What Is Actuarial Science?

Actuarial science involves using math, probability, and statistics to assess risk in industries such as insurance and finance. For example, car insurance providers use actuarial science to determine customers' monthly payment amounts. Actuarial science helps companies define, understand, and prepare for the financial repercussions of future events. Insurance companies use actuarial science to analyze the probability of mortality, accident, and injury.

Historically, actuarial science has utilized deterministic models for creating tables and premiums. However, modern professionals in the field use stochastic modeling assisted by computer technology. Many colleges and universities offer degrees in actuarial science, which typically feature advanced coursework in mathematics, finance, and economics. This guide covers the responsibilities of an actuary.

What Is an Actuary?

Actuaries use mathematics and probability to assess the financial implications of risk and uncertainty. Though actuaries can work in a variety of industries, most positions in the field are in insurance and finance. Actuaries in these industries provide the basis for setting prices and premiums. The Bureau of Labor Statistics projects actuary positions to increase 20% from 2018-2028.

The following sections explore various types of actuaries and their professional responsibilities.

What Does an Actuary Do?

Actuaries analyze large amounts of data to determine the probability and cost of events such as death, injury, and natural disaster. Professionals complete much of this analysis using computers. Actuaries compile data and use advanced statistics and probability applications to create tables and models, which illustrate the probability and consequences of certain events. Actuaries also identify whether a client can feasibly handle those financial consequences.

After compiling their findings, actuaries present recommendations to executives, shareholders, and clients. Actuaries typically work as part of a team of managers and specialists. In addition to minimizing risk, actuaries must provide recommendations that lead to profit and a competitive position in the industry for their employer.

In addition to minimizing risk, actuaries must provide recommendations that lead to profit and a competitive position in the industry for their employer.

Most actuaries work in the insurance industry, often in life and health insurance. Insurance companies could not develop effective policies without the guidance of actuaries. Many actuaries also work in finance, advising companies on the risk of potential investments. Some actuaries work for the government, where their work impacts how people receive benefits, such as Medicare and Social Security.

Professionals must have a variety of skills to succeed in the field. Actuaries need strong math skills, including proficiency in algebra, statistics, and calculus. They must also have good judgement and decision-making skills. They must be able to develop recommendations based on data -- including tables and models -- and their own discretion. Actuaries also need strong active listening skills to communicate with colleagues.

Actuaries use critical thinking skills to weigh the pros and cons of specific courses of action for designing policies and setting premiums. Actuaries also need strong technology skills, especially with spreadsheet applications such as Microsoft Excel. They may need to know how to use analytical and database user query software, such as IBM SPSS Statistics and Microsoft Access.

Actuaries use critical thinking skills to weigh the pros and cons of specific courses of action for designing policies and setting premiums.

Actuarial professionals can specialize in an area such as life, health, or property and casualty insurance. Health insurance actuaries develop long-term care and health insurance policies, predicting the costs of plans based on each holder's history. Life insurance actuaries help develop life insurance policies based on a holder's chances of falling victim to unforeseen events. Professionals in property and casualty insurance develop policies that protect people from unforeseen property loss and liability.

Actuaries in the finance industry often specialize in investment and manage investment decisions at large companies. Other common specializations include enterprise risk and pension/retirement benefits. Actuaries who specialize in enterprise risk help businesses avoid financial, economic, and political risks that could obstruct their short- and long-term goals. Professionals who focus on pension and retirement benefits often help develop retirement benefit plans for large companies.

Some actuaries operate under the title of consultant or consulting actuary. These professionals typically fulfill unique roles, such as auditing the work of full-time actuaries at larger insurance companies. Smaller companies often hire consulting actuaries rather than full-time actuaries.

What Are the Responsibilities of an Actuary?

Compile and Analyze Data

Actuaries gather and analyze data about events such as deaths, natural disasters, and accidents. Actuarial professionals compile this data into spreadsheets for ease of access. They then enter the information into statistical modeling software to determine the financial risks of certain events. Actuaries may also review nonstatistical data, such as demographics.

Review Company Policies

Actuaries thoroughly review policies and contracts that may hold relevance for their valuations and reports. They also review annuity plans, insurance policies, pension plans, and other contracts. They use knowledge gained during this process to assess the risk factors for various contracts and to set policy guidelines.

