An actuary analyzes a company’s financial risk and tests the probability of a detrimental event that may affect its financial security. They play a key role in the insurance industry by reducing potential risk and instability. Actuaries use statistics, math, and financial theory to predict these factors. Actuaries also use advanced modeling statistics and software for accurate data. This career field has a bright outlook, which means it has a faster than average career outlook for job openings between 2018-2028. However, because it is a small occupation, the fast growth will result in only about 5,000 new jobs over the 10-year period.
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How to Become a Actuary
Step 1: Earn a Degree
To become an actuary, most earn a bachelor’s degree in mathematics, actuarial science, or statistics. Coursework usually includes economics, computer science, mathematics, business, and statistics classes. According to O*NET OnLine, over 60% of actuaries hold at least a bachelor’s degree. The rest have certifications or education in addition to having earned their bachelor’s degree.
Step 2: Get Certified
To become an actuary, you do have to become certified. The good news is, after earning your degree you can actually work as an actuary while preparing to pass your exam. There are two professional societies that offer certification, the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA). The CAS certifies actuaries who want to work in the property and casualty field, which includes car, homeowners, medical malpractice, or employment compensation insurance. The SOA certifies actuaries who want to work in life or health insurance, retirement benefits, investments, or finances.
The CSA and SOA certifications provide you with associate-level and fellow-level status. You would gain the associate-level certification first, which typically takes 4-7 years to earn. Over time, you will end up taking several exams and each requires hundreds of hours of preparation and studying. Your fellowship level status will take you an additional 2-3 years. To learn more about the process of getting certified, you can visit the Society of Actuaries and Casualty Actuarial Society website.
Job Description of a Actuary
An actuary develops, prices, and evaluates financial cost or risks for businesses, insurance companies and other clients. They analyze statistical information such as disability, mortality, retirement rates, and accidents to predict liability payments of future benefits or any potential risks. They must have good verbal and written communication skills as well as analytical skills.
Actuaries help companies ensure payment of future benefits by ascertaining cash reserves and premium rates needed. A variety of people such as shareholders, company executives, government officials and others would expect an actuary to explain complex technical matters and help determine company policies. He or she would review, design and help administer pension plans, insurance and annuity plans, or policies by calculating premiums and financial soundness.
Actuaries use their expertise to assist businesses or clients maximize returns and manage risks with credit offerings or investment products. They analyze statistical information and other data to construct probability tables for cases pertinent to a company or client. One might be required to give testimony to public agencies affecting business on proposed legislation.
An actuary must have knowledge of economics, legal codes, government regulations, and agency rules. They should have the ability to read, understand and listen to information, and clearly communicate. They should remain technically current with pertinent job information and apply any new knowledge to his or her work. They should be able to think creatively by designing or developing new applications to the job. Some actuaries work in an office, however as an actuary consultant some travel may occur to meet clients.
Actuary Job Post
Let’s look at a posted actuary job description. This job announcement was posted by the Department of the Treasury, Internal Revenue Service. The salary range is $105,769 to $153,510 per year and they are looking for a candidate to perform the following tasks:
As an Actuary at the IRS you will be responsible for work in one of two areas, Policy or Field work. In either role you will analyze and determine the adequacy of Employee Plans Compliance Resolution System (EPCRS) submissions and estate, gift tax, and charitable trust plans. Policy Actuaries review private letter ruling requests, work on technical advice cases submitted from the field agents, assist with guidance projects and may become members of the Joint Board for the Enrollment or Actuaries. Field Actuaries work closely with Revenue Agents on pension plan audits and provide technical expertise and guidance when needed.
As an actuary you will:
- Serve in Employee Plans, Rulings and Agreements and you will perform work with respect to estates, gifts and charitable trusts (i.e., estate and gift tax work), or work with respect to pension, profit sharing, stock bonus plans, and other plans (i.e., pension work).
- Analyze complex problems regarding tax liability involving the valuation of complex life estates and remainder interests to determine estate, gift, and income tax liability or involving qualification for tax exemption of pension, annuity, profit sharing and stock bonus plans and trust.
- Prepare actuarial determinations interpretation of complex actuarial problems; assisting in the development of actuarial tables published by the Service in administering the estate and gift tax, pension, and income tax provisions of the Code.
- Participate in conferences with taxpayers, their representatives and professional consultants in connection with rulings or technical advice; and attorney’s, representatives of the insurance industry and actuarial consultants on problems and procedures.
- Review tax forms and instructions; and assisting Chief Counsel’s office in connection with the issuance or amendment of regulations.
This position was posted on USAjobs.gov, part of the U.S. Office of Personnel Management.
Actuary Career Video Transcript
Actuaries analyze the costs of risk and uncertainty. They use statistics to estimate how likely it is that an event (such as an illness or accident) will occur, and help their clients set insurance rates and payouts so they can manage the cost if it does. Depending on the type of insurance or benefit they work with, actuaries may examine factors that affect an individual’s health, estimate the length of a person’s life, calculate the likelihood of car accidents, or ensure a retirement plan will have enough funds for all the employees it covers.
Actuaries typically work alongside professionals from other fields, such as accounting, underwriting, and finance. For example, some actuaries work with accountants and financial analysts to set the price for security offerings or with market research analysts to forecast demand for new products. Actuaries also work in the public sector. In the federal government, actuaries may evaluate proposed changes to Social Security or Medicare or conduct economic and demographic studies to project future costs.
At the state level, actuaries may examine and regulate the rates charged by insurance companies. Most actuaries work full time, and overtime is common. Actuaries need a bachelor’s degree, typically in mathematics, actuarial science, or another analytical field. Students must complete coursework in economics, applied statistics, and corporate finance, and must pass a series of exams to become certified professionals.