Saturday, February 27, 2016

Actuaries: The Statistical Wizards

Numbers play a critical role in the daily lives of everyone around the world, whether we notice it or not. We make purchases, follow time schedules, and measure ingredients for recipes, but those are the numbers that most of us think about consciously when we are completing those related tasks. The numbers that are most important to our lives we may never even have given a thought to, such as our estimated life expectancy, the chances we get permanently injured on the job, or the amount we will need to contribute to our 401k plan each month to have a comfortable retirement. Thankfully, there are extremely well-trained financial professionals who do take the time to think about these crucially important figures and make the calculations that allow us to comfortably go on with our lives without too much worry. These skilled statisticians are known as Actuaries.

Actuaries analyze the financial costs of risk and uncertainty. They utilize mathematics, statistics, and financial theory to assess the risk that an event will occur, and they help businesses and clients develop policies that minimize the cost of that risk. Actuarial work is essential to the insurance industry. Most actuarial work today is done with computers. Actuaries use database software to compile information, and use advanced statistics & modeling software to forecast the probability of an event occurring, the potential costs if it does occur, and whether the insurance company has enough money to pay future claims. Actuaries typically work in teams consisting of other financial professionals, including accountants, insurance underwriters, and financial analysts. There are many different types of specialist actuaries, depending on the type of insurance or financial product or service they are analyzing. Some examples of specialist actuaries are health insurance actuaries, property & casualty insurance actuaries, and pension & retirement benefits actuaries.

Becoming an actuary is a difficult and time-consuming process, which is one of the reasons the profession is relatively small; there were only 24,600 actuaries practicing in the US in 2014. To enter the actuarial field, one must complete a bachelor's degree, generally in mathematics, actuarial science, statistics, or some other analytical field. Related coursework in economics, applied statistics, corporate finance, and computer science are all very useful for prospective actuaries, as they will help with daily tasks actuaries in the workforce deal with. Once graduated with a bachelor's degree, a prospective actuary must take a series of exams to be licensed as an Associate Actuary by one of the 2 main certifying boards. There is also a higher Fellow designation that requires more work experience & exam passing. Typically, it takes between 4 & 6 years post-college for an actuary to gain Associate status, as the exam process is very intense. Most actuaries do not regret their choice, however, as the career is quite lucrative; the mean annual salary in 2014 for actuaries was $110,090, substantially greater than the national average.

If you are interested in learning more about a career in the Actuarial field, check out our infographic below, it is full of helpful information to start you on your journey to a great professional career. For even more information, be sure to come back to our Facebook, Twitter, and Instagram pages all week long to learn more about Actuaries and what a career in this rapidly growing field is actually like.
Images courtesy of Shutterstock.


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