An in depth look at the actuarial profesion
Actuarial work is some of the most challenging (intellectually speaking, you won't physically exert yourself) and rewarding work. The skill set is fairly universal, so an actuary may turn up where you least expect. They are problem solvers, number savvy people who think about the big picture (especially in terms of risks). In this article I'll talk about what types of companies hire actuaries, how actuaries fit in a corporate setting, varies actuarial titles and job types among other tidbits about actuaries.
For other high level desciptions see:
- What is an actuary?
- The advantages and ddisadvantages of being an actuary - This is a UK perspective
Where do actuaries work?
Generally you will find actuaries in the following places:
- Life Insurance Companies (MetLife, NewYork Life, Northwestern Mutual)
- Home and Auto Insurance Companies (Geico, Allstate, State Farm)
- Health Insurance Companies (United Health, Blue Cross Blue Shield)
- Reinsurance Companies (RGA, ScottishRe)
- Financial Planning/ Retirement Planning/Asset Management Companies (Ameriprise Financial, Thrivent )
- Some Banks (ING)
- Risk Management Companies (Guy Carpenter)
- Companies that offer support to other actuaries
- Software Companies (Towers Watson, Polysystems, ARC)
- Consultants (Milliman)
- Audit Firms (Ernst& Young, Price Waterhouse Coopers)
- Public/Government - (CALPERS, State Depts. Of Insurance, Social Security)
- Education (as professors)
- Lastly there are some entrepreneurial actuaries out there working on their own
In general there are two types of structures: a consultant structure and a corporate structure. In a consultant structure you start of as an analysts and work toward becoming a principle or partner in the practice. I'm more familiar with the corporate structure, which I will detail below.
What is a typical actuarial career path?
- Internships are the main way actuaries get started. Here you get exposure to a company and will have them evaluate you over a summer. The work will be mostly analytical, involving manipulating and summariaing data to support a project.
- Entry Level- After the internship the work doesn't change much. You will have to balance work with studying for exams, as the first chunk of your career will be earning a credential.
- Mid Level - As you move up the work moves from slicing and dicing data, to using the data to actually come up with a business solution. This may be coming up with new premium rates on a contract, determining the value of an insurance liability or recommending a strategy for an investment portfolio. Modelling and problem solving skills really start to develop.
- Manager Level - Add meetings and more responsibility to the work you do as a mid level employee. The work and topics increase in scope and complexity.
- Director Level - Now leadership starts to play a factor. In addition, you become a little more removed from the gritty details and have to think at a high level. Big picture thinking means tying together all the work that the various members of your team are doing.
- VP Level- In addition to the leadership skills of a director, VPs start to get exposure to executive level decision makers in a company. they set the tone for what will get done and when.
Not all actuaries end up as VPs. Some bounce around several companies, others find a way to move up the ladder in the company they work for.
Typical Actuarial Job Titles
- For entry to manager level you may see: Actuarial Analyst, Actuarial Associate, Actuarial Student, Actuarial Technician, Staff Actuary, or simply Actuary
- Chief Actuary-Most companies that employ actuaries will grant someone this title. They oversee all actuarial functions of the company from pricing to reserving.
- Appointed Actuary - The appointed actuary signs the statements that are filed with the state's insurance departments.
- Illustration Actuary- Their signature is required in order for a company to sell a contract. An insurance illustration is what a client sees as a demonstration of their contract's performance.
- Valuation Actuary-The valuation actuaries are in charge of coming up with reserves. Reserves are basically like an emergency fund, except that they have pretty good idea of when they'll need to use the money and how much they should contribute.
- Pricing Actuary- The pricing actuaries figure out how much to charge you for insurance. They develop new products to fit the needs of their consumers.
The nature of the work will vary by the type of industry and size of the company. Generally as actuaries advance in their careers, they tend to specialize in a certain niche market. However, there are plenty of actuaries that continue to try new things, switch responsibilities, and even switch industries.
How Much Math Do Actuaries Use?
While extensively trained in math in the credentialing process and through their actuarial work, corporate actuaries aren't sitting at their desk solving calculus problems. That said, it's not like they don't compute anything. Mostly they rely on computer software to do the heavy lifting when in comes to computation. That computer software may utilize some complicated algorithms or actuarial formulas. However, the actuary still needs to know if they got the right answer. The ability to estimate is really important.
Unlike your typical math problem, there often isn't one final answer for the problems actuaries face. The ability to make a sounds judgement is critical, which leads me to the next section.
What Other Skills Do Actuaries Use?
Expect to do a lot of work with data, spreadsheets, and a variety of other softwares. Having some knowledge about basic computer programming codes will help, but you can also pick up on it as you work.
Actuaries need to communicate their ideas. Sometimes this written, sometimes this is oral. The best actuaries can take really complicated topics and phrase them in simple ways that other decision maker can understand.
If you really want to see an actuary in action, find the closest company to you that employs actuaries and ask for a job-shadow opportunity.