# Actuaries

## Summary

Actuaries use advanced statistics and modeling software to forecast the cost and probability of an event.
Quick Facts: Actuaries
2014 Median Pay \$96,700 per year
\$46.49 per hour
Typical Entry-Level Education Bachelor's degree
Work Experience in a Related Occupation None
On-the-job Training Long-term on-the-job training
Number of Jobs, 2014 24,600
Job Outlook, 2014-24 18% (Much faster than average)
Employment Change, 2014-24 4,400

#### What Actuaries Do

Actuaries analyze the financial costs of risk and uncertainty. They use mathematics, statistics, and financial theory to assess the risk that an event will occur, and they help businesses and clients develop policies that minimize the cost of that risk. Actuaries’ work is essential to the insurance industry.

#### Work Environment

Most actuaries work for insurance companies. Although most work full time in an office setting, some actuaries who work as consultants may travel to meet with clients.

#### How to Become an Actuary

Actuaries need a bachelor’s degree and must pass a series of exams to become certified professionals. They must have a strong background in mathematics, statistics, and business.

#### Pay

The median annual wage for actuaries was \$96,700 in May 2014.

#### Job Outlook

Employment of actuaries is projected to grow 18 percent from 2014 to 2024, much faster than the average for all occupations. Actuaries will be needed to develop, price, and evaluate a variety of insurance products and calculate the costs of new, emerging risks.

#### State & Area Data

Explore resources for employment and wages by state and area for actuaries.

#### Similar Occupations

Compare the job duties, education, job growth, and pay of actuaries with similar occupations.

Actuaries produce charts, tables, and reports to explain their calculations.

Actuaries analyze the financial costs of risk and uncertainty. They use mathematics, statistics, and financial theory to assess the risk that an event will occur, and they help businesses and clients develop policies that minimize the cost of that risk. Actuaries’ work is essential to the insurance industry.

### Duties

Actuaries typically do the following:

• Compile statistical data and other information for further analysis
• Estimate the probability and likely economic cost of an event such as death, sickness, an accident, or a natural disaster
• Design, test, and administer insurance policies, investments, pension plans, and other business strategies to minimize risk and maximize profitability
• Produce charts, tables, and reports that explain calculations and proposals
• Explain their findings and proposals to company executives, government officials, shareholders, and clients

Most actuarial work is done with computers. Actuaries use database software to compile information. They use advanced statistics and modeling software to forecast the probability of an event occurring, the potential costs of the event if it does occur, and whether the insurance company has enough money to pay future claims.

Actuaries typically work on teams that often include managers and professionals in 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.

Most actuaries work at insurance companies, where they help design policies and determine the premiums that should be charged for each policy. They must ensure that the premiums are profitable yet competitive with other insurance companies.

Actuaries in the insurance industry typically specialize in a specific field of insurance, such as one of the following:

Health insurance actuaries help develop long-term care and health insurance policies by predicting expected costs of providing care under the terms of an insurance contract. Their predictions are based on numerous factors, including family history, geographic location, and occupation.

Life insurance actuaries help develop annuity and life insurance policies for individuals and groups by estimating, on the basis of risk factors such as age, gender, and tobacco use, how long someone is expected to live.

Property and casualty insurance actuaries help develop insurance policies that insure policyholders against property loss and liability resulting from accidents, natural disasters, fires, and other events. They calculate the expected number of claims resulting from automobile accidents, which varies with the insured person’s age, sex, driving history, type of car, and other factors.

Some actuaries apply their expertise to financial matters outside of the insurance industry. For example, they develop investment strategies that manage risks and maximize returns for companies or individuals.

Pension and retirement benefits actuaries design, test, and evaluate company pension plans to determine if the expected funds available in the future will be enough to ensure payment of future benefits. They must report the results of their evaluations to the federal government. Pension actuaries also help businesses develop other types of retirement plans, such as 401(k)s and healthcare plans for retirees. In addition, they provide retirement planning advice to individuals.

Enterprise risk actuaries identify any risks, including economic, financial, and geopolitical risks that may affect a company’s short-term or long-term objectives. They help top executives determine how much risk the business is willing to take, and they develop strategies to respond to these issues.

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 benefit obligations. At the state level, actuaries may examine and regulate the rates charged by insurance companies.

Some actuaries are considered consultants and provide advice to clients on a contract basis. Many consulting actuaries audit the work of internal actuaries at insurance companies or handle actuarial duties for insurance companies that are not large enough to keep their own actuaries on staff.

Actuaries typically work on teams that often include managers and professionals in other fields, such as accounting, underwriting, and finance.

Actuaries held about 24,600 jobs in 2014. The industries that employed the most actuaries were as follows:

 Finance and insurance 71% Professional, scientific, and technical services 15 Management of companies and enterprises 9 Government 4

Actuaries typically work on teams that often include managers and professionals in other fields, such as accounting, underwriting, and finance.

