Actuarial Careers

Points of interest

Actuaries require an acute knowledge of mathematics and statistics, and usually must have bachelors degree to become fully recognized professionals in their field. While competition maybe initially high for these jobs, growth is looking very strong and this field is expected to grow very fast within the next decade. Around 55 percent of all actuaries work for insurance carriers to work on assessing risks.

Nature of the Work

Risk assessment is the name of the game for actuaries, and with a strong knowledge of the world of finance, business and general statistics they can identify how likely a certain risk will happen and how best to minimize the monetary effects of said risk. This kind of information and abilities is vital to all who work with insurance, creating rules and policies that keep risks at a minimum.

Addressing financial concerns and analyzing data, actuaries work to figure out the probability of such costly events as disability, illness, small or large injuries, and even death. With this information, they can assess how much this might cost companies, and how best to minimize these risks. However, actuaries can also work on the probable risks of financial investments, and how to best maximize profits on such ventures. They can also figure out how best to invest on all matters to make and achieve a certain level of retirement savings. With this level of knowledge on how best to work and minimize risks, actuaries design pension plans, policies for insurance companies, and even financial strategies to make sure that these plans are maintained and formed on a firm financial footing.

The majority of employed actuaries are working within the insurance industry, mostly with casualty and property insurance along with life and health insurance as well. Using modeling techniques based on the latest technologies and statistical analysis techniques, they can best figure out how and when certain vents are likely to occur, and how much of an impact said events can have on insurance claims and even a company’s financial losses. So, an actuary working with casualty insurance can use their knowledge of analysis to determine how many claims a person might have on their car insurance, using only information from their age, sex,history, car type, and other mitigating factors. With this information, they can make sure that the premium charged best suits the insurance company so that they won’t bite off more than they can chew when it comes to insuring certain individuals. With the help of an actuary, these companies will know whether or not someone is just not worth the risk.

When it comes to health and life insurance, actuaries can develop health and long term care policies for companies that detect the likelihood of chronic illnesses such as diabetes, stroke, HIV, cancer, and depression amongst certain groups of people with common risk factors such as living conditions, family history, or even ethnic background. This work is not only beneficial to the insurance company itself, as it adjusts the premium to minimize financial risk, but can also benefit the consumer as it can assist with predicting how likely a particular type of detrimental health condition will occur within that risk group. The annuity and life insurance policies created with the help of actuaries can even estimate the lifespan of a certain individual.

As for other financial industries, actuaries can work with credit card companies and create a price point for certain corporate security offerings. With their abilities to create cutting edge tools for investment, actuaries help each company they work for keep their edge when it comes to competing against other firms. Any actuary working in the pension field must work under the Employee Retirement Income Security Act (ERISA) of 1974, which created minimum standards that health and pension plans must work with. Actuaries employed by the federal or local government can also assist with managing financial assistance programs, like TANF, Social Security, and even Medicare.

Any company needing to devise a policy based on risk will turn to actuaries to help them out, along with explaining and simplifying complex technical issues and ideas to the higher ups, like executives, government officials, policy holders, shareholders, or even the general public. Actuaries can even testify in front of public agencies about the impact of potential business related legislation on their company’s bottom line and ability to function. Not only that, but they can create and work on plans to enter new sectors of business and how to best penetrate new geographic areas by determining the potential demand of said services in these new settings and locations.

When it comes to consulting actuaries, these advice oriented types can provide information and help to their clients while working under a contract. Similar to the duties of regular actuaries, consulting actuaries can look over a company’s pension plan and determine how valuable certain employee ad employer financial contributions will be and whether or not they can meet the needs of future retirees. Not only that, but others assist corporations in reducing their cost of insurance by showing them the best ways of reducing the risk of on the job injuries and other office and job site calamities. Consulting actuaries can also testify before a court about the potential value of an injured or killed individual’s lifetime earnings, how valuable future benefits of pension will be for divorce cases, and other assorted mathematical values that are only able to be calculated through complex statistical formulas. Finally, actuaries can work with reinsurance companies, a developing field where an insurance corporation works with others to share a larger prospective liability policy with a certain amount of other insurance companies to best minimize the risk involved in taking said policy while sharing the cost of the premium with each other.

