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How to Become an Actuary

Learn how to become an actuary with this informative guide from DegreeTree. Click on the roadmap links below to go to a particular topic area, or just start reading. This guide will help you understand the education needed, as well as the certification process for becoming an actuary. It will also cover actuary jobs and give you an idea of how much money actuaries make.

Actuary Roadmap

Types of Actuaries

There are several career paths for actuaries. Typically, an actuary will specialize in a certain area. These include:

  • Enterprise Risk Management (ERM)
  • Investments
  • Finance
  • Individual Life & Annuities
  • Retirement Benefits
  • Group & Health Insurance
  • Chartered Enterprise Risk Analyst (CERA)

Actuary Job Description

As an actuary, you'll work with numbers. You'll extract and compile large data sets to determine costs. You'll use financial analysis to identify and analyze trends to help upper management make calculated decisions based on your research. You may also be responsible for pricing analysis, data analysis and data extrapolation. Expect to use a lot of higher level math with your job as an actuary, including calculus and statistics.

Duties of an actuary include:

  • Analyze loss and expense reserves
  • Create loss ratio projections
  • Maintain accurate records and documentation including quarterly reports
  • Generate reports like month-end close, IBNR calculations, and monthly management reports
  • Evaluate, design, and implement risk management programs
  • Perform financial modeling
  • Analyze, interpret, communicate, and present on industry trends

 

Education Requirements

Most actuary jobs require a bachelors degree in mathematics, actuarial science, or statistics. Other degrees that are a good fit for an actuary are finance, accounting, or economics. In order to make more money as an actuary, you may also want to purse a masters degree in any of those fields.

Additional Skills Needed

Actuaries require a solid foundation in mathematics, including complex and high level math. You'll likely encounter real life cases where you'll use differential calculus or integral calculus, along with computing probabilities and statistics.

In addition to math, many employers will want you to have skills in computer programming. This may include programs like Microsoft Office, Word, and Excel. But it will likely include more complex programing like relational databases, SQL Server, Microsoft Server, .NET, and VBA.

As in most jobs, effective oral, written and interpersonal communication skills are a plus

Experience Requirements

Initially, you may be able to attain an entry level position as an actuary with your bachelors degree. However, you'll want to keep in mind that many jobs require a certain amount of experience within that particular field. For instance, if you work in healthcare as an actuary, you stand a good chance of achieving a promotion in the area of healthcare after 2 years of experience. With 2-5 years of experience, you can expect to be earning the a salary in the middle 50 percent of actuaries ($60,000+/year). However, you may find yourself starting over if you make a transition to another industry like banking, where you have no experience. In that situation, you'd likely have to start over with an entry level position and work your way up again. The take away from this is to choose the area in which you'd like to work as an actuary very carefully from the beginning to assure your experience and education level contribute to your promotion within a company and an increase in your salary.

Actuary Certification

The Society of Actuaries

The Society for Actuaries offers two designations and one credential for actuaries. The designations are Associate of the Society of Actuaries (ASA) and Fellow of the Society of Actuaries (FSA). The credential is Chartered Enterprise Risk Analyst. The requirements for each are listed below.

  • Associate of the Society of Actuaries Requirements
    • Complete and pass 5 exams
      1. Exam P – Probability
      2. Exam FM – Financial Mathematics
      3. Exam MFE – Models for Financial Economics
      4. Exam MLC – Models for Life Contingencies
      5. Exam C–Construction and Evaluation of Actuarial Models
    • Validation by Educational Experience in the following areas
      • Economics
      • Corporate finance
      • Applied Statistics
    • Complete the Fundamentals of Actuarial Practice (FAP) e–Learning Course
    • Complete the Associateship Professionalism Course (APC)
  • Fellow of the Society of Actuaries Requirements
    • Meet the requirements for the Associate level
    • Choose from the following specialty tracks:
      • Finance/ERM Track
      • Investment Track
      • Individual Life & Annuities Track
      • Retirement Benefits Track
      • Group & Health Track
    • Complete Decision Making and Communication (DMAC) Module
    • Complete Fellowship Admissions Course (FAC)
  • Chartered Enterprise Risk Analyst Requirements
    • Complete the following exams
      1. Exam P – Probability
      2. Exam FM – Financial Mathematics
      3. Exam MFE – Models for Financial Economics
      4. Exam C – Construction and Evaluation of Actuarial Models
      5. Advanced Finance/ERM Exam
    • Complete the Associateship Professionalism Course (APC)
    • Complete the CERA Operational Risk e–Learning Module

The Society of Actuaries

In addition to the Society of Actuaries, the Casualty Acturial Society offers various levels of membership. View the CAS requirements for each level.

Associate member of the Casualty Actuarial Society Requirements

  • Complete and pass exams 1-6
    1. Exam 1 — Probability
    2. Exam 2 — Financial Mathematics
    3. Exam 3 — Actuarial Models: (3F) Financial Economics and (3L) Life Contingencies and Statistics
    4. Exam 4 — Construction and Evaluation of Actuarial Models
    5. Exam 5 — Introduction to Property and Casualty Insurance and Ratemaking
    6. Exam 6 — Reserving, Insurance Accounting Principles, Reinsurance, and Enterprise Risk Management
  • Complete the two CAS Online Courses
  • Receive credit by Validation by Educational Experience (VEE) for the required topics of economics, corporate finance, and applied statistical methods
  • Complete the CAS Course on Professionalism

Fellow of the Casualty Actuarial Society Requirements

  • Meet all of the Associateship requirements
  • Complete and pass exams 7-9
    1. Exam 7 — United States—Nation-Specific Examination: Law, Regulation, Government and Industry Insurance Programs, and Financial Reporting and Taxation
    2. Exam 8 — Investments and Financial Analysis
    3. Exam 9 — Advanced Ratemaking, Rate of Return, and Individual Risk Rating Plans

Actuary Jobs

According to the Bureau of Labor Statistics, the number of actuary jobs is expected to be less than the number of qualified applicants. Therefore, competition for actuary jobs is likely to be high. One of the ways to distinguish yourself from other candidates is to attain a bachelors degree.

As an actuary, you'll likely find jobs working for life and health insurance companies, airlines, investment companies, healthcare companies, or banks. Companies that have a high need for actuaries are usually looking to contain costs and evaluate and limit risks. Other opportunities exist with consulting firms, where you may be brought in to work with different companies for short periods of time as an actuary to analyze various risks.

Types of jobs you may expect are:

  • Retirement plan actuary
  • Health actuary
  • Life insurance actuary
  • Property and casualty actuary
  • Consulting actuary
  • P&C pricing actuary
  • Pension actuary
  • Actuary analyst
  • Health analyst
  • Actuarial Pricing

Actuary Salary

One of the common questions people ask is: "How much money will I make as an actuary?" As with all careers, your salary will greatly depend on the area you live in, the size of the company you work for, your level of experience, and your level of education. According to the Bureau of Labor Statistics, actuaries median annual salary was $84,810 in 2008. The middle 50 percent earned between $62,020 and $119,110. The lowest 10 percent had wages less than $49,150, while the top 10 percent earned more than $160,780. According to the National Association of Colleges and Employers, annual starting salaries for graduates with a bachelor's degree in actuarial science averaged $56,320 in 2009.

In addition to your salary, you may receive a benefits package which includes healthcare plans, dental plans, paid time off program, sick leave, matching 401(k) retirement, and education assistance.


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