Actuaries typically work in an office setting. However, actuaries who work for consulting firms may need to travel to meet with clients.

### Work Schedules

Most actuaries work full time, and about 1 in 4 worked more than 40 hours per week in 2014.

Actuaries need a bachelor’s degree and must pass a series of exams to become certified professionals.

Actuaries need a bachelor’s degree, typically in mathematics, actuarial science, statistics, or some other analytical field. Students must complete coursework in economics, applied statistics, and corporate finance, and must pass a series of exams to become certified professionals.

### Education

Actuaries must have a strong background in mathematics, statistics, and business. Typically, an actuary has an undergraduate degree in mathematics, actuarial science, statistics, or some other analytical field.

To become certified professionals, students must complete coursework in economics, applied statistics, and corporate finance.

Students also should take classes outside of mathematics and business to prepare them for a career as an actuary. Coursework in computer science, especially programming languages, and the ability to use and develop spreadsheets, databases, and statistical analysis tools, are valuable. Classes in writing and public speaking will improve students’ ability to communicate in the business world.

Two professional societies—the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA)—sponsor programs leading to full professional status. The CAS and SOA offer two levels of certification: associate and fellow.

The CAS certifies actuaries who work in the property and casualty field, which includes automobile, homeowners, medical malpractice, and workers’ compensation insurance.

The SOA certifies actuaries who work in life insurance, health insurance, retirement benefits, investments, and finance.

The main requirement for associate certification in each society is the completion of exams. The SOA requires that candidates pass five exams for associate (ASA) certification. The CAS requires that candidates pass seven exams for associate (ACAS) certification.

Many employers expect students to have passed at least one of the initial actuary exams needed for professional certification before graduation.

In addition, both CAS and SOA require that candidates take seminars on professionalism. Both societies have mandatory e-learning courses for candidates.

It typically takes 4 to 6 years for an actuary to get an ACAS or an ASA certification because each exam requires hundreds of hours of study and months of preparation.

After becoming associates, actuaries typically take another 2 to 3 years to earn fellowship status.

The SOA offers fellowship certification in five separate tracks: life and annuities, group and health benefits, retirement benefits, investments, and finance/enterprise risk management. Unlike the SOA, the CAS does not offer specialized study tracks for fellowship certification.

Both the CAS and the SOA have a continuing education requirement. Most actuaries meet this requirement by attending training seminars that are sponsored by their employers or the societies.

Pension actuaries typically must be licensed by the U.S. Department of Labor and U.S. Department of the Treasury’s Joint Board for the Enrollment of Actuaries. Applicants must meet certain experience requirements and pass two exams administered through the SOA to qualify for enrollment.

### Other Experience

Because there are different types of practice areas, including health, life, pension, and casualty, internships may be helpful for students deciding on which actuarial track to pursue.

### Training

Most entry-level actuaries start out as trainees. They are typically on teams with more experienced actuaries who serve as mentors. At first, they perform basic tasks, such as compiling data, but as they gain more experience, they may conduct research and write reports. Beginning actuaries may spend time working in other departments, such as marketing, underwriting, and product development, to learn all aspects of the company’s work and how actuarial work applies to them.

Most employers support their actuaries throughout the certification process. For example, employers typically pay the cost of exams and study materials. Many firms provide paid time to study and encourage their employees to set up study groups. Employees usually receive raises or bonuses for each exam that they pass.

Advancement depends largely on job performance and the number of actuarial exams passed. For example, actuaries who achieve fellowship status often supervise the work of other actuaries and provide advice to senior management. Actuaries with a broad knowledge of risk management and how it applies to business can rise to executive positions in their companies, such as chief risk officer or chief financial officer.

### Important Qualities

Analytical skills. Actuaries use analytical skills to identify patterns and trends in complex sets of data to determine the factors that have an effect on certain types of events.

Communication skills. Actuaries must be able to explain complex technical matters to those without an actuarial background. They must also communicate clearly through the reports and memos that describe their work and recommendations.

Computer skills. Actuaries must know programming languages and be able to use and develop spreadsheets, databases, and statistical analysis tools.

Interpersonal skills. Actuaries serve as leaders and members of teams, so they must be able to listen to other people’s opinions and suggestions before reaching a conclusion.

Math skills. Actuaries quantify risk by using the principles of calculus, statistics, and probability.

Problem-solving skills. Actuaries identify risks and develop ways for businesses to manage those risks.

#### Actuaries

Median annual wages, May 2014

Actuaries

\$96,700

Mathematical science occupations

\$80,270

Total, all occupations

\$35,540

The median annual wage for actuaries was \$96,700 in May 2014. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than \$58,080, and the highest 10 percent earned more than \$180,680.