Work Enviroment

The majority of actuaries work a “desk job”, or any job in which they work with files and computers in a pleasant and very comfortable office environment. Some jobs require bits of travel here and there, which can extend the average 40 hour work week of the typical actuary.

Training, Other Qualifications, and Advancement

Anyone looking to get into the growing field of actuaries needs to make sure they acquire a good background in the fields of statistics, mathematical analysis,and general business matters. Most actuaries have gotten a bachelor’s degree, and they must pass specialized exams related exclusively to their field to become a true certified professional.

Education and training

If you’re going to become an actuary, you’re going to need to take college courses in classes such as applied statistics, corporate finance, and actuary science, as this is required to acquire professional accreditation in the actuary field. This strong background in mathematics and general business will get you on the right footing, especially if you’re looking to gain an internship while you’re a student to gain vital experience in the exciting field of risk assessment before you graduate.

With the way things are looking in the world of actuaries, companies are starting to require their employees to have already completed and passed the first actuarial exam that will be discussed in the following section, as this test measures the proficiency in mathematics (including probability, statistiics, and calculus) before they can be hired by said business.

Those starting in the exciting field of actuaries will usually rotate between different jobs in a company, including such diverse divisions as financial reporting, marketing, and financial reporting, so that they may gain enough valuable experience in each field and learn valuable skills and tasks lin the insurance world. These tasks can include such simple things as preparing data for actuarial projects and such. Next, they move on to tougher tasks, like preparing correspondence, drafting reports, conducting research, and supervising clerks. Usually in their early careers, actuaries move from company to company to be able to advance to higher and higher positions.

Licensure

Currently, there are two professional societies that sponsor actuary related license programs that can lead to full professional status in at least two specialties: the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA). The CAS offers a series of exams and tests for those looking to get into the fields of casualty and property, which includes medical malpractice, workers compensation, automobile, personal injury liability, and homeowners insurance. The SOA, however, works to certify actuaries in the worlds of financial systems, investment, life insurance, health benefits systems and retirement systems.

These societies don’t work completely separate from each other, however, and four of the first seven exams in their examination series are sponsored together by the two societies and even cover the exact same material! Because of this, those students afraid of commitment to a particular specialty can wait until after their initial examination to decide, as the initial exam just tests for competence in mathematics and can assist in evaluating their proficiency in the actuary field. When the first examination process is completed, actuary students can begin to take the next series of exams, which can be assisted with a myriad of self study guides and courses. When two or more of the exams have been passed, students will have a much better chance of employment at a higher starting salary than students who flunked them. Fret not, though, as these initial exams can be retaken while students remain in college.

Students in the field of actuary should consider themselves very lucky, as they can find immediate work after graduation even without full certification. In fact, many companies will hire graduates while they are still in the certification process so that they may gain valuable experience as they wait. Once these exams are passed, however, they can expect to be rewarded with a large increase in pay and even a higher position. The world of actuaries is blessed to find that most, if not all employees are willing to assist employees throughout the accreditation process. Home study is still essential to bet prepare for the accreditation exams, but employers will help out in any way that they can.

Getting accreditation from the Casualty Actuarial Society is based mostly in exams, and there are several exams that must be taken to gain the highest level within CAS. For those looking to become an Associate, or to achieve the ACAS level, students need to complete seven examinations, go to at least one course on the basics of professionalism, and complete the necessary coursework about corporate finance, economics, and applied statistics, as is required by both the CAS and the SOA. This is not an overnight task, however, and the entire process for becoming an Associate can take from four years to up to eight years. The next level within CAS is fellowship or FCAS, and this requires taking and subsequently passing two additional tests in more advanced fields of study, which include assessments, investments, and dynamic financial analysis and evaluation with regards to insurance. It can take about two to three years to reach the level of fellowship after one has finished up the associate level work.The process for gaining certification in the Casualty Actuarial Society is predominantly exam-based.