Communicate With Businesses

Actuaries spend a substantial amount of time communicating their findings to managers. They may prepare presentations and written reports to share with stakeholders and executives. These presentations and communications may include proposals for policy changes and recommendations for asset management.

Develop New Risk-analysis Methods

As actuarial science evolves, actuaries must adjust statistical models to account for new insurance risks. They also develop plans to help their employer enter new industries and geographic areas. Actuaries often conduct research under the guidance of statisticians, accountants, and mathematicians.

Create Actuarial Reports

Actuaries craft written reports to present the findings of their valuation and to justify conclusions to policyholders. Reports must comply with professional standards, which means they must mention the actuary's name and include sections covering the purpose and scope, collected data, and methods and assumptions.

Provide Expert Testimony

Occasionally, actuaries testify as expert witnesses. They may also testify on behalf of their employer in cases related to insurance and financial risk. An actuary's testimony can be particularly important in trials regarding new insurance laws.

What Qualifications Do You Need to Become an Actuary?


Bachelor's Degree in Actuarial Science Most employers require candidates to hold at least a bachelor's in actuarial science.
Computer Science Coursework Computer science coursework helps learners develop basic computer literacy skills, including familiarity with databases and spreadsheets.
Certification Coursework Actuaries pursuing professional certification typically take courses in economics, statistics, and corporate finance.


Critical Thinking Actuaries need critical thinking skills to weigh opposing viewpoints and make judgments. Professionals use these skills when creating valuations and internal reports for management and clients./td>
Active Listening Actuarial work requires active listening skills. Actuaries must pay close attention to feedback from management, clients, and shareholders.


Inductive Reasoning Actuaries use inductive reasoning to solve general problems by connecting related information. Inductive reasoning skills help professionals make sound inferences about nonstatistical data.
Mathematical Reasoning Actuaries need the ability to use general mathematical reasoning.
Numbers Facility The daily responsibilities of an actuary require simple calculations, which professionals must complete accurately.


Economics and Accounting Actuaries need knowledge of basic economics and accounting principles to succeed in business settings. This knowledge helps workers understand the expectations of their colleagues, including sales agents and accountants.
Computers and Technology Actuaries work with computers and technology every day. They need knowledge of programming languages, databases and data query tools, and analytical software.
Laws and Government Actuaries must understand how local, state, and federal laws affect relevant industries, such as life insurance.
Learn More About How to Become an Actuary

How are Actuaries Employed?

  • Life Insurance

    Many actuaries work in the life insurance industry. These professionals manage annuity and life insurance policies, and they calculate premiums based on factors such as age, gender, and tobacco use.

  • Health Insurance

    Health insurance companies employ a large number of actuaries. In this field, actuaries manage long-term care and health insurance policies based on the personal history of each policyholder.

  • Property and Casualty Insurance

    Actuaries who work in property and casualty insurance calculate the likelihood of financial loss and liability due to unforeseen accidents.

  • Enterprise Risk

    Many actuaries in the financial services sector specialize in enterprise risk. They often work for large companies with large amounts of money available to invest.

  • Self-employed

    Many actuaries work for themselves. Self-employed actuaries may specialize in investment consulting or offer retirement planning advice to individuals. These professionals often pursue certification.

Learn More About Actuaries and Take the First Step Today!

Professional Organizations for Actuaries

  • Casualty Actuarial Society CAS offers online professional certification for property and casualty actuaries. The society also provides an online career center, continuing education opportunities, and research projects.
  • Society of Actuaries Established in 1949, the SOA advocates for actuaries on a global scale. The organization offers professional certification and fellowships for actuaries working in life insurance, health insurance, retirement benefits, investments, and finance.
  • American Academy of Actuaries Founded in 1965, this organization supports U.S. actuaries in all specialization areas. It also sets independent standards for actuarial conduct and research.
  • Conference of Consulting Actuaries The CCA represents and advocates for actuaries operating outside the insurance industry in the U.S. and Canada. The organization provides resources including a webinar series, an annual meeting, and e-learning courses.
  • International Actuarial Association Based in Ottawa, the IAA furthers actuarial science and professional development for actuaries globally. The organization provides seminars, conferences, and publications. The IAA maintains subsections in diverse interest areas.