Actuaries do important work in society that touches every facet of our lives. This work is highly skilled and requires literal years of study, frequent examination, and ongoing professional education. The remuneration for this work, though, is quite high. Median salaries are often in the $80-$100k yearly range. The employment outlook for this field continues to experience strong demand and is expected to continue so into the future.
If you can master the exams and the coursework and balance your skills in mathematics with social fluency in the academic and business arenas, you can definitely compete in 2021 and beyond. Though the job markets have been competitive, you can be among those that assess risk and make the uncertain and uncomfortable into something more secure. Thus, you can humanize statistical values for those who lack this ability.
Today’s students are encouraged to acquire skills in science, technology, engineering, and mathematics (STEM) related disciplines. The employment outlook for actuaries may be just the incentive for some students to challenge themselves in their STEM studies.
Actuaries evaluate the likelihood that certain significant events will occur, and they seek to reduce the negative impacts that those events tend to cause for their employers or clients. Risk management and mitigation is the name of the game.
Any organization whose products or services involve risk must employ actuary science skills to stay in business. The best example of the work done by actuaries is the pricing, terms, and conditions for homeowners insurance. Actuaries help insurance companies to set prices for these insurance products that garner nice corporate profits and cover repair costs to homes when negative events like hurricanes and hail storms occur. Banks and investment firms use the services of actuaries to help establish pricing strategies for their financial products and to conduct quantitative risk analysis. Actuaries also work as consultants who help companies to generate employee pensions.
Here are some of the details about projected job growth, career development, and compensation for actuaries.
Projected Job Growth for Actuaries
According to the Bureau of Labor Statistics (BLS), actuaries’ estimated job growth rate is much faster than the average rate for all jobs that the agency surveyed in 2014. The total number of actuary jobs in the United States (U.S.) that the BLS recorded in 2014 was 24,600, and this modest figure gives a good indication of the select nature of this group of mathematicians. A greater than average percentage rate of job growth for the actuary role is expected partially because the current number of actuary jobs within the U.S. is relatively limited. The states where actuaries can find the highest number of jobs are New York, Pennsylvania, California, Illinois, and Texas.
Professional Development for Actuaries
Besides gaining an undergraduate degree in business, mathematics, or actuarial science, an aspiring actuary must pass a group of finance-related tests administered by private, professional associations for actuaries. The Casualty Actuarial Society encourages membership of actuaries who specialize in performing quantitative risk analysis for casualty and property insurance. Their nine competency exams are tailored for the insurance industry. The Society of Actuaries offers membership to actuaries who work in all types of industries, and their five examinations focus on financial mathematics and statistical modeling of risk events.
The undergraduate degree is an important part of the actuarial career arc. Indeed, the other parts are not accomplishable without it. Actuarial studies is, naturally, a great major for entering this field, but other degrees, like math, statistics, or even chemistry, can lead to this path. The important thing is that you have the math skills needed, and by that, we mean linear algebra and calculus, as well as computer modeling and information science. During your undergrad, you will need to maintain positive, active relationships with peers, advisors, professors, or anyone else you may depend upon for necessary and inevitable networking. Of course, it’s advisable to take every slight advantage–be sure to hold up your end.
Two Main Types of Actuaries
Actuaries can be broken down into two categories: those who deal with life and those who deal with non-life. As you can see, these two categories are about as diametrically opposed as things can be. “Life” actuaries deal with life insurance and the risk that goes along with, well, living. “Non-life” actuaries deal with, well, insurance of things that are not alive. Property insurance and things of that nature. While this is one way of classifying actuaries, it is hardly the only way to differentiate among the roles that actuaries play in modern society.
Associate Level Certification
Associate level certification occurs after four to seven years of study and practice. Students must pass a series of rigorous exams, a process that is usually paid for or supported by the employer. They say that each four-hour exam requires about 400 hours of individual study. The associate-level certification requires several of these exams, depending on which certifying organization you are seeking certification with. The Casualty Actuary Society certifies non-life actuaries, mostly in property and casualty insurance. The Society of Actuaries is in charge of certification for life actuaries. It offers five tracks: life and annuities, finance/enterprise risk management, investments, retirement benefits, and group and health benefits. The yearly salary for an associate actuary is $65,000-$86,000.
Fellowship Level Certification
Fellowship level certification follows about 2-3 years after associate level certification. Another component of the training is professional education that is sponsored by the employer or the certifying organization. Requiring three years of professional experience and passage of several exams, the actuarial fellow is qualified to pursue research and further study in the field. This job level usually still reports to a manager and reports a level of remuneration of $100k to $181k per year.