Becoming certified from the Society of Actuaries involves a bit more work with computers than those looking for accreditation from the Casualty Actuarial Society, as it uses both examinations, typical book related course work and computer learning modules. Once the initial tests are finished and passed, actuary students need to choose their specialty field: group and health benefits, retirement benefits, investments, individual life and annuities, finance/enterprise risk management or investments. To become an Associate or to reach the ASA level, students must pass five tests, complete coursework required by both the CAS and SOA in applied statistics, economics, and corporate finance, work through a gauntlet of eight computer modules and write two essays, a process that can take between four to eight years in total. Once an associate level is reached, students can work to become accredited at the Fellowship level, or FSA. To become an FSA, two tests in the chosen field of specialty and three additional computer modules along with a seminar on professionalism and a course in fellowship admissions must be completed. The process of entering the status of fellowship within the SOA can take an additional two to three years after one has become an associate.

There are additional, more specific requirements for those who plan to work within the fields of pension, as they must become verified by the Federal Government sine they will be verifying the status of plans in accordance to federal standards. First, they need to enrolled by the Joint Board of the United States Treasury Department and the United States Department of Labor for the Enrollment of Actuaries . To be able to be enrolled by these prestigious government divisions, actuaries must fulfill certain requirements in fields of experience and blaze through two examinations administered by the Society of Actuaries, as is stipulated by the aforementioned governmental board.

Other qualifications

Anyone looking to enter the fast paced and fast growing world of actuaries needs to polish up on their computer skills, since they will need to be able to create and use databases, spreadsheets and the standard statistical analysis software used by the majority of insurance companies. Visual Basic, SAS, and SQL are all useful programming languages for actuaries to brush up on, as they can be used to develop new styles of software for analysis and risk management. A well rounded individual who has training in the fields of business, strong communication skills, and has a good technical background are highly sought after by various companies. Fantastic people skills and a good personality go a long way for anyone looking to become a consulting actuary, as working with individuals is a vital part of consulting.

Keeping up to date with the world around them, including the world of economics, legislation, and social trends, is also highly recommended for those looking to become actuaries, as this can highly benefit analysis techniques. An ear to the ground with regards to developments in business, finance, and health can highly benefit those who wish to work with insurance companies and develop future benefits packages.

Advancement

To advance within their chosen field, actuaries need to focus on good job performance and the number of accreditation exams they have passed. Knowing quite a bit about the world of insurance, business, pension, investment and employee benefit fields can assist actuaries to higher positions, even to the field of executive positions such as Chief Financial Officer and Chief Risk Officer. These sort of positions typically require candidates to use their knowledge and skills at assessing risk and applying it to the entirety of the company that they are working for. When actuaries become more skilled at supervisory techniques, they can advance to management positions such as accounting, data processing, underwriting, marketing,and even advertising. Many can even advance out on their own and move into consulting, opening up their own firms and becoming their own boss. Finally, some look back at their college experience and even work for universities themselves, teaching and assessing risk for higher learning institutions.

Employment

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Employment prospects are extremely hot, and in 2008 actuaries had around 19,700 jobs i with more being opened all the time. Approximately 55 percent of all employed actuaries worked for insurance carriers, while 16 percent of actuaries worked within the fields of management, technical and scientific consulting services. Some actuaries worked with individual insurance agents and brokers, and within the management of enterprises and companies as well. Finally, a small amount of actuaries worked exclusively for the federal government in various government agencies.

Job Outlook

Compared to some other industries, employment in the field of actuary work is expected to grow at a much higher rate than that of other related fields. Future positions are opening all the time in not just the insurance industry but in the world of investments and other financial worlds.

Employment change

The employment rate of actuaries is expected to grow by 21 percent over the 2008 through 2018 period. This is far faster than the average for all occupations, even those in the ever expanding fields computers and other technological industries. Employment for actuaries within the insurance industry will probably remain one of the best ways for those seeking jobs, as a bit of growth is expected. However, a large amount of job growth is seen to occur within other related industries, like that of consulting and financial services.

