What Does a Life Actuary Do?
The main job objective in a life actuary job is to determine the risk that a specific event may occur and then calculate the cost associated with that risk over time. Most actuarial tasks are directed at analyzing statistical information to estimate mortality, sickness, accident, retirement, and disability rates. The actuary is then responsible for calculating the premium rates for related insurance policies and estimating the required cash reserves needed to pay future benefits.
Because insurance companies want to remain competitive with other insurance companies, the actuary must constantly balance between keeping policies’ premiums competitive and allowing the insurance company to make enough money to cover any claims that may occur.
Actuaries are also responsible for building tables of probability for certain events — such as natural disasters, fires, and unemployment — based on the analysis of market information. With this information, the actuary works with the given insurance company’s management to assist in administering insurance, pension, and annuity plans.
Because the actuary works with large data sets, the applicant for an actuary position must be comfortable working with scientific research data, investigative findings data, and social and economic data. The actuary is also responsible for compiling the data into useful mathematical ideas and interpretations through simulations. The actuary must also be an excellent communicator and effectively translate complex mathematical models into potential actions and decisions for management to make.
In addition to understanding statistics, databases, and large-data-set modeling, the actuary needs to be able to understand property, contract, and insurance laws. From time to time, it may be necessary for the actuary to testify before public agencies and governments on proposed legislation that may influence the insurance industry. Actuaries may also be required to testify in court as expert witnesses for cases regarding the value of the potential future earnings of people who are killed or disabled as a result of accidents.
Actuaries are also involved with determining the value and financial risks involved with credit offerings and investment products. They are also involved with analyzing credit to help price corporate security offerings and products.
Educational Background and Certification
Most people who pursue careers in actuarial science have a bachelor’s degree in statistics, mathematics, actuarial sciences, finance, economics, or business. Coursework in corporate finance and applied statistics is also required for professional certification, and
most companies do require professional certification of their actuaries. Two professional societies offer programs that will lead to certification and full professional status as an actuary. The Casualty Actuarial Society sponsors examinations in property and casualty law, which includes medical malpractice, workers compensation, personal injury, car, and homeowner liability. The Society of Actuaries certifies actuaries in investment, finance, retirement, health benefits, and life insurance systems.
It takes about four to six years for an actuary to reach the experience level for an actuarial associate position. Certification requires that the applicant pass a series of tests, complete a required amount of coursework, and complete some additional training classes. The first level of certification in both of the aforementioned organizations results in the Associate level. It usually requires an additional two to three years for the actuary to complete the exams and coursework to attain the level of Fellow.
Areas to Emphasize in Your Resume and Cover Letter
Because advancement in actuarial careers requires excellent job performance as well as passing exams for certification, having attained either the Associate or the Fellow level of certification should be stressed in both a resume and cover letter.
Within the various actuarial science careers, an applicant should emphasize familiarity with the type of work that is required. Because actuaries may start out with a broad area of interest and then begin to focus on specific areas, it’s important to research and understand the given position. If the candidate will be responsible for defining the financial risks of investments, then focusing on an understanding of modeling and designing risk models for investment vehicles would be beneficial. If the position involves providing actuarial services for pension funds, emphasizing an understanding of mortality, health, and demographic data sets should be helpful.
Most actuarial positions also require excellent presentation skills. Being able to demonstrate a time when the applicant was able to deconstruct a complex mathematical model into a business problem and then communicate the results to a group is also helpful to show.
Career Outlook
Actuarial science careers are expected to grow at a rate of 24% between 2006 to 2016. This growth rate is substantially greater than for the rest of the economy. The Society of Actuaries and the Casualty Actuarial Society both have a guide to actuarial careers available to potential candidates. In addition, actuary positions will increase in demand as more companies try to understand the impact of Medicare reform and new requirements for pension plans.
