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Business professionals who have strong quantitative skills may be interested in what an actuary does for a living. This specialized, business career niche is experiencing some of the fastest growth in the country. Actuaries work primarily in the insurance sector within the financial services industry, and their work is critical for keeping insurance companies competitive and prosperous. Here are some of the tasks that actuaries do regularly, the typical steps to become an actuary and a brief overview of the salary and job prospects for actuaries.
Job Functions of Actuaries
Actuaries usually begin their careers as risk analysts for insurance companies. In this role, they assess, measure and make recommendations for the mitigation of liabilities related to insurance products. Actuaries use their knowledge of financial theory, economics and statistics to determine the likelihood of occurrence of events that would cause insurance companies to make significant pay outs for claims. For example, financial services companies that offer flood insurance in various areas would have an actuary identify the degree of likelihood that floods will occur in each area, the amount of damage that could take place and the best ways that insurance companies can shield themselves from losses when they have to pay out claims on these insurance products. These actuaries can recommend higher prices for higher risk insurance products, or uncommonly they can advise insurance companies not to offer certain products in certain areas. When insurance products are deemed unsuitable, actuaries are called upon to help to develop new financial products so that insurance companies can provide value to their clients while staying within acceptable fiscal risk limits. Some actuaries also help corporate clients to design appropriate pension plans for their employees. Senior actuaries have more career options available to them, and their skills are sometimes used to give advice to executive level leaders during the planning stages for mergers and acquisitions. The primary task within this type of role is valuation of assets and liabilities at the division and enterprise levels.
Career Path Taken by Actuaries
The actuary career field depends heavily on the quantitative problem solving skills of its practitioners, and a generic undergraduate degree in business administration is not usually adequate. Most actuaries have an undergraduate degree in finance, economics or applied mathematics. Prospective actuaries also have to take a series of comprehensive exams to be able to continue to work at many companies as professionals in this field. Most insurance companies value the skills of actuaries so much that they pay for exam fees, set aside time at work for actuaries to study for exams and compensate those who do well on the exams. Almost all actuaries join professional associations like the Society of Actuaries or the Casualty Actuarial Society to network and refresh their knowledge through continuing education programs.
Salary and Employment Prospects for Actuaries
One of the main attractions for those entering the field of actuarial science is the great pay and benefits that actuaries earn by working in the insurance sector. According to the Bureau of Labor Statistics, the median annual salary for actuaries in 2012 was $93,680. In addition to the insurance sector, actuaries find work in the transportation, energy, environment and healthcare industries with private companies as well as government agencies.
Related Resource: Finance Jobs in Commercial Banking
Conclusion
The role of actuary allows business professionals to apply their knowledge of mathematics and statistics to real world challenges faced by insurance companies. Financial risk management is what an actuary does best.
