How to Become an Actuary
How to Become an Actuary
For corporations and insurance companies — virtually any entity for which financial safeguards are imperative — the need to assess risk is paramount. This is where an actuary is a key component in businesses all over the world. By assessing the possibility and cost of risk, actuaries can help companies devise insurance plans and pension packages that balance the needs of the company with the potential payoff or risk.
What does an actuary do?
Most actuaries (also called risk assessment analysts or actuarial analysts) work in the insurance industry, helping devise insurance plans. To accomplish this, an insurance actuary will look at a given set of data and assess the probability of claims to be filed and how much the company will be likely to pay out for claims. This information then enables the company to appropriately set premiums and co-pays in order to maximize profits.
Not only does an actuarial analyst have to look at overall rates that claims occur, but also the frequency of events broken down in to subsections. For example, actuaries designing automobile insurance coverage need to examine both the overall incidence of traffic accidents and the frequency of accidents in each age range, geographical location, and gender. This way, insurance companies know how to design different coverage plans for different populations.
Some actuarial jobs are in businesses that focus on pension plans. In this role, an actuary will examine the needs of retirees and try to figure out the best payment options to meet those needs while also keeping the amount within the capabilities of the company.
What kind of training does an actuary need?
To qualify for an actuarial job, a bachelor degree is generally required, usually with a business and mathematics focus. Some colleges offer actuarial science degree programs, but some companies will hire actuaries with a broader business degree.
Actuarial certification is very important, and is often required by employers. There are two major certifications available, the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS). Both of these certifications require extensive testing to maintain certification, which means that certified actuaries must continually hone their skills in order to advance in their career. (1)
What are the prospects for a career in actuarial science?
Reports suggest strong and steady growth in for actuarial careers. In fact, the Bureau of Labor Statistics projects that actuary jobs will increase by 24% from 2006 through 2016, indicating a total of 22,000 jobs. Despite fluctuations in the economy, the insurance industry tends to remain fairly stable, especially as companies revamp their benefits plans.
How much do actuaries make?
Entry-level actuarial positions currently are paying between $45,412 and $66,330. As enticing as that annual salary sounds, the pay scale rises significantly for actuaries with more experience and certifications. Mid-level jobs can reach up to $107,188 per year while upper level positions can pay nearly $150,000. (2)
The job of an actuary is both challenging and intense, but it can be highly rewarding for motivated people. The requirements and work may be demanding, but the intellectual and monetary dividends are definitely worth considering.