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Actuaries use statistics to determine the probability of risks and the financial consequences of those risks; it’s the perfect position for someone who loves numbers. Actuaries come up with numbers for insurance companies, working with accountants and underwriters to determine what insurance rates should be based on these risks and their financial outcomes.
Actuaries hold jobs in rank based on their experience. Entry-level actuaries are new graduates that may or may not have regional certification. Actuaries with a level V are considered to be the top-level specialists in their field with approximately eight to ten years of experience.
Actuaries use their wide range of knowledge in the fields of math and statistics as well as business and finance probability to determine the premiums of insurance plans. They calculate the risk factors for occurrences such as floods, fires, unemployment, accidents, mortality, and other risks to give an accurate depiction of the risk that insurance companies will take by insuring an individual or business. Actuaries work with insurance companies that specialize in many things including life insurance, health insurance, automobile insurance, and homeowners insurance. These professionals generally specialize in one type of insurance but can be certified in multiple areas.
Property and casualty actuaries research what will happen to insurance companies and businesses of that nature in the case of undesirable events. They are responsible for creating financial solutions that will manage these risks and that will benefit the interest of every party—not only the insurer, but the policyholder as well. They use their keen skills of analysis and risk management, including basic human behavior, to create strategies that will bring positive outcomes to tragic situations. They develop tables that show researched data regarding death, fire, auto accidents, and other tragedies that affect the insurance trade.
Actuaries not only research and create strategies; they must also be able to correctly evaluate how well these strategies will work to lessen the risk borne by the insurance companies they work for while still giving an appropriate benefit to the policyholders. They use their immense sea of knowledge and creativity to lessen the impacts of risks. Actuaries document their findings and use these reports to predict the probability of negative occurrences and the impacts they will have on the individual or business.
Most of the work performed by actuaries is done at a desk. This desk job is most often a full-time position of 40 or more hours per week. Actuaries work closely with insurance professionals to create plans that work well for the company and the policyholders. The job is relatively low-stress for qualified candidates with extensive knowledge of probability, statistics, mathematics, and business. Actuaries may spend time in meetings with other insurance companies if they are in the business of reinsuring policies.
Most actuaries hold at minimum a bachelor’s degree in a business field, mathematics, statistics, or accounting. Economics and finance are also appropriate degree options for this career choice. Internships play a large role in the hiring process for a well-paying position. Internships give valuable work experience, especially when candidates for actuaries positions take available internships with insurance companies, accounting firms, or other related occupation while they complete their education.
Many places require actuaries to be certified. The CAS or Casualty Actuarial Society is the most recommended society through which actuaries take certification examinations. The CAS provides examinations for graduates going into the areas of automobile, homeowners, medical malpractice, and other popular fields.
Many employers will hire after graduation and allow actuaries to gain valuable experience in the office while preparing for their certification exam. Some students feel confident with their knowledge and take the exam before they finish college. This provides them with more employment opportunities directly after they finish their college education.
Qualified actuaries possess more than a diploma and certificate. They must also possess superior skills in mathematics, organization, and planning. Communication skills are a must in this position, as actuaries must be able to clearly communicate the cause and effects of risks to the company when updating premiums for insurance plans. Actuaries must have a clear perspective of risks and each facet of risk factors, which can be variable depending on demographics of the area the companies and policyholders are located.
For higher paying positions, actuaries should have experience in reinsurance. This is when portions of an individual or business policy is passed on to another company, making it so the insurance company isn’t solely responsible for paying out a large amount of money for a risky insurance claim. Communications skills and selling skills are necessary for these positions.
If you want to become an actuary, you should never try to do the minimum amount of work needed just to pass. Actuaries are responsible for massive amounts of other people's money. It makes sense for actuarial examinations to have very high standards. Never cram for a test; when you take an actuarial exam and you read a problem, you should immediately know how to do it. The formulas should all be memorized; do hundreds of practice problems and review your list of formulas for memorization daily.
Take a course on insurance. If you're going to work in the insurance industry, it helps to know something about it. If you hate insurance, then you most likely won't enjoy being an actuary.
Most employers look for candidates that have had some actuarial experience before consideration. An internship is pretty much a requirement, so try to get one, or ideally two internships during your summer months. This will also help you decide if you're headed on the right career path. Employers also look for good computer skills, so the better they are, the more likely you will be considered for a position.
Both actuaries and statisticians have similar skills sets, such as computer knowledge, mathematical knowledge, and the use of statistical techniques. Where they differ is their employment settings, and the scope of their work.
Actuaries work specifically within the insurance industry, and handle data related to risk, providing companies with statistical probabilities of future occurrences. They focus on the financial losses that are associated with accidents, illnesses and natural disasters, and help insurance companies assign what coverage and premiums the client should be charged.
Statisticians (sometimes called data scientists) can work in a variety of settings, with multiple types of data. They are employed in banks, government agencies, consulting firms, technology firms, health-care organizations.. anywhere that collects and handles large amounts of data. They use statistical techniques to extract, analyze and summarize, turning complicated data sets into usable information. This information is then given to management, which will in turn use it to make informed decisions and policies.
In the first year of actuarial work, you will most likely be learning the actuarial, insurance, and company environment, and will probably be assigned some pretty routine calculations. After you've gained some experience, you will be given larger dollar amount projects, and higher level work.
The work varies by specialty and by employer, but typically you'll be working with quite a bit of data, performing various calculations, looking for patterns and trends, and recommending what price to charge for an insurance deal or how much to set aside to pay for claims.
Actuaries and accountants both work with the same information, both handle financial data, and both generate statistics. Yet each will perform different business functions, and will serve different purposes.
The majority of actuaries are employed in the insurance industry, and deal primarily with risk. They will provide the statistical probability of a future event occurring (such as accidents or natural disasters), and advise managers on how to reduce any likely financial impact of adverse events. They also advise insurance companies how much to charge in premiums and which customers to insure.
Accountants work with individuals or organizations, handling monetary transactions by recording financial information. Their job may also include financial analyzing and reporting, preparing tax returns, auditing accounts, and/or acting as consultants on a wide variety of financial matters. Their duties are typically broader than that of an actuary.
I thought I'd give you a taste of the actuarial sciences by bringing you a day in the life of a financial services actuary (in her own words) who works for a large hedge fund.
We take a look at the typical workday of three actuaries who work for different types of companies and who are at different stages in their careers.
A generous salary is obviously significant for many and a qualified actuary may be well rewarded – with many experienced actuaries picking up annual salaries which run into six figures.
The numbers Robin Houghton crunches really are deadly serious. But, he tells Jill Insley, his efforts often result in a much-improved income for clients.
We asked actuaries to describe a typical day on the job. Here is what they had to say...