Actuaries are financial risk experts who play a leadership role in financially-oriented businesses like Insurance, Banking, rating agencies, and accounting firms. They apply mathematics, statistics, probability, risk theory, and economic principles to economic markets, taking into account potential trends and external factors (e.g. political or social factors), to calculate the likelihood of various events and to assess the financial consequences for those outcomes. Some Actuaries are employed by universities, governments, bank and trust companies, insurance companies, pension benefit consulting firms, and professional associations, while others may work as self-employed or salaried consultants in specialist consulting firms.
An Actuary manipulates specialized software to perform calculations and represent their findings. They present their recommendations to the Managers at their firm or company and convince others of the soundness of their decisions.
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 the actuarial duties for small insurance companies that don’t keep their own Actuaries on staff. Other consulting Actuaries work for employee benefits firms which design, analyze, and manage employee benefit programs, such as employer-sponsored healthcare and retirement plans for companies.
Here’s a non-exhaustive list of common tasks Actuaries are required to complete.
- Analyzing the financial costs of risk and uncertainty:
- Applying mathematical models to forecast and calculate the probable future costs of insurance, pension benefits, accidents, sickness, natural disasters, among others;
- using mathematics, statistics, and financial theory to assess the risk of an event occurring and helping businesses and clients develop policies that minimize the cost of that risk;
- monitoring companies’ profitability and working with management to set annual rate targets;
- testifying before public agencies on proposed laws that affect their business, such as state laws influencing insurance prices; and
- using various techniques to provide legal evidence on the value of future earnings.
- Working for insurance companies:
- Designing life, health, and property insurance policies, as well as calculating premiums, contributions, and benefits for insurance policies, pension, and superannuation plans;
- developing annuity and life insurance policies for individuals and groups by estimating, based on risk factors such as age, gender, and tobacco use, how long someone is expected to live; and
- ensuring that the premiums are profitable, yet competitive with other insurance companies.
- Developing investment strategies that manage risks and maximize returns for companies or individuals:
- Assisting companies in the development of broad policies and strategies that assess risks across all areas of business, also known as enterprise risk management; and
- providing financial and economic advice to senior management.
- Designing, testing, and evaluating company pension plans to determine if the expected funds available in the future will be enough to ensure payment of future benefits:
- Reporting the results of their evaluations to the federal government; and
- helping businesses or individuals develop other types of retirement plans, such as healthcare plans for retirees.
- Gathering statistical data and other pertinent information for further analysis.
- Estimating the probabilities and prospective economic costs of events such as death, sickness, accidents, or natural disasters.
- Designing, testing, and administering insurance policies, investments, pension plans, and other business strategies to minimize risks and maximize the company or organization’s profitability.
- Creating charts, tables, and reports to explain their calculations and suggestions.
- Presenting and explaining their findings and proposals to company executives, government officials, shareholders, or clients.
The average Actuary salary is $113,346 per year or $58 per hour. This is around 3.5 times more than the Median wage of the country. Entry level positions start at $79,000 while most experienced workers make up to $159,000. These results are based on 7 salaries extracted from job descriptions.