Becoming an actuary requires education and training but it’s a career worth the time because it offers excellent career growth, good wages and the opportunity to help businesses save money, which results in consumers also saving money. We often wonder how insurance premiums are determined. They’re actually the result of the hard work performed by actuaries. Actuaries generally have a love for math, enjoy working with money and are valuable employees. Learn how to become an actuary and what they do throughout the course of their day.
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What Actuaries Do
Actuaries are a valuable commodity in many companies because they analyze the monetary costs of risk and uncertainties. Using their knowledge of statistics, mathematics, and financial theory, they assess the risk of certain events and help companies create policies to offer the least amount of risk and loss. Actuaries may work in several industries, but they’re most commonly found working for insurance companies.
An actuary working for an auto insurance company would gather information on the driver, the driver’s driving habits, traveling destinations and vehicle information. The actuary then analyzes this data, produces charts or graphs, and estimates the probability of the driver being involved in an accident and the cost to the insurance company in claims. Using this information, the actuary can help the insurance company determine the best premium for the customer but one that has the lowest potential for loss to the company.
How to Become an Actuary
Actuaries typically have at least a bachelor’s degree in majors like actuarial science, mathematics, statistics or a similar analytical fiend. They also benefit if they have a strong background in math and business. Course topics include applied statistics, economics, actuarial science, computer science, writing, programming languages, and databases. If they wish to become certified, they should complete courses in statistics, economics, and corporate finance. The ability to communicate and speak well is also a benefit in this profession.
Licensure/Certification
Many actuaries choose to obtain certification, which can be done through two different organizations and on two different levels: associate and fellow. The Society of Actuaries (SOA) offers certification to actuaries who work in casualty and property fields, such as medical malpractice, homeowners, automobile and worker’s compensation insurance. The Casualty Actuarial Society (CAS) offers certification for actuaries who work in health insurance, life insurance, investments, retirement benefits, and finance.
Both of these organizations require candidates to complete college courses in finance, economics, and mathematical statistics. To earn the associate-level certification, the actuary must pass seven examinations. Both organizations require the actuaries to complete seminars as well as e-learning courses.
The entire process to reach an associate-level can take from four to seven years. It takes an additional two to three years to reach the fellowship level. Actuaries obtaining certification through the SOA also have the option of specializing this these areas.
• Finance/enterprise risk management
• Life and annuities
• Investments
• Retirement benefits
• Group and health benefits
To maintain certification, actuaries much complete continuing education credits.
Career Outlook
Despite being a small occupation, the demand for actuaries is very high according to the U.S. Bureau of Labor Statistics (BLS). These professionals should see job growth of 20 percent during the 2018-2028 decade, a number that should result in about 5,000 new jobs created by 2028. Actuaries earned wages ranging from $61,140 to $186,110 as of a May 2018 BLS report. The average annual wage was $116,250.
Working as an actuary has the potential to not only be a lucrative career but also one that can be challenging. The ability to help others save money and reduce loss can be extremely rewarding. The best news is that it’s relatively easy to become an actuary.