What Types of Skills Does an Actuary Need?
When it comes to actuarial positions, a prospective actuary must be proficient in financial matters as well as with figuring out statistics and the impact they may have on the business or individual for which he or she works. The actuary is going to need to determine the amount of loss that would be suffered for events such as accidents, disabling injuries, illness, or even death.
A good working knowledge of finance and business will help an actuary to create a detailed plan that will allow him or her to set up insurance, pensions, and other types of financial management as needed. Actuaries are normally employees of insurance companies. This person determines the likelihood of certain events causing a claim for insurance.
The probability of a person who is insured collecting a claim for an accident in a vehicle is one of the things they calculate. Many factors are taken into consideration, and from all of these the probability of an accident is assessed. These considerations may include:
- Age of the person
- Sex of the person
- History of accidents
- Type of car being driven
- Any previous claims for accidents
Just as the automobile insurance actuary determines the cost of insurance for each individual driver, the life insurance actuary determines the cost of insurance for a person. The overall health of the person — any history of long-term ailments, whether or not they smoke, and many other factors — is considered when coming up with a premium suited for the individual.
Companies may hire actuaries on an “as needed” basis to determine certain criteria for their retirement or pension funds. The long-term contributions of both the employer and employee will be calculated to see if this is a sufficient amount for the retiree to live on when they become retirement age. They also may have plans devised that will lessen the risk of work-related injuries.
What Training is Required to Become an Actuary?
Courses offered in college can provide a good introduction to the actuary field. Having an aptitude for mathematics is paramount. While taking business-related courses, such as finance or economics, a college student may also get actuarial student jobs or internships to help prepare him or her for the position for which they are training.
There are also courses in economics and corporate finance, which should be taken if possible, and courses related directly to mathematics, such as applied statistics. The actuary will normally have a bachelor’s degree and will have to successfully pass a number of exams in succession to become a certified actuary.
There are several colleges that offer programs for actuarial science, and two professional programs offer courses that will allow you to become a certified actuary. The Society of Actuaries (SOA) is one, and the Casualty Actuarial Society (CAS) is another. The SOA provides a certification for insurance fields such as life and health, retirement programs, and investment, and the CAS provides certification for insurance related to property, car, worker’s compensation, and personal injury.
To begin, there is a series of four exams. Since three of them are co-sponsored by the SOA and the CAS and cover basically the same material, prospective actuaries do not need to choose a specialty until the exam results have been given, when they can see what their strongest points are.
For those wishing to attain the first level of certification, which is the associate actuary level, there are seven examinations to be completed and passed. Prospective actuaries must have taken a course on professionalism as well as the courses required by the SOA and CAS, which are applied statistics, economics, and corporate finance. All told, this process may take anywhere from four to six years.
For further advancement, there will be more years of study and more exams. The exams are not difficult if you spend the time studying what is needed. Often studying for one exam will take several months. The earnings are good, as high end actuaries may make six figures a year; however, the process required to reach a level that will pay well is long. The process can take up to 10 years, depending on the exams you take.
People employed as actuaries in 2006 numbered about 18,000; over half of these were employed by the insurance industry. About 21 percent were working for professional and technical industries, and the others worked for insurance agents. A small percentage of actuaries work for the government.
