|Quick Facts: Actuaries|
|2017 Median Pay||$101,560 per year
$48.83 per hour
|Typical Entry-Level Education||Bachelor's degree|
|Work Experience in a Related Occupation||None|
|On-the-job Training||Long-term on-the-job training|
|Number of Jobs, 2016||23,600|
|Job Outlook, 2016-26||22% (Much faster than average)|
|Employment Change, 2016-26||5,300|
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Actuary Career, Salary, and Education Information
What Actuaries Do
Actuaries analyze the financial costs of risk and uncertainty. They use mathematics, statistics, and financial theory to assess the risk of potential events, and they help businesses and clients develop policies that minimize the cost of that risk. Actuaries’ work is essential to the insurance industry.
Actuaries typically do the following:
Compile statistical data and other information for further analysis
Estimate the probability and likely economic cost of an event such as death, sickness, an accident, or a natural disaster
Design, test, and administer insurance policies, investments, pension plans, and other business strategies to minimize risk and maximize profitability
Produce charts, tables, and reports that explain calculations and proposals
Explain their findings and proposals to company executives, government officials, shareholders, and clients
Most actuarial work is done with computers. Actuaries use database software to compile information. They use advanced statistics and modeling software to forecast the probability of an event occurring, the potential costs of the event if it does occur, and whether the insurance company has enough money to pay future claims.
Actuaries typically work on teams that often include managers and professionals in other fields, such as accounting, underwriting, and finance. For example, some actuaries work with accountants and financial analysts to set the price for security offerings or with market research analysts to forecast demand for new products.
Most actuaries work at insurance companies, where they help design policies and determine the premiums that should be charged for each policy. They must ensure that the premiums are profitable yet competitive with other insurance companies.
Actuaries in the insurance industry typically specialize in a specific field of insurance, such as one of the following:
Health insurance actuaries help develop long-term care and health insurance policies by predicting expected costs of providing care under the terms of an insurance contract. Their predictions are based on numerous factors, including family history, geographic location, and occupation.
Life insurance actuaries help develop annuity and life insurance policies for individuals and groups by estimating, on the basis of risk factors such as age, gender, and tobacco use, how long someone is expected to live.
Property and casualty insurance actuaries help develop insurance policies that insure policyholders against property loss and liability resulting from accidents, natural disasters, fires, and other events. They calculate the expected number of claims resulting from automobile accidents, which varies with the insured person’s age, sex, driving history, type of car, and other factors.
Some actuaries apply their expertise to financial matters outside of the insurance industry. For example, they develop investment strategies that manage risks and maximize returns for companies or individuals.
Pension and retirement benefits actuaries design, test, and evaluate company pension plans to determine if the expected funds available in the future will be enough to ensure payment of future benefits. They must report the results of their evaluations to the federal government. Pension actuaries also help businesses develop other types of retirement plans, such as 401(k)s and healthcare plans for retirees. In addition, they provide retirement planning advice to individuals.
Enterprise risk actuaries identify any risks, including economic, financial, and geopolitical risks that may affect a company’s short-term or long-term objectives. They help top executives determine how much risk the business is willing to take, and they develop strategies to respond to these issues.
Actuaries also work in the public sector. In the federal government, actuaries may evaluate proposed changes to Social Security or Medicare or conduct economic and demographic studies to project future benefit obligations. At the state level, actuaries may examine and regulate the rates charged by insurance companies.
Some actuaries are considered consultants and provide advice to clients on a contract basis. Many consulting actuaries audit the work of internal actuaries at insurance companies or handle actuarial duties for insurance companies that are not large enough to keep their own actuaries on staff.
Work Environment for actuaries
Actuaries held about 23,600 jobs in 2016. The largest employers of actuaries were as follows:
Finance and insurance: 70%
Professional, scientific, and technical services: 16%
Management of companies and enterprises: 7%
Self-employed workers: 1%
Actuaries typically work on teams that often include managers and professionals in other fields, such as accounting, underwriting, and finance.
Although actuaries usually work in an office setting, those who work for consulting firms may need to travel to meet with clients.
Most actuaries work full time, and about 1 in 3 worked more than 40 hours per week in 2016.
How to Become an Actuary
Actuaries need a bachelor’s degree, typically in mathematics, actuarial science, statistics, or some other analytical field. Students must complete coursework in economics, applied statistics, and corporate finance, and must pass a series of exams to become certified professionals.
Actuaries must have a strong background in mathematics, statistics, and business. Typically, an actuary has an undergraduate degree in mathematics, actuarial science, statistics, or some other analytical field.
To become certified professionals, students must complete coursework in economics, statistics, and corporate finance.
Students also should take classes outside of mathematics and business to prepare them for a career as an actuary. Coursework in computer science, especially programming languages, and the ability to use and develop spreadsheets, databases, and statistical analysis tools, are valuable. Classes in writing and public speaking will improve students’ ability to communicate in the business world.
Licenses, Certification, and Registrations
Two professional societies—the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA)—sponsor programs leading to full professional status. The CAS and SOA offer two levels of certification: associate and fellow.
The CAS certifies actuaries who work in the property and casualty field, which includes automobile, homeowners, medical malpractice, and workers’ compensation insurance.
The SOA certifies actuaries who work in life insurance, health insurance, retirement benefits, investments, and finance.
Both professional societies require applicants to complete certain educational coursework in economics, finance, and mathematical statistics while in college. Applicants also must pass seven exams for associate-level certification.
Many employers expect students to have passed at least one or two of the initial actuary exams needed for professional certification before graduation.
In addition, both CAS and SOA require that candidates take seminars on professionalism. Both societies have mandatory e-learning courses for candidates.
