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Actuaries use data analysis and statistics to predict future business outcomes, including forecasting financial risks and rewards. Actuarial accounting is a relatively small but fast-growing field, with median salaries often reaching six figures.
A majority of actuaries maintain full-time positions in the finance and insurance industry. Actuaries commonly work on teams with managers and other finance, accounting, and underwriting professionals.
Becoming an actuary requires an undergraduate degree and a long certification process. Actuaries enter the field as trainees under the supervision of an experienced professional, completing certification exams and gaining experience to advance their careers.
Those who consider themselves a "numbers person" may thrive in an actuary career. Actuaries possess strong analytical, mathematics, and computer skills. Actuary jobs demand juggling extensive amounts of data using statistical modeling and database software.
Read on to learn more about actuary career skills, requirements, and job opportunities.
What Is an Actuary?
Actuarial accountants use statistical data — including financial, social, and demographic information — to assess and manage future risks. They help businesses and clients minimize costs by quantifying risk and uncertainty and making data-driven recommendations to keep clients in solid financial standing. Their responsibilities include:
- Compiling and analyzing data. Actuaries gather and analyze data about events such as deaths, natural disasters, and accidents. Actuarial professionals compile this data into spreadsheets, then run it through statistical modeling software to determine the financial risks of certain events. Actuaries may also review nonstatistical data, such as demographics.
- Reviewing company policies. Actuaries review policies and contracts relevant to 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.
- Communicating with businesses. Actuaries must communicate 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.
- Developing 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 include sections about the report's 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.
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Key Hard Skills for Actuaries
The daily responsibilities of an actuary require mathematical calculations, which professionals must accurately complete.
Economics and Accounting
Actuaries need knowledge of basic economics and accounting principles to succeed in business settings. This knowledge helps workers understand their colleagues' – sales agents, accountants – expectations.
Actuaries work with computers and technology. They need knowledge of programming languages, databases and data query tools, and analytical software.
Laws and Governance
Actuaries must understand how local, state, and federal laws affect relevant industries, such as life insurance.
Key Soft Skills for Actuaries
Actuaries need the ability to use general mathematical reasoning.
Actuaries use inductive reasoning to solve problems by connecting related information. Inductive reasoning skills help professionals make sound inferences about nonstatistical data.
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.
Actuarial work requires active listening skills. Actuaries must pay close attention to feedback from management, clients, and shareholders.
Most actuaries specialize in one field, such as health or life insurance, pensions and retirement benefits, or enterprise risk in the private sector. Actuaries employed in the public sector provide services to state and federal governments.
The insurance industry revolves around risk, and actuaries play an important role in developing and maintaining insurance policies. Most insurance actuaries specialize in areas like health insurance, life insurance, or property/casualty insurance. While specific duties vary by specialization, insurance actuaries’ methods are largely the same. Using math, statistics, and forecasting, they analyze risk-related financial costs and determine ways to minimize the impact of undesirable future events.
Actuaries in the financial sector often take jobs at banks and investment firms, where they assess risks on loan products, measure potential losses in investment portfolios, and analyze the balance between assets and liabilities. Investment bankers with a background in actuarial science assess risks associated with mergers, acquisitions, and stock purchases.
Actuaries employed at private corporations provide management with the information to make informed decisions. Actuary accountants deal specifically with risk evaluation, presenting company decision-makers with relevant statistics and actionable insights. Many companies use enterprise risk management (ERM) to assess, control, finance, and monitor risks. ERM actuaries factor in variables like competition, globalization, market volatility, and capital scarcity as they assess risk.
State and federal government offices employ many actuaries. Those employed in the public sector work on programs related to benefits, public health and welfare, taxes, housing development, energy, education, or transportation. While most federal positions are concentrated in the Washington, D.C. area, public sector opportunities are available nationwide.
How to Become an Actuary
Students interested in an actuary career must earn a four-year bachelor's degree in actuarial science, statistics, mathematics, or a closely related analytical field. Professionals can also pursue a two-year master's degree if desired, though employers do not commonly require graduate study.
The Society of Actuaries and the Casualty Actuarial Society offer required certifications for actuaries. The certification process can take up to a decade to complete, as actuaries need to pass multiple certification exams.
While initially working toward certification, professionals train under the supervision of an experienced actuary. Actuaries often progress to entry-level positions after completing their first few certification exams.
Actuary Accounting Career and Salary Outlook
Between 2020 and 2030, the BLS projects actuary jobs will grow 24%, much faster than the national average projected growth. The ongoing need to replace workers who retire or move to other occupations drives this projected growth. Actuaries earned a median annual salary of $111,030 as of 2020.
