Historically, most actuaries have been employed by the insurance industry. Today, actuaries work in a variety of sectors – including finance and investment – all over the world. Find out where an actuarial career could take you.

Actuaries tackle the risks and uncertainties that financial businesses face, working in the interest of both customers and owners. Actuarial skills are increasingly recognised across industries, meaning that the range of employment opportunities is always increasing. Traditional areas for actuaries are pensions, insurance and investment. Ageing populations, damages, finance, genetics, healthcare, personal finance planning and risk management, however, are all new areas in which the effective contribution of actuaries has been recognised.

Where do actuaries work?

Of the 11,717 fellows of the Institute and Faculty of Actuaries (IFoA), 72% are in the UK and Northern Ireland (NI) and 28% are based outside the UK and NI. The areas currently worked across are:

  • 33% Life insurance
  • 7% Investment
  • 27% Pensions
  • 4% Emerging fields – Health and Care, Risk management
  • 5% Other.

Consultancy

Actuarial consultancies offer a range of services to their clients on issues such as mergers and acquisitions, corporate recovery and financing capital projects. Many also offer advice to employers and trustees who run occupational pension schemes. In fact, such consultancies are probably the biggest employers of actuaries in the UK.

Insurance industry

LIFE INSURANCE
This is a traditional area for actuaries, in companies that provide life insurance, pensions and other financial services. Actuaries are involved at all stages in the product development, pricing, risk assessment and marketing of the products. In addition, actuaries fill key roles in financial management and the investment of policyholders’ money by developing strategies that ensure customers get a good return.

GENERAL INSURANCE

This is a fast–growing area for actuaries, both within insurance companies, consultancies and at Lloyd’s of London, where actuaries have certain statutory duties.
General insurance includes personal insurance, such as home and motor insurance, as well as insurance for large commercial risks. As there are many different factors that can affect the size and number of claims, general insurance companies employ actuaries to assist with their financial management, particularly in connection with premium rating and reserving.

Actuarial and statistical techniques are used extensively in the analysis of often substantial amounts of available data. Statistical models are therefore a key part of an actuary’s work. This analysis is then used to rate the 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 in an uncertain future.

HEALTH AND CARE

With recent legislation leading to more private healthcare provision, insurance companies are extending their range of products to include medical insurance, income protection, critical illness and disability insurance. Actuarial roles in this area are similar to those outlined in the insurance section. However, greater importance is placed on understanding morbidity rates (rates of becoming sick or disabled, of needing medical treatment or of recovering from sickness) which are more complex than mortality rates.

PENSIONS
Actuaries are heavily involved in designing and advising occupational pension schemes. This could be a formal valuation for one person’s benefits or for a whole scheme with one million members.

Finance and investment

INVESTMENT MANAGEMENT
Actuaries have been involved in the field of investment management for decades. Actuaries are involved in buying and selling assets, investment analysis and portfolio management. In addition, actuarial techniques are ideal for use in measuring investment performance. Solving problems while making correct investment decisions is a constant stimulus.

CORPORATE FINANCE
Although generally regarded as the province of the investment banker, actuaries can add value in this area. An actuary’s basic skills in forecasting and assessing risks are ideal for estimating whether a capital project (e.g. for a new hospital or a transport infrastructure project) is financially viable. Employers can include government departments, management consultancies or property companies specialising in this area.

BANKING
Actuaries are becoming increasingly involved in banking. Some leading insurance companies have their own established banking operations, with actuaries filling some of the senior executive positions for finance and risk.

Retail banks are also increasingly employing actuaries, as they recognise that the longer-term approaches advocated by actuaries can add value to their businesses. As insurance companies progressively hedge their risks, we have seen a corresponding rise in the demand for actuaries from the investment banks that provide the hedge products.

As the insurance and banking markets continue to converge, we can expect to see the demand for actuaries within banking fields grow.

RISK MANAGEMENT
Another role that actuaries can take is the analysis of risk in a business. They may analyse specific risks or develop models that they can leave with a business to minimise their own future risks. It is then important that the actuary explains the model well enough to the business that they are able to use it to full effect themselves.

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