How to Become An Actuary

An actuary is a risk management expert who uses analytical, statistical and mathematical skills to assist in measuring probability and riskiness of future events. Industries, businesses, organizations and investors greatly benefit from the information provided by actuaries as it enables them to quantify the risk of events. Actuaries also help in the development and designing of ways to reduce the likelihood of unfavorable events, and the impact they would have if at all they occur. Moreover, actuaries provide consultancy services with regards to policy making, business and investment decisions. Their work is based largely on statistical analysis to evaluate the associated risk and probability of an event.



What Skills Should Actuaries Have?

The job of an actuary can be extremely demanding and requires individuals to put in their very best. In order to successfully carry out one’s duties as an actuary it is essential that they acquire the following skills and demonstrate them to the best of their abilities:

  • Ability to analyze and manage uncertainty and risk
  • Ability to evaluate financial analysis
  • Application of scientific pricing and reserving techniques
  • Financial management skills
  • Asset and liability management
  • Risk analysis and management
  • Communication of complicated financial concepts
  • Financial and mathematical modeling
  • High level of numeracy
  • Strong critical thinking, analytical and problem solving skills
  • Report writing skills
  • Sound judgment
  • Commitment
  • Compliance with regulatory bodies

Where Do Actuaries Work?

Some of the common workplaces for actuaries include:

  • Colleges and Universities - Work involves evaluating risks associated with changes in policy and research in the field of actuarial sciences.

  • Banks and Investment Firms - Work involves pricing financial derivatives, quantitative investment research and fund management

  • Insurance Companies- Work involves developing insurance policies on the basis of various risk factors.

  • Agencies and Brokerages- This involves evaluation of coverage policies and catering to risk assessment needs of clients.

  • Rating Bureaus – This involves evaluating risk with regards to rating plans, manual, rates/loss cost and endorsements.

  • Government Organizations – This includes risk assessment with regards to public policy, tax policy and health policy.

  • Public Accounting Firms - Work involves evaluating risks involved in accounting practices.

  • Consultancy Firms - Work involves consultancy services with regards to financial capital projects, corporate recovery, mergers and acquisitions.

  • Private Corporations - Work involves consultancy services.

  • Funds, Trusts and other financial vehicles - Work involves designing, testing and evaluating finances to ensure availability of sufficient funds in the future.

Actuaries primarily work in office setting; some of them travel quite frequently depending upon the nature of their job. They typically work in teams with other professionals from the fields of accounting, management, finance and underwriting.

Job Outlook

According to the Bureau of Labor Statistics (BLS), the employment for actuaries is expected to grow by 26 percent in the period 2012-2022. This employment growth rate is much faster than the average growth rate for all occupations. According to BLS, the median annual wage for actuaries was $93,680 in 2012. However, the salaries range from $57,430 to $176,190; depending on the state, level of education, experience, industry and the employer.

Educational Requirements

In order to pursue a career as an actuary, one needs to complete a number of educational requirements.

  • A bachelor’s degree from an accredited program, in actuarial science, mathematics, statistics, economics, business, accounting, finance or a related field; is necessary. A master’s degree is recommended but is not mandatory.

  • Enrollment in a full-accredited actuarial science course which would prepare the candidates for taking certification exams from either the Casualty Actuarial Society (CAS) or the Society of Actuaries (SOA).

  • Application for the required examination program through the SOA or the CAS. Exams are to be taken in two parts: the first part consists of basics covering theoretical knowledge and actuarial models while the second part comprises of Associate and Fellowship programs.

  • Finding internships or employment for experience as an actuary while in the process of taking exams.

  • Application for Validation by Educational Experience (VEE) exams.
Actuarial Certification Societies

The Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA) are professional societies, that sponsor programs leading to full professional status. Two levels of certifications are offered by these societies: associate and fellowship. The CAS provides certifications for actuaries in the property and casualty filed which includes medical malpractice, automobile, workers’ compensation and homeowners’ insurance. The SOA provides certifications for actuaries in health insurance, life insurance, investments, finances and retirement benefits.

To acquire the associate certification of either society, candidates are required to complete a series of exams and the process typically takes 4-6 years as each exam requires a significant amount of preparation. The SOA requires candidates to clear five exams for their associate certification which is the ASA certification, while the CAS requires candidates to clear seven exams for their associate certification which is the ACAS certification.

  • The ASA Certification Requirements:
  • Exam P-Probability
  • Exam FM- Financial Mathematics
  • Exam MFE- Models for Financial Economics
  • Exam MLC- Models for Life Contingencies
  • Exam C- Construction and Evaluation of Actuarial Models
  • VEE Economics
  • VEE Corporate Finance
  • VEE Applied Statistics
  • Fundamentals of Actuarial Practice (FAP) e-Learning Course
  • Associateship Professionalism course (APC)
  • E-Learning Course
  •  Professionalism Seminar
  • The ACAS Certification Requirements
  • Exam P-Probability
  • Exam FM- Financial Mathematics
  • Exam MFE- Models for Financial Economics
  • Exam MLC- Models for Life Contingencies
  • Exam C- Construction and Evaluation of Actuarial Models
  • Exam ST- Models for Stochastic Processes and Statistics
  • Exam 5- Basic Techniques for Ratemaking and Estimating Claim Liabilities
  • Exam 6- Regulation and Financial Reporting
  • CAS Course on Professionalism
  • VEE Economics
  • VEE Corporate Finance
  • VEE Applied Statistics

CAS Online Courses:

  • Online Course 1- Risk Management and Insurance Operations

  • Online Course 2- Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation

It takes another 2 to 3 years to gain the fellowship certification. The SOA offers five options for candidates to pursue specialization in: life and annuities, investments, group and health benefits, retirement benefits, and finance and enterprise risk management. The CAS does not offer specialization tracks. 

 

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