Actuary

At a Glance
Actuaries determine how much to charge for services that have an uncertain future cost, such as insurance.

Core Tasks

Most specialize in life and health or property and accident insurance Analyze data to estimate the probability of certain events taking place, such as accidents Determine prices for insurance policies based on the risks involved Some help companies develop and administer pension plans

Workplace

Work for large insurance companies, actuarial consulting firms, financial services companies, or government departments Work in offices Spend much of the workday using computers Spend time each day in meetings with clients, other actuaries, and a wide range of other professionals Most work a 5-day, 40-hour week

Earnings
TypicalEarningsRange: $40 - $120

$45,000 to $160,000 a year for most Earnings vary considerably depending on experience and education

Education & Training

A bachelors degree is recommended Relevant programs include actuarial studies, mathematics, economics, and statistics Pass a series of exams administered by industry organizations

Level of Education

4-Year College or University

Attributes & Abilities

An aptitude for math Computer skills Logical Analytical Communication skills

Michigan Career Pathways

pathwayDescription

JobDescription
Ever wonder why you have to pay so much for insurance? If you were an actuary, you would know the answer to this question. Actuaries specialize in determining how much to charge for services that have an uncertain future cost. Most actuaries specialize in either life and health, or property and accident insurance. Others work in finance or employee benefits. Regardless of their specialty, they assemble and analyze data to estimate the probability of certain events taking place, such as death, sickness, injury, disability, or property loss. Suppose, for example, you buy a car insurance policy. These policies protect a driver from financial loss due to an accident. If the driver avoids an accident, the insurance company that sold the policy wont have to pay out any money. If the driver crashes into another vehicle, the payout could be substantial. Unfortunately, an insurance company has no way of knowing which drivers will be involved in accidents. This uncertainty makes it hard to decide how much to charge each individual driver. One of the jobs of an actuary is to resolve this uncertainty and determine how much to charge. For car insurance policies, they study the historical trends of car accidents to try to determine how likely a person is to be involved in a car crash. Once the probability has been determined, they look at the likely payout for each crash. After taking these two factors into account, they have a rough idea of how much to charge for a car insurance policy. Actuaries are involved in deciding the prices charged for life insurance, car insurance, health insurance, house insurance, and disability insurance. Some actuaries also help companies develop and administer pension plans. If a company wants to set up a pension plan for its employees, the skills of an actuary are required to estimate the probable future cost of the plan to the company. To arrive at this figure, actuaries analyze various factors to estimate the likelihood of people retiring, leaving their jobs, or becoming disabled. Once the future cost has been estimated, the company can determine how much to contribute to the pension plan each year. Pension actuaries also estimate the level of pension contributions required to produce a certain retirement income level.

WorkingConditions
For the most part, actuaries work for large insurance companies or for actuarial consulting firms. Some work for financial services companies or government departments. Depending on the size and type of project, actuaries may work alone, or on a team with other actuaries. In addition to having contact with their clients, they may have contact with a wide range of other professionals, such as accountants, lawyers, and businesspeople. Work hours are relatively standardapproximately 40 hours a week. However, at more senior levels, the additional responsibility often requires workweeks averaging 50 to 60 hours. Telephone calls and meetings with clients and other actuaries tend to take up a lot of time. Most actuaries have 2 to 3 weeks of vacation a year.

Earnings
Actuaries work primarily for life and health insurance companies, insurance agents and brokers, pension benefit consulting firms, public relations companies, and government agencies. Some actuaries hold teaching positions at colleges. Because of their specialized talents, actuaries are well-paid. The entry-level salary for an actuarial student just out of college ranges from about $45,000 to $70,000 a year. In order to receive higher pay, they must continue to study for and pass difficult qualifying exams. The median earnings for all actuaries are about $87,000 a year. A fully qualified actuary who has passed all the fellowship-level exams can expect to make between $95,000 and $160,000 a year. Actuaries who reach management can earn much more. Full-time actuaries generally receive benefits in addition to a salary. These may include paid sick days and vacation time, health coverage, and contributions to pension plans.

