level actuaries start out as trainees. They are typically on teams with more experienced actuaries who serve as mentors. At first, they perform basic tasks, such as compiling data, but as they gain more experience, they may conduct research and write reports. Beginning actuaries may spend time working in other departments, such as marketing, underwriting, and product development, to learn all aspects of the company’s work and how actuarial work applies to them.
Most employers support their actuaries throughout the certification process. For example, employers typically pay the cost of exams and study materials. Many firms provide paid time to study and encourage their employees to set up study groups. Employees usually receive raises or bonuses for each exam that they pass.Advancement
Advancement depends largely on job performance and the number of actuarial exams passed. For example, actuaries who achieve fellowship status often supervise the work of other actuaries and provide advice to senior management. Actuaries with a broad knowledge of risk management and how it applies to business can rise to executive positions in their companies, such as chief risk officer or chief financial officer.Important Qualities
Analytical skills. Actuaries use analytical skills to identify patterns and trends in complex sets of data to determine the factors that have an effect on certain types of events.
Communication skills. Actuaries must be able to explain complex technical matters to those without an actuarial background. They must also communicate clearly through the reports and memos that describe their work and recommendations.
Computer skills. Actuaries must know programming languages and be able to use and develop spreadsheets, databases, and statistical analysis tools.
Interpersonal skills. Actuaries serve as leaders and members of teams, so they must be able to listen to other people’s opinions and suggestions before reaching a conclusion.
Math skills. Actuaries quantify risk by using the principles of calculus, statistics, and probability.
Problem-solving skills. Actuaries identify risks and develop ways for businesses to manage those risks.
Average Length of Employment
Top Careers Before Actuary
Top Careers After Actuary
Hispanic or Latino9.4%
Black or African American0.6%
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University of Iowa9.8%
University of Connecticut8.2%
State University of New York Buffalo6.6%
University of Nebraska - Lincoln4.9%
Brigham Young University4.9%
Georgia State University4.9%
Pennsylvania State University4.9%
University of Oklahoma4.9%
New Jersey Institute of Technology4.9%
Rensselaer Polytechnic Institute4.9%
State University of New York Stony Brook4.9%
Northern Arizona University3.3%
University of Nebraska at Omaha3.3%
Morgan State University3.3%
University of Northern Iowa3.3%
University of California - Los Angeles3.3%
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|Job Title||Company||Location||Start Date||Salary|
|Actuary||ZNA Services LLC||New York, NY||Dec 14, 2015||$172,740|
|Life Settlement Actuary||AIG Employee Services, Inc.||New York, NY||Jul 18, 2016||$172,037|
|Actuaries||Ernst & Young U.S. LLP||New York, NY||Sep 24, 2014||$169,208|
|Predictive Analytics Actuary||Starr Insurance Holdings, Inc.||New York, NY||Oct 04, 2014||$169,208|
|Actuaries||Ernst & Young U.S. LLP||New York, NY||Jul 23, 2014||$169,208|
|Actuaries||Swiss Re America Holding Corporation||Armonk, NY||Sep 02, 2014||$158,000 -
|Predictive Analytics Actuary||Starr Insurance Holdings, Inc.||New York, NY||Dec 16, 2014||$158,000 -
|Actuaries||Ernst & Young U.S. LLP||New York, NY||Feb 04, 2014||$157,664|
|Actuaries||Ernst & Young U.S. LLP||New York, NY||Feb 05, 2014||$157,664|
|Chief Actuary||Liberty Mutual Insurance Company||Boston, MA||Aug 01, 2014||$157,200 -
|Actuary||Liberty Mutual Group Inc.||Boston, MA||Jul 12, 2016||$150,850|
|Actuary, Modeling and Valuation||B Asset Manager LP||New York, NY||Feb 11, 2015||$150,000|
|Life Settlement Actuary||AIG Employee Services, Inc.||New York, NY||Dec 09, 2016||$150,000|
|Life Settlements Actuary||American International Group, Inc.||New York, NY||Dec 02, 2013||$150,000|
|Actuaries||Pacific Life Insurance Company||Newport Beach, CA||Jan 08, 2014||$122,262|
|Actuaries||Phoenix Life Insurance Company||Hartford, CT||Apr 23, 2014||$122,000|
|Actuaries||The Prudential Insurance Company of America||Newark, NJ||Aug 29, 2013||$122,000|
|Chief Actuary||Netcare Life and Health Insurance Company||Feb 14, 2014||$121,500|
|Actuaries||Mercer (Us) Inc.||New York, NY||May 27, 2014||$121,500|
|Lead Actuary||Harvard Pilgrim Health Care||Wellesley, MA||May 25, 2015||$120,750|
|Actuary||McKinsey & Company, Inc. United States||Chicago, IL||May 15, 2016||$120,399|
|Actuaries||Liberty Mutual Group Inc.||Chicago, IL||Aug 01, 2014||$120,000 -
|Actuaries||Transamerica Life Insurance Company||Cedar Rapids, IA||Feb 13, 2013||$103,709 -
|Actuaries||Aaanortherncalifornia, Nevada&Utahinsuranceexchange||Walnut Creek, CA||Mar 22, 2013||$103,355 -
|Actuaries||Insurance Services Office, Inc.||Jersey City, NJ||Jul 10, 2014||$102,752|
|Actuaries||Cheiron, Inc.||New York, NY||Jun 05, 2014||$102,752|
|Actuary||Aegis Service Corp.||NY||May 27, 2015||$102,752|
|Actuary||Milliman, Inc.||Chicago, IL||Sep 12, 2013||$102,497|
|Actuaries||Perr&Knight||Boca Raton, FL||Feb 04, 2013||$102,000|
|Actuaries||Liberty Mutual Group Inc.||Boston, MA||May 13, 2014||$101,700 -
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