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What an Actuary Does and How to Become One

By June 27, 2022August 2nd, 2022No Comments
financial safeguards

What is an Actuary?

Actuaries believe they play an essential part in society because they contribute to the establishment of adequate financial safeguards to protect against the occurrence of catastrophic economic events.

Mary Kirby, senior vice president and consulting actuary for Segal’s retiree health business, says actuaries ensure the insurance system is operating. According to her email, they assist companies achieve “financial stability.”

Kirby “You may choose your actuarial specialty. Health, retirement, finances, and insurance are examples.”

How to Become an Actuary?

According to the United States Bureau of Labor Statistics, a bachelor’s degree in an analytical field such as mathematics, statistics, or actuarial science is typically required for entry-level positions in the actuarial profession. The BLS also notes that high-level actuarial jobs require formal certification or licensure to be considered for the post. In most cases, actuaries must consistently participate in ongoing training to satisfy continuing education obligations and keep their current certifications or licenses.

Weis stresses the difficulty of training for a profession in actuarial science, emphasizing that those who become actuaries are required to improve their abilities and broaden their knowledge base continually.

“Becoming an actuary is a protracted process that lasts much beyond graduation from school,” he explains. “The process may take anywhere from five to ten years.” “To get the professional designation, one must put in a lot of effort and devotion to pass the professional tests and complete the professional courses, as well as earn practical experience by working in an actuarial sector. Actuaries must continue applying themselves and achieving appropriate professional development throughout their careers once they have a professional designation. This is the case even after the title has been earned.

The following are the most typical routes that one may take to become an actuary:

  • Complete Your Undergraduate Education.

An undergraduate in actuarial science is the most straightforward route to take in terms of schooling. Completing a bachelor’s degree program in a field such as finance, economics, or commerce is another rather prevalent route. Because companies focus more on candidates who have successfully passed certification examinations, prospective actuaries might also select unrelated degrees such as engineering or art.

  • Take some more classes (If Necessary).

Students working for a degree in an area unrelated to economics, statistics, or corporate finance may find that they need to take additional classes throughout their undergraduate education. Learning essential technologies used in the profession, such as programming languages, computer science, and the operation of spreadsheets, databases, and other statistical analysis tools, is beneficial for those interested in becoming actuaries.

  • Submit an Application to a Professional Organization and Complete All Necessary Certification Exams.

You are eligible to apply for membership in a professional actuarial organization the moment you start the final year of your undergraduate degree program. After completing their courses and successfully passing their examinations, you will be able to begin earning your certification. By the time you graduate and start searching for work, most companies anticipate that you will have already completed at least one or two of these examinations.

What Kind of Work Do Actuaries Do, and Where Do They Work?

Actuaries compute insurance customers’ premiums and rates. Pension funds and retirement programs utilize them. They may help for-profit or nonprofit organizations and government entities estimate disaster expenses. They often advise decision-makers.

Six-figure wages are frequent. As of May 2019, the Bureau of Labor Statistics reported that the median annual compensation for actuaries working in the United States was $108,350. The Bureau of Labor Statistics projects that by 2028, the number of actuaries employed will be twenty percent greater than in 2018. This job growth rate is much faster than the average rate of five percent across all professions.

A strong aptitude for mathematics and statistics is required to enter this in-demand and profitable field. Because it demands making sense of data and seeing patterns in numbers, actuaries say that people who work in this sector need good mathematical abilities, an eye for detail, and a systematic approach.

Why Work as an Actuary?

The actuarial industry is projected to increase by 18 percent from 2019 to 2029, substantially faster than the average for all occupations. With a current median compensation of $111,030 per year, the actuarial profession exceeds other mathematical science careers and delivers approximately three times the income of ordinary American employment. The combination of high demand and revenue allows for a profitable and secure job.

Typically, actuaries may expect a full-time but flexible schedule for a healthy work-life balance and enjoy pleasant office settings. In addition to these characteristics, Forbes magazine has rated it one of the top occupations for women, and career expert Laurence Shatkin’s book “150 Finest Recession-Proof Jobs” identifies it as one of the best sectors in a recession.

