An actuary helps businesses to assess the risk of certain events occurring and to formulate policies that minimize the cost of that risk. For this reason, actuaries are essential to the insurance industry. Actuaries assemble and analyze data to estimate the probability and likely cost of the occurrence of an event such as death, sickness, injury, disability, or loss of property.
Using their broad knowledge of statistics, finance and business, actuaries help design insurance policies, pension plans and other financial strategies in a manner that will help ensure that the plans are maintained on a sound financial basis. Actuaries also address financial questions, including those involving the level of pension contributions required to produce a certain retirement income level and the way in which a company should invest resources to maximize return on investments in the light of potential risk.
Most actuaries are employed in the insurance industry, specializing in life and health insurance or property and casualty insurance. They produce probability tables, which determine the likelihood that a potential future event will generate a claim. From these tables, they estimate the amount a company can expect to pay in claims. For example, property and casualty actuaries calculate the expected amount of claims resulting from automobile accidents, which varies depending on the insured person's age, sex, driving history, type of car and other factors.
Actuaries ensure that the price, or premium charged for such insurance will enable the company to cover claims and other expenses. This premium must be profitable, yet competitive with other insurance companies. Within the life and health insurance fields, actuaries are helping to develop long-term-care insurance and annuity policies, the latter a growing investment tool for many individuals. They also deal with investments of life assurance companies, for example the investment of money in government stock, mortgage bonds, ordinary and preference shares, property and other securities. A considerable amount of time is devoted to the evaluation of a company's liabilities in respect of all policies. Actuaries in other financial services industries manage credit and help price corporate security offerings. They also devise new investment tools to help their firms compete with other financial services companies. The duties of most consulting actuaries are similar to those of other actuaries. Some help companies reduce their insurance costs by lowering the level of risk the companies take on. For instance, they may provide advice on how to lessen the risk of injury on the job, which would lower worker's compensation costs. Consulting actuaries sometimes testify in court regarding the value of the potential lifetime earnings of a person who is disabled or killed in an accident, the current value of future pension benefits (in divorce cases) or other values arrived at by complex calculations. Some work in reinsurance, a field in which one insurance company arranges to share a large prospective liability policy with another insurance company, in exchange for a percentage of the premium.
Actuaries are experts in the theory and practice of statistics and specifically of mortality, sickness, retirement and unemployment. They work mostly with numbers and figures. They devise, compile and develop assurance policies; pension and medical aid schemes and perform other specialized functions mainly in the assurance industry. Actuaries have desk jobs, and their offices are usually comfortable and pleasant. They often work at least 40 hours a week. Some actuaries, particularly consulting actuaries, may travel to meet with clients. Consulting actuaries also may experience more erratic employment and sometimes be expected to work more than 40 hours per week.
Actuaries have great security in terms of employment possibilities due to the fact that the qualifications they obtain are internationally recognized and because of the high demand for actuaries generally.
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