An actuary is a professional who uses mathematics and statistics to analyze and manage financial risks for individuals and organizations. Actuaries play a critical role in helping people make informed decisions about insurance, pensions, and investments. They assess the likelihood of future events, such as accidents, illnesses, or market fluctuations, and use their expertise to develop strategies that ensure financial security and stability. In this dynamic field, actuaries help safeguard people’s financial futures and guide businesses in making sound financial choices.
Watch a video that explains more about what an actuary does:
How to Become a Actuary
Step 1: Earn a Degree
Aspiring actuaries typically follow a clear path to earn their bachelor’s degree in a related field such as mathematics, statistics, or actuarial science. During their undergraduate studies, students may take coursework specifically designed to prepare them for actuarial exams. These exams, administered by professional organizations like the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS), are a crucial part of the process.
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.
Step 2: Gain Experience
After completing their degree and passing a series of exams, individuals can pursue internships or entry-level positions in insurance companies, financial firms, or consulting agencies to gain practical experience. As they accumulate more experience and pass additional exams, actuaries advance in their careers, eventually achieving a fully qualified actuary status, which opens up various exciting opportunities in risk management, finance, and beyond.
Job Description of a Actuary
Actuaries are financial experts who play a crucial role in helping businesses, insurance companies, and clients manage financial risks. They use mathematical and statistical analysis to assess factors like disability, mortality, retirement rates, and accidents, predicting future financial responsibilities and potential risks. Effective communication and strong analytical skills are essential in this profession.
These professionals help companies secure future financial commitments by determining the necessary cash reserves and setting appropriate premium rates. Actuaries are often called upon to explain complex technical concepts to a wide range of stakeholders, including company leaders, government officials, and shareholders. They are responsible for designing, reviewing, and administering pension plans, insurance policies, and annuities, calculating premiums, and ensuring financial stability.
Actuaries also assist businesses and clients in optimizing returns and managing risks associated with investments and credit offerings. They create probability tables based on statistical data and provide expert testimony on proposed legislation affecting business operations. Actuaries need a broad understanding of economics, legal codes, government regulations, and agency rules. They must stay updated with the latest industry developments and apply new knowledge to their work, often thinking creatively to develop innovative solutions. While many actuaries work in office settings, those in consulting roles may travel to meet with clients.
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.