What Is an Actuary and What Do They Do?
While the actuary occupation isn’t listed as one of the 10 highest-paying jobs in America, they still earn hefty salaries. If you’re interested in mathematics, statistics, and finances, a job as an actuary may pique your interest. Actuaries are in charge of performing complex calculations that help to determine the likelihood of certain outcomes as they relate to illnesses, investments, disasters, or consumer demands.
Actuaries usually work in offices dealing with important facts and figures that help businesses to succeed and thrive. After completing their calculations individually or with a team, actuaries are responsible for presenting this information to insurance underwriters, investment bankers, or company executives. These figures are used to determine how investments are made or how insurance policies are priced.
Learning more about the duties an actuary performs and the types of industries they’re employed in may help you decide whether this career is right for you. Use this guide to find out more about the daily activities an actuary performs and the secondary education requirements for this position.
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Types of Actuary Jobs
Since actuaries analyze risk and investments while performing other crucial calculations, these analytical professionals are needed in a variety of fields. There are several different types of actuaries that work in various industries, including the following:
- Life Insurance Actuary: Using basic factors, such as the age, gender, or tobacco use of a client, a life insurance actuary calculates life expectancy. This figure is used to determine the premium and policies the company provides.
- Health Insurance Actuary: A health insurance actuary analyzes the occupations, family health histories, and locations of a group of insured individuals to determine how much health insurance may need to pay out. This analysis is used to design health insurance and long-term care policies and determine costs.
- Pension Actuary: These actuaries evaluate and test pension plans to ensure there are enough funds to support the program in the future. A pension actuary analyzes employees and contributions to help employers design other employee benefit plans, such as 401(k) accounts and health insurance offers.
- Property and Casualty Actuary: By calculating the expected total losses from claims through existing insurance policies, property and casualty actuaries assist in creating policies with specific coverages and premiums. These insurance policies protect property, including cars and homes, from losses, such as fire and theft.
- Enterprise Risk Actuary: Enterprise risk actuaries assist company executives in identifying risks that may negatively impact a company’s goals, such as a recession. The actuary then assists in developing strategies to continue striving to achieve these goals by controlling the company’s level of susceptibility to these risks.
- Investment Actuary: With a focus on managing risk, investment actuaries analyze how money is invested and attempt to calculate the outcome. If calculations are not favorable, these actuaries provide advice on how to mitigate the risk and potentially make investments more profitable.
- Finance Actuary: A finance actuary’s job is similar to a financial examiner because they’re responsible for examining finances and calculating profit and loss. Using this analysis, a finance actuary may give advice on implementing certain strategies to increase profit and decrease loss.
- Pricing Actuary: By collecting statistical data and analyzing past situations, a pricing actuary helps determine the best price for financial products, such as insurance coverage. Their calculations determine what a company should charge for these products while remaining profitable.
Actuary Job Description
In order to perform their jobs and provide accurate calculations or actionable business strategies, an actuary has many duties, including the following:
- Research and collect statistics and data.
- Use these statistics to determine the likelihood of future events, such as accidents or death.
- Estimate the costs of damage if these events do occur.
- Design plans, policies, and strategies that mitigate these risks and benefit the company.
- Test these policies to determine their outcomes and improve them as needed.
- Administer plans and strategies within the company or within the client base.
- Present study findings to executives, company owners, or government officials.
The specific duties an actuary must perform each day depend on the field they work in and the project they’re assigned.
Actuary Salary and Job Outlook
According to the U.S. Bureau of Labor and Statistics, actuaries earn an average salary of $102,880 per year, which equals out to an average of $49.46 per hour. The salary you earn as an actuary depends on your experience, education, location, and the field you work in.
The job outlook for actuaries is expected to grow by 20% from 2018 to 2028, which is much faster than most other occupations. Within the industry, this may equate to about 5,000 new jobs in the 10-year period. To continue growing within the industry, actuaries need to stay abreast of the latest risks and newest insurance products.
Most actuaries work in offices and don’t face many physical requirements. They usually work on computers and may be asked to attend meetings or travel to other company branches to present proposals. Most actuaries work in the insurance industry while some may work in finance offices, large companies, or for government facilities.
Most actuaries work full-time business hours and may work on teams of other actuaries or financial analysts. If an actuary is working on a time-sensitive project, they may need to work longer hours and may be asked to be available in the evenings or on weekends.
Actuary Educational and Training Requirements
To become an actuary, you must have a bachelor’s degree in mathematics, statistics, or a related field. You’re also required to become a certified professional before you may begin work as an actuary. This entails completing coursework in corporate finance, economics, and statistics. You may begin your career as an actuary intern to complete training in the field before you’re offered a position.
Depending on the field you plan to work in, you may also be required to earn your associate or fellow certification. If you’re planning to work in the property and casualty industry, you may be required to earn your Casualty Actuarial Society (CAS) certification. If you’re planning to work in finance, investments, retirement benefits, or the health and life insurance fields, you may be required to earn your Society of Actuaries (SOA) certification.
While you may be hired as an actuary without certification, most employers expect you to have completed some coursework toward this certification while in school. To advance into a head actuary position, you may be required to complete the training necessary to earn your fellow certificate.
Actuary Skills, Aptitudes, and Competencies
As an actuary, your employer expects you to possess certain soft skills that allow you to perform your job efficiently and accurately. Actuaries must have advanced mathematical and analytical skills. They’re tasked with analyzing large amounts of data to draw conclusions and create strategies. Attention to detail and focus are important skills you must possess to efficiently perform this job.
In addition to these skills, you must also have hard skills you’ve learned in school or training, such as specific formulas to complete calculations and methods to analyze data. Computer and technological skills are also crucial as an actuary. You may be tasked with presenting the information you’ve collected, so interpersonal and communication skills are also key in this position.
Actuaries are focused on mathematics, finances, economics, and statistics. Similar jobs that are focused on these same fields include the following:
- Financial advisor;
- Financial analyst;
- Budget analyst;
If you have advanced mathematical skills and enjoy analyzing statistics and data, a job as an actuary may be right for you. With a high salary and exciting job opportunities in several fields, you may find this a career path you’re ready to pursue.
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