What is an Actuary
The basis of the actuarial profession is the legal responsibility for the long-term solvency of life assurers and pension and provident funds. Actuaries are also recognised as experts when it comes to all long-term financial calculations, particularly those involving some element of doubt.
In order to fulfil these responsibilities, they have to study mathematics, economics, statistics and the workings of life assurers, retirement funds and the investment markets. Most actuaries continue to work in these organizations, but there is a growing number who work in banks, investment houses and general insurance companies. In addition actuaries are also being employed by the Regulators.
The job "actuary" has been rated the second best job in the United States by the Jobs Rated Almanac (Sixth Edition, 2002). The popular reference book lists the actuarial profession above other highly regarded careers such as accountant or attorney. Only "biologist" rated higher.
The Jobs Rated Almanac printed five previous editions between 1988 and 2001. In two editions, "actuary" was rated as the best job and in two others, actuary was rated second best. "Actuary" has never been rated lower than fourth, a ranking it received in the fifth edition before climbing two spots in the most recent edition.
The editors compiled statistics on 250 occupations, from accountant to zoologist. The occupations are ranked on the basis of six key criteria: environment, income, employment outlook, physical demands, security and stress. The data comes from government sources, such as the U.S. Bureau of Labor Statistics and the U.S. Census Bureau, as well as studies from trade associations and industry groups.
Actuaries are usually involved in the following types of work:
- Development of new products and the setting of premium rates for all types of policies.
- Investigations into the financial soundness of the life assurer, and the determination of bonus rates on policies.
- Statistical investigations into mortality rates, disability rates, expenses, lapses and surrender rates.
- The setting of the terms under which life assurance policies can be altered or discontinued.
- Life reassurance involving reassurance premiums, development of new products, and reserving methods.
Actuaries give advice to the management of pension and provident funds on the cost of the various benefits they provide to members. Every three years law requires an actuary to investigate the financial soundness of most funds. The actuary will often also give advice on the type and the level of benefit that can be offered. He or she must also confirm that the investment strategy is sound, and will measure the investment performance. Actuaries in this field can work for a life assurer, or an actuarial consulting firm, or on their own.
Actuaries have always held a large proportion of the senior management positions in the fields of life assurance and employee benefit consulting.
A growing number of actuaries are involved in the investment world, looking after the assets of, amongst other life assurers and pension and provident funds. Actuaries are employed in this capacity bystockbrokers and merchant banks. It is likely that an increasing number of actuaries will move into this field.
Actuaries working in this field will usually work for life assurers and be involved in the marketing of life assurance policies and retirement fund services.
Health Insurance and medical aids
Increasing numbers of actuaries are involved in health care finance.
Regulation of financial services is becoming more complex and actuaries are being employed by the Financial Services Board to monitor the financial health of the industries that are regulated by that body.
Life assurers, being service organisations, have extensive administrative systems. Control of these systems requires a sound and extensive knowledge of life assurance, as well as knowledge of the use of computers. Many actuaries are well suited to this field of work.