Key factors impacting income potential for actuaries include career specialization, industry, location, educational attainment, and years of experience. According to January 2022 Payscale data, actuaries in entry-level positions earn $64,230 annually. Salaries increase to six-figure sums after 5-9 years of experience.
Career Spotlight: Michael Clark
Why did you become an actuary? What initially interested you about the field?
In high school, I really loved math and wanted to do something math-related, but not exclusively math. I was looking for a profession that could combine several different fields, including economics and business. When I came across the actuarial profession, I knew it was for me. It combines high level mathematical and statistical modeling along with finance, economics, accounting, legal, and communication.
What education did you need to pursue this career? How did it prepare you for your current role?
I earned a degree in statistics with an actuarial science emphasis, and a business management minor. These foundational courses gave me the advanced statistical modeling coupled with the different elements of business and economics that I needed to be successful in my career.
What was the job search like after graduating with your degree?
I was fortunate to be at a university where employers came to recruit actuaries. What I tell people looking into the profession is to check out www.actuarialdirectory.org (a compilation of credentialed actuaries) and search on different locations to see where actuaries work. From there, look for job postings from those companies and see who you might be connected to on platforms like LinkedIn.
What are some of the most rewarding aspects of working as an actuary? Some of the most challenging aspects?
I work as a consulting actuary, which means I get to work with clients. That interaction with my clients is some of the most rewarding time I spend during the day. I routinely speak with CFOs, CEOs, heads of HR, and others. I also write articles and present at conferences, which is something I love doing and is a specific direction I’ve taken my career.
One of the most challenging aspects of being a consulting actuary is making sure that I’m meeting my clients’ needs. In professional services, you get paid by providing services to clients and when they need something (sometimes with very little lead time). It can be stressful to get them what they need when they need it.
"In addition to the technical skills that are demonstrated through the actuarial exam process, being a good communicator is key to being successful as an actuary."
What do you think is the most important skill actuaries need to succeed?
In addition to the technical skills that are demonstrated through the actuarial exam process, being a good communicator is key to being successful as an actuary. Because actuaries deal in highly technical concepts, the ability to distill those concepts down so that non-actuaries can understand them and make informed decisions based on the actuary’s analysis is critical. This includes being able to write as well as present. Being a good communicator can be a key differentiator for those looking to enter the profession.
What advice would you give to students considering your career?
There are lots of opportunities to excel in the actuarial profession. The skills that you can learn from becoming an actuary can translate into a lot of other areas and I’ve known a number of actuaries that have moved on from the profession into other jobs, but have been able to do so because of the foundation that they received from becoming an actuary first. Check out the various resources for help in navigating the entry into the profession such as The Actuarial Foundation, The Organization of Latino Actuaries, and the International Association of Black Actuaries in addition to the Society of Actuaries or Casualty Actuarial Society.
Michael Clark is a managing director and consulting actuary in River and Mercantile's Denver office. In his role, he consults on all aspects of financial risk management for retirement plans. He is a past president of the Conference of Consulting Actuaries. Michael is a frequent speaker at industry and professional association conferences on the topics of pension risk management and pension plan administration and has had several articles published in major trade magazines. He is a Fellow of the Society of Actuaries, an Enrolled Actuary, and a Fellow of the Conference of Consulting Actuaries.
Questions About the Actuary Accounting Job
What is the meaning of an actuary job?
For the insurance industry, which employs the largest percentage of actuaries, an actuary job means vital risk analysis and mitigation. Using statistics, probability, and data analysis, actuaries help design policies and determine costs and premiums.
What does an actuary do?
Common actuary tasks include compiling statistical data and information, estimating probability and economic costs, and designing business strategies to minimize risk and maximize profit. Actuaries work extensively with computers, database software, and statistical modeling software.
Is an actuary a CPA?
No. Actuaries and CPAs both work with financial information. However, CPAs focus on financial data from the past and present, while actuaries work to predict future financial risks and opportunities. CPAs and actuaries need different certifications.
What specializations can actuaries have?
Actuaries working in the insurance industry may specialize in health insurance, life insurance, property and casualty insurance, or pension and retirement benefits. Actuaries may also work in federal and state government agencies or in consulting.
Where does an actuary work?
Actuary jobs require work in an office environment. Actuaries work in teams with other accounting, underwriting, and finance professionals. Some travel may be required for actuaries who work as consultants for independent clients.
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