MichiganWages
Occupation: Actuaries

Level of Experience

Hourly

Annual

Entry Wage

$29.03

$60,370

Median Wage

$35.22

$73,260

Experienced Wage

$46.27

$96,230

Source:U.S. Department of Labor, Bureau of Labor Statistics http://www.bls.gov

MichiganOutlook
Occupation: Actuaries

Employment

2010

690

2020

870

Change

Number

180

Percentage

26

AnnualAverageOpenings

Total

Growth

Replacement

60

18

42

Source:Michigan Department of Technology, Management & Budget, Labor Market Information http://www.milmi.org

Education
Start by taking math courses, particularly calculus and algebra, in high school. Courses in economics, commerce, and business administration are also useful. While a bachelors degree is not a formal requirement to become an actuary, having a degree will make it easier to find employment. Thats because most candidates seeking actuarial positions are college graduates who have completed programs in areas such as math, statistics, or economics. Many have even completed specialized college programs in actuarial science. To become a fully qualified actuary, you must pass a series of exams offered through the Casualty Actuarial Society (CAS) or the Society of Actuaries (SOA). The first of these are the associate-level exams. Most candidates begin taking these while still attending college. The final exams are the fellowship-level exams. These vary depending on the chosen specialization, such as pensions, investments, or finance. Most actuarial students work for insurance firms or actuarial consulting firms while studying for these exams. In this way they can earn a salary while working towards becoming fully qualified. It is not uncommon for students to fail some of these exams. Luckily, they may rewrite the exams as many times as necessary. It usually takes 6 to 10 years to complete all of the actuarial exams, including those completed while at college.

RelatedCollegePrograms
Actuarial Science Finance, General Statistics, General Insurance

OtherSuggestedQualifications
A good aptitude for and understanding of mathematics, particularly algebra and calculus, is important. Computer experience is also valuable, as actuaries use computers to create complex mathematical models. Companies increasingly prefer well-rounded individuals who, in addition to a strong technical background, have some training in liberal arts and business. Actuaries must keep up with legislative, economic, social, medical, and other trends that affect insurance practices. Knowledge of marketing, economics, investments, and general business is helpful.You should enjoy analytical work and be a good communicator.

SuggestedHighSchoolSubjects
Grade9 Grade10

English

English

Grade9

Grade10

Mathematics Science Social Studies - Geography Health & Physical Education Business Keyboarding Computers

Mathematics Science Social Studies - History Business Computers

Grade11

Grade12

English Mathematics Science Economics Law & Government Accounting Business & Management Computers

English Calculus Probability & Statistics Economics Law & Government Accounting Business & Management Computers

Important Check with your advisor to make sure that your course selections satisfy your graduation requirements. Courses available may vary from school to school.

SampleCareerPath
People take different pathways through their careers, but no one starts at the top. This is an example of how the earnings, education and experience requirements, and responsibilities might progress for someone in this occupation.

Level 1

SampleTitle

Actuarial Analyst

Level 1

Earnings

$45,000 to $70,000 a year

Requirements

Bachelors degree Completion of some of the actuarial exams is helpful but not necessary

Responsibilities

Using computer models to determine insurance premiums and pension plan contribution rates; analyzing trends, rate level, and policyholder impacts; implementing rating plans and structures.

Level 2

SampleTitle

Associate Actuary

Earnings

$70,000 to $100,000 a year

Requirements

2 or more years of job experience Completion of associate-level actuarial exams

Responsibilities

Beginning to take more responsibility for large actuarial projects; reviewing contribution rates for different kinds of pension or insurance plans; supervising and training other actuaries; studying for and taking the qualifying exams.

Level 3

SampleTitle

Director

Earnings

$95,000 to $160,000 a year, or more

Requirements

7 or more years of experience Completion of fellowship-level actuarial exams

Responsibilities

Responsibility for all aspects of an actuarial project (for example, full responsibility for setting car insurance premiums or for designing and administering a company pension plan); verifying all actuarial calculations for a particular project; managing and supervising junior and senior actuarial students; dealing directly with and advising clients.