Further Professional Education and Certification
With the actuaries’ proximity to the world of finance, there are ever new types of risks that businesses are being exposed to. That is, what are the risks associated with Non-Fungible Token (NFT) exposure? If that is the kind of question that keeps you up at night, you might be suited for further pursuit down the actuarial rabbit hole and seek certification as an Enrolled Actuary, Chartered Enterprise Risk Management Actuary, or join the American Academy of Actuaries so that they may offer Statements of Actuarial Opinion. Further continuing professional education is the name of the game, even for senior, fully qualified senior actuaries. This work may seem like a stodgy profession accomplished by clerks on high chairs at desks scratching quills into large ledgers in the back of a bank, but this is a cutting-edge field with totally modern tools at their disposal.
Career Opportunities for Actuaries
Property and Casualty Actuary
Property and casualty actuaries oversee the insurance of property and business ventures. Also known as “general actuaries,” these individuals work to ensure that anything unrelated to human health and mortality can be insured against loss or damage. P&C actuaries, as they are often referred to, create and price these insurance products to meet market demand. In addition, they forecast possible responses to unforeseen adverse events.
Life and Annuity Actuary
Life and annuity actuaries are among the most common types of workers in this field and definitely what most people think about when considering the field. This job entails the use and construction of ever more accurate mortality rate tables so that people can plan for survivorship or retirement (in the case of annuities). As a more conventional field, it can provide you the benefit of reliable office culture. If that kind of culture is not appealing to you, several more contemporary fields are featured below.
Finance/Enterprise Risk Management Actuary
This is a newer area of actuarial study. Enterprise risk management goes beyond the risk assessment of standard actuarial work. It probes deeper, looking at the cost of, say, bad publicity or a negative reputation on a company’s bottom line. Finance actuaries would work toward creating financial instruments that meet demand and please the company’s bottom line.
This type of actuary fulfills three main roles. They run support on large-scale financial transactions. They focus on strategy development and investment risk management. The third role they fulfill is reminding companies that while liabilities are local, investment opportunities are global. This international approach can help organizations keep track of their bottom line in an increasingly expanding global workspace.
Savings and Retirement Actuary
This type of actuary has no involvement with the insurance industry. They prepare savings and annuity products to help their clients prepare for retirement. These “S&R” actuaries think about life and death in a different way than the standard life and annuity actuaries we covered above in an earlier part of this article. Rather than prepare for death, these actuaries make sure individuals are prepared for retirement by estimating how long people will live and forecasting what their needs might be.
Health Insurance Actuary
Actuaries in health insurance create and price products that serve the needs of their organization and their clientele. Health insurance actuaries may also be involved in writing policies for individuals who are ineligible for group policies. They also work in disability insurance to predict new claimants and keep pricing where the company stays above the waterline. These individuals utilize the data provided by their companies to predict future costs. Health insurance companies generate a lot of data, so this is both simple and complex, as the amount of data is not limited, but it can be overwhelming,
Key Salary Information for Actuaries
According to the BLS, the mean annual wage that actuaries earned in 2015 was $110,560. The BLS data indicated that most actuaries were employed with insurance carriers, but these actuaries made slightly less than the mean wage; their mean salaries were $105,880 annually. The actuaries who commanded the highest salaries worked for financial services, mortgage lenders, and brokerage firms. Their mean annual salaries reached above $152,000. Successful completion of actuarial exams are prerequisites for employment, and entry-level actuaries usually have passed one or two exams to gain initial employment. Once these actuaries are hired, employers often agree to pay for subsequent exams. Passing scores on the exams result in greater job security, raises, and bonuses. More than 70% of employed actuaries work in the insurance industry. Only about 3% work in that capacity for government agencies.
It is worth considering that you don’t even have to stay in the professional actuarial game. Careers that align nicely with your skills and specializations range from statistician to economist to auditor to even the academic route, should that come to attract you. There’s such a thing as an Academic Actuary. Some universities that produce would-be actuaries have an Actuarial Science Program Faculty, and these people retire and change profession, just like people in the rest of professional life. So, with a little study of the market, you could bring your skillset to bear on the next generation of would-be actuaries. You might also consider writing for a public that is hungry for the economic information that both attracts and scares them. Don’t forget your enviable career skills and independent-mindedness can make you a formidable entrepreneur. Consulting actuaries who travel the country giving their opinions and the results of their research are very much a thing.
Actuarial science incorporates the fundamentals of the business environment, deep statistical knowledge, and insight into human behavior. Besides developing pricing strategies for existing financial products, many actuaries are encouraged to design innovative products that satisfy consumers’ desires for varying levels of financial security and that support the profitability goals of the organizations for which the actuaries work. As new risks emerge, the employment outlook for actuaries will likely continue to improve. As noted above, if you have the constitution for the stress, you will likely be paid among the best of the best in high finance.