Actuaries tackle the risks and uncertainties that financial businesses face, working in the interest of both customers and owners.
As actuarial skills are becoming increasingly recognised across industries, the range of opportunities for a qualified actuary is always growing. Some of the traditional areas include pensions, insurance and investment.
However, personal finance planning, damages and healthcare are all new areas in which the effective contribution of actuaries has been recognised.
Where do actuaries work?
As of 2018, there are under 32,000 members of the Institute and Faculty of Actuaries (IFoA), with 54% of members based in the UK.
Pensions and Benefits
The pensions sector has become increasingly complex in the past few years, so there is an increasing demand for specialist advice. Actuaries are therefore heavily involved in designing and advising on occupational pension schemes. From formal valuations for one person’s benefit to a whole scheme with one million members, actuaries are invaluable to the pensions industry.
Working in companies that provide life insurance, pensions and other financial services is a traditional area for actuaries. They are involved at all stages of the produce development, pricing, risk assessment and marketing of the products.
Actuaries also fill key roles in financial management and the investment of policyholders’ money by developing strategies to ensure that customers get a good return.
In a global business world, mergers between life companies are now quite frequent. When life offices are bought and sold or life funds merged, actuaries tend to be retained by both sides.
Whether it be working within insurance companies, consultancies or at Lloyds of London, actuaries can also be found working
in general insurance.
General insurance includes personal insurance, such as home and motor insurance, as well as insurance for large commercial risks, and general insurance companies will employ actuaries to assist with their financial management. You can also find roles in reinsurance and broking operations.
Statistical models are a key part of an actuary’s work, as actuarial and statistical techniques are used extensively in the analysis of substantial amounts of data. This analysis is then used to rate risks and to ensure that claims reserves are adequate to meet the eventual settlement of insurance claims.
Terrorist attacks, natural disasters and industrial diseases are all examples of insurance liabilities where actuaries have been integrally involved in estimating ultimate costs into an uncertain future. Interested in a career in insurance? Take a look at our sister website, Insurance Careers for everything you need to know about pursuing a career in insurance!
An actuary’s aptitude for analysing specific risks make them well suited to work in risk management.
They develop models that they can leave with a business to minimise their own future risks. An actuary will then have to explain the model well enough to the business so they can use it to full effect. Therefore, the ability to convey complex information in layperson’s terms is vital in this role.
Finance and Investment
For decades, actuaries have been involved in investment management. They are involved in buying and selling assets, investment analysis and portfolio management. In addition, actuarial techniques are ideal for use in measuring investment performance.
While this area of finance is often regarded as the province of the investment banker, actuaries can really add value in this area.
As an increasing number of insurance companies have their own banking operations, demand for actuaries in the banking field is growing and many actuaries are now filling some of the senior roles in finance and risk.
Actuaries are also found in retail banks as many are recognising that the longer term approaches advocated by actuarial professionals can add value to their business. And, with insurance companies hedging their risks, there has been an increase in actuaries from investment banks that provide hedge products.
The UK qualification is highly valued throughout the world. There are thousands of IFoA members based in countries all over the world including India, South Africa and China. The Institute also works with other international actuarial bodies to offer mutual recognition of the professional qualifications between the different bodies. Some of these include institutes in Australia, Canada and Japan.