It typically takes 4 to 7 years for an actuary to earn the associate-level certification, because each exam requires hundreds of hours of study and months of preparation.
After becoming associates, actuaries typically take 2 to 3 more years to earn fellowship status.
The SOA offers fellowship certification in five separate tracks: life and annuities, group and health benefits, retirement benefits, investments, and finance/enterprise risk management. Unlike the SOA, the CAS does not offer specialized study tracks for fellowship certification.
Both the CAS and the SOA have a continuing education requirement. Most actuaries meet this requirement by attending training seminars that are sponsored by their employers or the societies.
Pension actuaries typically must be licensed by the U.S. Department of Labor and U.S. Department of the Treasury’s Joint Board for the Enrollment of Actuaries. Applicants must meet certain experience requirements and pass two exams administered through the SOA to qualify for enrollment.
Because there are different types of practice areas, including health, life, pension, and casualty, internships may be helpful for students deciding on which actuarial track to pursue.
Most entry-level actuaries start out as trainees. They are typically on teams with more experienced actuaries who serve as mentors. At first, they perform basic tasks, such as compiling data, but as they gain more experience, they may conduct research and write reports. Beginning actuaries may spend time working in other departments, such as marketing, underwriting, and product development, to learn all aspects of the company’s work and how actuarial work applies to each one.
Most employers support their actuaries throughout the certification process. For example, employers typically pay the cost of exams and study materials. Many firms provide paid time to study and encourage their employees to set up study groups. Employees usually receive raises or bonuses for each exam that they pass.
Advancement depends largely on job performance and the number of actuarial exams passed. For example, actuaries who achieve fellowship status often supervise the work of other actuaries and provide advice to senior management. Actuaries with a broad knowledge of risk management and how it applies to business can rise to executive positions in their companies, such as chief risk officer or chief financial officer.
Analytical skills. Actuaries use analytical skills to identify patterns and trends in complex sets of data to determine the factors that have an effect on certain types of events.
Communication skills. Actuaries must be able to explain complex technical matters to those without an actuarial background. They must also communicate clearly through the reports and memos that describe their work and recommendations.
Computer skills. Actuaries must know programming languages and be able to use and develop spreadsheets, databases, and statistical analysis tools.
Interpersonal skills. Actuaries serve as leaders and members of teams, so they must be able to listen to other people’s opinions and suggestions before reaching a conclusion.
Math skills. Actuaries quantify risk by using the principles of calculus, statistics, and probability.
Problem-solving skills. Actuaries identify risks and develop ways for businesses to manage those risks.
Salaries for actuaries
The median annual wage for actuaries was $101,560 in May 2017. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $59,950, and the highest 10 percent earned more than $184,770.
In May 2017, the median annual wages for actuaries in the top industries in which they worked were as follows:
Finance and insurance: $102,510
Professional, scientific, and technical services: $101,430
Management of companies and enterprises: $95,060
Most actuaries work full time, and about 1 in 3 worked more than 40 hours per week in 2016.
Job Outlook for Actuaries
Employment of actuaries is projected to grow 22 percent from 2016 to 2026, much faster than the average for all occupations. However, because it is a small occupation, the fast growth will result in only about 5,300 new jobs over the 10-year period.
Actuaries will be needed to develop, price, and evaluate a variety of insurance products and calculate the costs of new risks.
More actuaries will also be needed to help companies manage their own risk, a practice known as enterprise risk management. Actuaries will help companies avoid, manage, and respond to any potential financial risks across all areas of their business operations. This analysis helps companies adjust their business or investment strategies to achieve economic returns and respond to new financial regulations and requirements.
Insurance companies will need actuaries to analyze the large amount of information, such as medical or property data, collected from consumers. The increase in available data will allow insurance companies to better develop new products, set competitive prices, predict consumer behavior, and make more accurate projections of future risks and costs.
In addition, health insurance companies will require more actuaries to help evaluate the effects of changing healthcare regulations and guidelines, expand into new insurance markets, and offer products to new customers.
Job opportunities should be somewhat competitive for entry-level applicants because the number of students sitting for actuarial exams has increased in the past few years. Students who have passed at least two actuarial exams, have had an internship while in college, and have strong analytical and business skills should have the best job prospects for entry-level positions.
Employment projections data for actuaries, 2016-26
Employment, 2016: 23,600
Projected Employment, 2026: 28,900
Change, 2016-2026: +22%, +5,300
Careers Related to actuaries
Accountants and auditors prepare and examine financial records. They ensure that financial records are accurate and that taxes are paid properly and on time. Accountants and auditors assess financial operations and work to help ensure that organizations run efficiently.
Budget analysts help public and private institutions organize their finances. They prepare budget reports and monitor institutional spending.
Cost estimators collect and analyze data in order to estimate the time, money, materials, and labor required to manufacture a product, construct a building, or provide a service. They generally specialize in a particular product or industry.
Economists study the production and distribution of resources, goods, and services by collecting and analyzing data, researching trends, and evaluating economic issues.
Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.
Insurance underwriters decide whether to provide insurance, and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.
Mathematicians and statisticians analyze data and apply mathematical and statistical techniques to help solve real-world problems in business, engineering, healthcare, or other fields.
Personal financial advisors provide advice on investments, insurance, mortgages, college savings, estate planning, taxes, and retirement to help individuals manage their finances.
Postsecondary teachers instruct students in a wide variety of academic and technical subjects beyond the high school level. They may also conduct research and publish scholarly papers and books.
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Actuaries,
on the Internet at https://www.bls.gov/ooh/math/actuaries.htm