In spite of slower than average job growth in the world of insurance, actuaries can still expect employment to still increase for them in this key field of risk assessment during the 2008-2018 decade. Actuaries will be essential, as it will still be necessary to develop, evaluate, and price a myriad of products in the insurance industry and work out the price of new and upcoming risks. As natural disasters will still plague this nation of ours, the use of actuaries will be needed for property and casualty insurance, while the ever growing popularity of annuities, which is a financial product sold by life insurance companies will fuel employment as well. Many actuaries will be thrust into many non-traditional fields in addition to the typical insurance work, such as financial services, as they will be needed to assist with pricing security offerings for corporations and other more interesting and diverse services.

Those wishing to create their own consulting firms will see fast employment demand, since a large number of companies and industries will be using actuaries for risk assessment. As health care reform continues to pass in congress, actuaries will be needed to help create new legislation and manage health care companies themselves.

Job prospects

Actuaries seeking employment should definitely look towards completing internships and completing at least two of the initial exams, as this will help them enjoy the highest number of job prospects. Since most actuary programs will offer a very solid background in mathematics, especially when it comes to the abilities to compute complex probabilities for assessing risk, it should be easier to find jobs than the average employment seeker. Being able to find your way around a computer and having good skills with programing will also help as an essential for any resume. Not only will growth assist those looking for new jobs, but as the populace ages and other actuaries retire while other employees move around, those now open positions will be there as well.

The field with the most job opportunities will be those within the fast growing world of consulting firms. Since many companies are finding it extremely cost effective to work with aforementioned firms for various risk analysis jobs, these job openings are being created the fastest. Health care management and other health care companies will be looking to actuaries as more government control is being placed on the individual corporations, as the ability to contain the rising cost of health care itself will also require the management and expertise of actuaries.

Since the skills acquired by actuaries are seen to be increasingly useful in a more risk filled world, such as the airline industry and the world of banking, there is also an expected growth for job opportunitie in these fields as well.

Projections

While there are currently over 19,700 job positions filled by actuaries at this time, this is expected to grow up to 23,900 by 2018. This is a 4,000 job increase and a 21 percent jump and is far higher than many other industries at this time.

Earnings

The average annual earnings of an actuary were around $84,000 in May 2008. The middle 50 percent of actuaries earned an amount between $62,000 and $119,110. The bottom 10 percent earned a little less than $49, 150 while the highest wage earners in the top 10 percent averaged over $160, 780.

The National Association of Colleges and Employers has gone on record with stating that the annual starting salariy for college graduates with a Bachelors in actuarial science earned an average of $56,320.

Wages

The mean hourly wage for actuaries in 2009 was $46.50, an increase of 1 percent over 2008. The average 50 percent of workers earned around $41 per hour while the top ten percent of earners averaged around $76.08 for each hour worked.

Related Occupations

Some related fields that require a strong background in mathematics and analysis include:

  • Accountants and auditors
  • Budget analysts
  • Economists
  • Financial analysts
  • Insurance underwriters
  • Market and survey researchers
  • Mathematicians
  • Personal financial advisors
  • Statisticians

Sources of Additional Information

Anyone interested in additional information regarding the fast growing world of pension actuaries can check out these additional resources:

American Society of Pension Professionals & Actuaries, located at 4245 N. Fairfax Dr., Suite 750, Arlington, VA 22203. Their website is located at http://www.aspa.org

Anyone interested in finding information about careers in the world of health and life insurance, employee benefits, and finance, you can contact:

Society of Actuaries (SOA), located at 475 N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. Their webstie is located at http://www.soa.org

Those seeking information regarding actuary work in the fields of casualty insurance can find additional information from:

Casualty Actuarial Society (CAS), located at 4350 N. Fairfax Dr., Suite 250 Arlington, VA 22203. Their website can be located at http://www.casact.org

The SOA and CAS both sponsor a Web site for those interested in pursuing an actuarial career that can be found at http://www.beanactuary.org

Those seeking more general information regarding entering the field of actuary work can contact

American Academy of Actuaries, located at 1850 M St. NW., Suite 300, Washington, DC 20036. Their website is located at http://www.actuary.org