Actuaries are all about helping individuals and companies avoid the financial consequences of risk. They study the uncertain future by gathering financial and statistical data, and using models and theories to assess the risk that an event will occur. With the help of an actuary, businesses can manage and minimize the associated cost of that risk.
Actuaries often work for insurance companies, employee benefits firms, healthcare companies, government agencies, public accounting firms, banks and investment firms. Actuaries are in high demand and enjoy strong job security and opportunities for advancement. If you are interested in a challenging career that utilizes mathematics, statistics and modeling software, this could be a rewarding career choice for you.
The daily job duties of an actuary will vary according to the employer’s needs, but in general, they do what’s necessary to manage risk. Using powerful software and proven theories, actuaries evaluate the likelihood of a future event and find creative ways to reduce the likelihood of undesirable events. When these undesirable events do occur, actuaries help to decrease their financial impact.
Specifically, actuaries often help insurance companies determine what to charge customers for auto, home, business or life insurance. They develop insurance policies that safeguard customers’ property, lives and health, while returning a profit to the insurer. In addition, actuaries help organizations develop and implement employee retirement plans.
An actuary may work on tasks such as:
- Researching rules and regulations.
- Compiling and reviewing financial data.
- Analyzing economic conditions.
- Running models to make financial projections.
- Making estimates on the probability and cost of events, such as death, natural disasters or automobile accidents.
- Designing and pricing new product offerings.
- Responding to inquiries.
- Preparing reports to communicate with managerial staff and other stakeholders.
- Conferring with other departments, managing data and dealing with discrepancies.
Salary Range and Job Outlook for Actuaries
A May 2012 survey by the U.S. Bureau of Labor Statistics’ (BLS) reported that actuaries earned a median salary of $93,680. Those in the top 10% earned more than $175,330 annually.
The BLS projects that employment for actuaries will grow 26% through 2022. This is much faster than the average rate of job growth for all occupations. Demand for actuaries is expected to increase as a result of new healthcare laws, as well as increases in the number and severity of storms and other natural disasters.
Health, property and casualty insurance firms will rely on more actuaries to evaluate changes in coverage, while private companies needing to evaluate employee healthcare plans should boost demand for consulting firms that employ actuaries.
According to the BLS, since actuary jobs are highly desirable, there may be strong competition for positions. Employment prospects will be best for graduates with work experience who have passed at least two actuary exams.
Career prospects and pay vary depending on experience, education and regional market conditions.
Required Knowledge and Skills
Becoming an actuary requires passing a series of examinations and earning the actuarial designation. Preparation starts early, since successful actuaries need to develop a wide range of knowledge and skills:
- Learning and assimilating a wide range of information.
- Strong analytical skills.
- Broad-based business knowledge.
- Understanding of human behavior.
- Strong computer skills.
- Critical thinking.
- A team-centered work style.
- Effective written and verbal communication skills.
Required and Recommended Education for Actuaries
The path to an actuary career begins with earning a bachelor’s degree. Many prospective actuaries study actuarial science, while others choose to major in mathematics, statistics, finance, business or statistics. To become eligible for certification, students must complete coursework in economics, applied statistics and corporate finance, and pass a series of tests.
In addition, courses in computer science, programming languages, databases and statistical analysis tools can be very valuable to future actuaries. Some employers require work experience, which can be obtained through internships or part-time employment.
Certification is offered by two professional societies: the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA), who each offer two certification levels (associate and fellowship). The CAS certifies actuaries in the property and casualty field, while the SOA certifies actuaries in life and health insurance, investments, finance and retirement benefits.
It can take from six to 10 years to pass all of the actuary certification exams and attain fellowship status, but you can begin your actuary career after passing the first two. Most prospective actuaries get a jump on their careers by completing at least one of the initial exams needed for certification while still in school.
Once certified, actuaries are required to participate in continuing education throughout their careers. These requirements are typically completed through seminars or employer-sponsored training opportunities.