Though insurance actuaries play an important role in the insurance industry, few people understand what they do. An insurance actuary determines the statistical odds of an event occurring. In the insurance industry, knowing the odds of an event happening is important to properly price policies as well as to determine the proper allocation of assets.
The primary goal of an insurance actuary is to help the insurance company develop prices for insurance products. For example, if a person wants to buy a life insurance policy, the actuary uses information on the person to determine when the person is likely to die. While this may not sound pleasant, it is important for the insurance company to know when this event may occur. Using this information, the company determines how much it must charge for the policy in order to create a profitable business transaction. Actuaries may also determine good investments for insurance company funds.
Actuaries work in an office environment, typically in a corporate setting. Actuaries spend a large portion of the day working at a computer. Actuaries generally work a standard 40-hour week, though specific deadlines may require overtime. Many actuaries work for consulting firms, in which case they may travel significantly. Though actuaries rarely work with the public, they often meet with high-level employees within the company. An actuary position can be quite stressful as mistakes can eat into company profits.
Insurance companies typically only hire actuaries with college degrees. Common undergraduate majors for an insurance actuary include actuarial science, mathematics, finance, economics and statistics. Many college students interested in becoming an actuary complete an internship in the insurance industry while in school. In addition to a college degree, actuaries must pass a series of examinations to become a professional actuary. Actuaries often work in a variety of roles within the insurance industry early in their careers to learn about the different aspects of the insurance business. Actuaries with computer programming or other advanced computer skills are particularly attractive to employers.
Employment and Compensation
Though most actuaries work for a private insurance company or insurance consulting firm, there are other opportunities for actuaries. Many federal and state government agencies also employ actuaries. Actuaries employed in government positions work primarily in insurance regulation and pension oversight. Smaller numbers of actuaries work in other fields where risk is a factor, including the airline and automotive industries. As of May 2008, the median annual wage for actuaries was $84,810, according to the Bureau of Labor Statistics.