To accomplish this, actuaries must first assemble and analyze data from which mathematical models are developed. Models of probabilities of sickness, death, accident etc. and also tables of probabilities of unemployment etc. are constructed. After all probabilities and the costs to the company are calculated, the actuary is then able to determine the premium rates which will cover the expected insured loss.
For example, before an insurance company insures the health of an individual or issues a policy on a car, the actuary helps to determine the risks of sickness or accidents that will result in claims. The actuary then makes sure that a fair price is charged by the company which is enough to pay claims and also for the company to operate profitably as a business.
Actuaries may also use mathematical and statistical skills to provide legal evidence on the value of future lost earnings, such as the value of potential lifetime earnings lost by a person who has been disabled by an accident. Keeping informed about general economic, social and legislative developments are a must for actuaries who work in several areas in varying environments.
Excerpt from:'Picture yourself making a terrific choice! The Actuarial Profession' - Society of Actuaries While actuaries work on all sorts of projects in diverse business environments, they have one thing in common: They use quantitative skills to analyze and plan for future financial situations. Using these skills, actuaries may be involved in projects as varied as: Placing a price on a company about to merge with another business. Estimating the impact of seat-belt laws in automobile losses and determining appropriate rate discounts. Projecting Social Security benefits so money can be collected to pay workers planning to retire in 20 years. Determining why malpractice insurance costs for doctors are skyrocketing. Projecting what the AIDS epidemic will cost life and health insurance companies in five, ten and twenty years. Determining the price for a liability policy. Collecting and investing enough money so that an insurance company can pay claims. Designing a new retirement program for a company. Calculating the price to charge for insuring a satellite launch. Estimating the benefit costs for a labour union contract. Answering questions like "What risks are insurable," and "How much and where should companies invest money?" Estimating the costs of a major earthquake on the West Coast.
Most actuaries work for life,health and property/casualty INSURANCE COMPANIES. In these companies, actuaries are involved in almost every aspect of the business and their judgement is relied on heavily to ensure financial security. There is a significant percentage of actuaries in executive positions where they help to determine company policies. Company actuaries may also be found in pension planning, group underwriting, investment and other departments due to the broad knowledge of insurance acquired. Actuaries may also be involved in a wide range of activities in the CONSULTING field. Some operate their own private practice, while others work for actuarial consulting firms. Consulting actuaries work with and provide advice for a fee to financial institutions and to the chief operating officers and often chief executive officers in risk management and health care fields. Pension consulting is an important field that has grown over the years. A growing number of actuaries work for the federal and provincial GOVERNMENT.Actuaries work as senior officials with the Canadian Department of Insurance and other government bodies. These opportunities usually deal with a particular pension plan or insurance such as the government welfare plan. Significant and rewarding opportunities can also be found in EDUCATION. Many actuaries hold positions on the academic staffs of universities. In many organizations, actuaries serve as key financial people, including large industrial corporations, public accounting firms, labour unions and fraternal organizations. A list of the major employers such as insurance companies, consulting groups etc. is available from the CANADIAN INSTITUTE OF ACTUARIES.
Courses in calculus, linear algebra, statistics, operations research, numerical analysis and theory of interest provide reasonable preparation for the early professional examinations (mentioned below). Career options can be increased by taking accounting, economics, finance and computer science courses because you are preparing for a career in business. Since effective communication skills (oral and written) are necessary, courses in english and business communication may also be valuable. While most actuaries have mathematics, statistics or actuarial science degrees, some companies may hire individuals with engineering, economics or business administration provided their background in the essentials (above) is enough . By passing the necessary beginning examinations (mentioned below), one is in a favourable position to apply for entry level jobs in the actuarial field.Professional Recognition:
In North America, the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS) grant professional recognition to actuaries who pass a number of qualifying examinations. The Society of Actuaries members are involved in the areas of life and health insurance, pension planning and employee benefits. The Casualty Actuarial Society members are involved in the areas of property and casualty insurance covering such risks as fire, medical malpractice and personal injury liability. The professional examinations are divided into two parts - the Associateship level exams and the Fellowship level exams. Most students complete a few of the Associateship level exams while in college/university. Further information regarding the Associateship level exams can be obtained from the SOCIETY OF ACTUARIES.
- Try to take the actuarial exams as early as possible, structuring your university curriculum so that you may pass exams as they come along. It's good to graduate with at least two or three passed exams. Of course the more exams you pass - the better! - Try to get actuarial internships in the summer. Getting one at a life/health insurance company and one at a property/casualty company will give an idea which specialty is more appealing to you. Talking to actuaries in various business environments is also another possibility. - If you are unsure whether you would want to specialize in SOA courses leading to a career in life/health insurance or pensions, or in CAS courses leading to a property and casualty insurance career - It is advisable to take courses # 100, 110, 120, 135 and CAS 4B . Both the SOA and CAS offer credits for these courses and you would be sure to receive credits for the exams passed regardless what option you may choose later. - Select as many business related courses while you are in university such as economics, accounting, marketing, business management and finance. Remember,"...actuaries are, first of all, business men and women." - The exams are difficult and it takes determination and commitment. DON'T BE DISCOURAGED!! The road to an actuarial career may be a long, arduous one BUT the actuarial career is a very interesting and rewarding one - the opportunities to grow into a responsible position are great.
These are some of the major organizations representing actuaries: CANADIAN INSTITUTE OF ACTUARIES (CIA) Suite 820 360 Albert Street Ottawa, Ontario K1R 7X7 Canada Telephone: (613) 236-8196 SOCIETY OF ACTUARIES (SOA) 475 North Martingale Road Suite 800 Schaumberg, IL 60173-2226 U.S.A Telephone: (312) 706-3500 CASUALTY ACTUARIAL SOCIETY (CAS) One Penn Plaza - 250 W. 34th Street New York, New York 10119, U.S.A Telephone: (212) 560-1018 AMERICAN ACADEMY OF ACTUARIES (AAA) 1720 I Street, N.W. 7th Floor Washington, D.C. 20006 U.S.A. Telephone: (202) 223-8196