Insurance companies and other businesses use an actuary to assist them in making informed financial decisions and mitigating risk. For example, a company that sells insurance must determine how much to pay for their insurance by different people.
An actuary will use science, mathematics, and financial analysis, as well as methods such as databases and predictive technology to assess the risk of insuring someone based on their age, history, and the type of insurance they have.
Such hazard assessments can then be used by the actuary to model different insurance policies and set costs. Read on to learn more about starting a career as an actuary.
Educational Background as an Actuary
You must have at least a bachelor’s degree to become an actuary. Most universities and colleges offer actuarial science programs that incorporate business, mathematics, and coursework on statistics. You don’t have to become an actuary in actuarial sciences, but choose courses that will build a strong base in mathematics, statistics, probability, economics, accounting, management, and computer science.
College is an excellent time to pursue internships that will allow you to apply in an actuarial role. Internships are a great way to familiarize yourself with this large knowledge base. Upon graduation, your course can lead to a job offer, but at least you will be making professional contacts in the field.
Job Specialties of an Actuary
- Health insurance actuaries aid in the design of long-term care and health insurance policies by estimating future care costs under the terms of an insurance contract. Based on numerous variables, their predictions include family history, geographic location, and occupation.
- Actuaries in life insurance help to develop annuity and life insurance policies for individuals and groups by estimating how long someone is expected to live based on risk factors such as age, gender, and tobacco use.
- Actuaries in property and casualty insurance help create insurance policies that protect policyholders against loss of property or liabilities arising from accidents, natural disasters, fires, and other incidents. We calculate the number of claims anticipated arising from car accidents, which varies depending on the age, gender, driving history, vehicle size, and other factors of the insured person.
Licensure Requirements of an Actuary
While it is not necessary to become an actuary to have a degree in actuarial sciences, getting certified is. You must start the process of becoming accredited by either the Casualty Actuarial Society (CAS) or the Society of Actuaries (SOA) before you can work as an actuary.
The first credential you will obtain is an associate certification that you can receive by taking these steps: pass a Validation of Educational Experience (VEE) in Applied Statistics, Corporate Finance, and Economics. A committee will review your college coursework, grades, and/or exam scores to see if you have been adequately trained in these fields on critical topics.
Average Salary of an Actuary
According to PayScale, in May 2012, the average annual salary for actuaries was $93,680. The median wage is the salary where half of the workers in the industry earned more than that, and half earned less than that. The lowest 10% earned less than $55,780, while the highest 10% earned more than $175,330.
Actuaries use analytical skills to detect patterns and trends in complex data sets to identify factors that affect those types of events. For more careers in accounting, click here.