In May 2014, the median annual wages for actuaries in the top industries in which they worked were as follows:

 Finance and insurance \$98,310 Professional, scientific, and technical services 96,880 Government 94,710 Management of companies and enterprises 89,630

Most actuaries work full time, and about 1 in 4 worked more than 40 hours per week in 2014.

#### Actuaries

Percent change in employment, projected 2014-24

Mathematical science occupations

28%

Actuaries

18%

Total, all occupations

7%

Employment of actuaries is projected to grow 18 percent from 2014 to 2024, much faster than the average for all occupations. However, because it is a small occupation, the fast growth will result in only about 4,400 new jobs over the 10-year period.

Actuaries will be needed to develop, price, and evaluate a variety of insurance products and calculate the costs of new risks.

More actuaries will also be needed to help companies manage their own risk, a practice known as enterprise risk management. Actuaries will help companies avoid, manage, and respond to any potential financial risks across all areas of their business operations. This analysis helps companies adjust their business or investment strategies to achieve economic returns and respond to new financial regulations and requirements.

Insurance companies will need actuaries to analyze the large amount of information, such as medical or property data, collected from consumers. The increase in available data will allow insurance companies to better develop new products, set competitive prices, predict consumer behavior, and make more accurate projections of future risks and costs.

In addition, health insurance companies will require more actuaries to help evaluate the effects of changing healthcare regulations and guidelines, expand into new insurance markets, and offer products to new customers. However, consolidation among health insurance companies and providers may limit growth in this area.

### Job Prospects

Job opportunities should be somewhat favorable for applicants interested in an actuarial career. However, competition may grow, because the number of students sitting for actuarial exams has increased in the past few years. Students who have passed at least two actuarial exams and have had an internship while in college should have the best job prospects for entry-level positions.

Employment projections data for actuaries, 2014-24
Occupational Title SOC Code Employment, 2014 Projected Employment, 2024 Change, 2014-24 Employment by Industry
Percent Numeric

SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program

Actuaries

15-2011 24,600 29,000 18 4,400 [XLSX]

### Occupational Employment Statistics (OES)

The Occupational Employment Statistics (OES) program produces employment and wage estimates annually for over 800 occupations. These estimates are available for the nation as a whole, for individual states, and for metropolitan and nonmetropolitan areas. The link(s) below go to OES data maps for employment and wages by state and area.

### Projections Central

Occupational employment projections are developed for all states by Labor Market Information (LMI) or individual state Employment Projections offices. All state projections data are available at www.projectionscentral.com. Information on this site allows projected employment growth for an occupation to be compared among states or to be compared within one state. In addition, states may produce projections for areas; there are links to each state’s websites where these data may be retrieved.

### Career InfoNet

America’s Career InfoNet includes hundreds of occupational profiles with data available by state and metro area. There are links in the left-hand side menu to compare occupational employment by state and occupational wages by local area or metro area. There is also a salary info tool to search for wages by zip code.

This table shows a list of occupations with job duties that are similar to those of actuaries.

Occupation Job Duties ENTRY-LEVEL EDUCATION 2014 MEDIAN PAY

#### Accountants and Auditors

Accountants and auditors prepare and examine financial records. They ensure that financial records are accurate and that taxes are paid properly and on time. Accountants and auditors assess financial operations and work to help ensure that organizations run efficiently.

Bachelor's degree \$65,940

#### Budget Analysts

Budget analysts help public and private institutions organize their finances. They prepare budget reports and monitor institutional spending.

Bachelor's degree \$71,220

#### Cost Estimators

Cost estimators collect and analyze data in order to estimate the time, money, materials, and labor required to manufacture a product, construct a building, or provide a service. They generally specialize in a particular product or industry.

Bachelor's degree \$60,050

#### Economists

Economists study the production and distribution of resources, goods, and services by collecting and analyzing data, researching trends, and evaluating economic issues.

Master's degree \$95,710

#### Financial Analysts

Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

Bachelor's degree \$78,620

#### Insurance Underwriters

Insurance underwriters decide whether to provide insurance and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.

Bachelor's degree \$64,220

#### Mathematicians

Mathematicians conduct research to develop and understand mathematical principles. They also analyze data and apply mathematical techniques to help solve real-world problems.

Master's degree \$103,720

Personal financial advisors provide advice on investments, insurance, mortgages, college savings, estate planning, taxes, and retirement to help individuals manage their finances.

Bachelor's degree \$81,060

#### Postsecondary Teachers

Postsecondary teachers instruct students in a wide variety of academic and career and technical subjects beyond the high school level. They also conduct research and publish scholarly papers and books.

See How to Become One \$70,790

#### Statisticians

Statisticians use statistical methods to collect and analyze data and to help solve real-world problems in business, engineering, healthcare, or other fields.

Master's degree \$79,990

Casualty Actuarial Society

For more information about actuaries in life and health insurance, retirement benefits, investments, and finance/enterprise risk management, visit

Society of Actuaries

Be an Actuary