Professional Accreditation as an Actuary

In the United States and Canada, the Society of Actuaries (SOA) and the Casualty Actuarial Society provide certification examinations (CAS). The SOA qualifies professionals in life and health insurance, retirement benefits, investments, and finance. CAS focuses on qualifications within the property and liability insurance industry.

Employers often require entry-level actuaries to pass one or two certification examinations before college graduation. Seven tests are necessary for certification at the associate level. This usually takes four to seven years since each exam needs mandated e-learning courses, hundreds of study hours, and months of preparation.

You may obtain a total fellowship rank by passing three more tests after becoming an associate. Working professionals may accomplish this objective in an extra two to three years. Actuaries must engage in continuing education to keep their certification through seminars provided by their companies or professional bodies.

How to Start Your Actuarial Profession?

Internships in various specializations, including health, life, pension, and casualty insurance, may help you select the path you want to take. You may find employment in an insurance company, consulting firm, government body, employee benefits department, hospital, bank, or insurance company; essentially, any organization that requires professionals in financial risk management.

You will likely begin your professional career as a trainee on a team with more experienced actuaries. Your employment responsibilities will develop as you acquire experience and pass more certification examinations, even if you begin by doing simple duties.

Your employer will pay for your study materials and examinations. Many workplaces provide compensated study time, and your coworkers may organize study clubs. You might anticipate a bonus, salary increase, or promotion.

Job Opportunities for Actuaries

If you are considering a career as an actuary, you will rarely encounter someone who would dissuade you from pursuing this route. In 2021, US News & World Report ranked actuary employment #16 in Best Business Jobs, #23 in Best Paying Jobs, and #25 in Best STEM Jobs on its list of the 100 Best Jobs.

The US Department of Labor projects an 18 percent increase in actuary positions from 2019 to 2029, much quicker than the typical career path. Careers in actuarial science are frequently ranked among the finest in our economy, and this is set to expand as more businesses depend on data. According to 2019 Department of Labor data, actuaries worked in the following industries in 2019:

  • Seventy-one percent in banking and insurance.
  • Professional, scientific, and technological services accounted for 13% of the total.
  • Six percent in company and business management.
  • 4 percent in self-employment.
  • 3 percent in government positions

Over the next decade, the insurance business will drive the bulk of employment growth. As actuaries must examine the implications of new healthcare rules, the health insurance industry is anticipated to see rapid employment growth. In addition, more actuaries are expected to engage in enterprise risk management, assisting businesses in managing their own risk.

What is the Actuary Income?

This is one industry where workers seldom complain about inadequate compensation. According to Salary.com, entry-level actuarial positions pay a median salary of $72,700, which increases dramatically with experience and qualifications.

When you finish your credentials and become an associate or fellow, you might earn more than $100,000 annually. For instance, the typical actuarial analyst earns between $98,200 and $126,900 annually.

Possible actuaries have a bright future due to the extensive compensation range and expanding prospects. Salary.com data indicates that the average income for top actuarial executives, including incentives, is more than $475,000. The top 10 percent make more than $740,000. These stats make an effort to achieve an actuarial job appear much more tempting.

How Does an Actuary Determine the Level of Risk?

Evaluating potential future dangers is a task that is easier said than done. Actuaries are responsible for gathering data and then doing sophisticated calculations to assess the risk of occurrences and the potential associated costs. These events might include death, sickness, accident, disability, or property loss. After that, they devise measures that lower the costs associated with that risk.

Actuaries are crucial to the functioning of the insurance sector for this exact reason. Insurance policies, pension plans, and other financial strategies may all benefit from the input of actuaries throughout the planning stages. More specifically, they analyze monetary issues like the minimum amount of money that must be contributed to a pension plan to have a decent retirement. Actuaries use their extensive understanding of statistics, finance, and business to provide recommendations about the investment strategies that should be implemented by a company or pension fund to get the highest possible return on investments.

Taylor Day

Frequently Ask Questions

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