Where can I work?
Areas of work
Actuaries work in a wide range of different fields. The following gives you an idea of these practice areas and also information about what you might do, as a graduate actuarial trainee.
This is the fastest growing practice area for actuaries. The role of a general insurance actuary is incredibly varied, and has changed considerably over the years. Given the fast-moving dynamics of the industry, the ever-changing regulatory environment and the continuous development of actuarial skills, it’s a safe bet that the role actuaries play in the insurance industry will continue to evolve.
There are four main areas:
- Reserving: how much an insurance company needs to set aside to pay future claims, given how many policies it has sold in the past.
- Pricing: how much an insurance company should charge customers for a new policy, given how much risk is involved.
- Capital modelling: all insurers need to hold a certain amount of capital a side, in case claims turn out to be worse than expected or something else goes wrong. Actuaries build models to help them decide how much and what sort of capital to hold.
- Enterprise Risk Management: Actuaries get involved in monitoring and quantifying all risks facing an insurance company, and help devise strategies for dealing with and avoiding these risks.
Health and care
Health and care insurance issues such as critical illness, income protection and long-term care insurance are designed like long-term or short-term life insurance policies so actuarial role are very similar to those described in the life insurance section. Although many of the roles and activities are the same as for these other types of insurance business, the inherent risks differ. There is more emphasis on understanding the rates of becoming sick or disabled or needing medical treat mentor rates of recovering from sickness, which are more complex than death rates.
It is also necessary to consider aspects such as the implications of medical advances and medical cost inflation. Some health and care actuaries are more closely involved in wider roles, such as national healthcare funding systems. For example, how best can we ensure that there will be adequate provision for long term care in old age under increasing national budget pressures and an ageing population?
Actuaries have been involved in the field of investment management for decades. They buy and sell assets and undertake investment analysis and portfolio management. 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 might include government departments, management consultancies, or property companies.
Actuaries working in life insurance have a broad range of responsibilities, both in technical and client facing work, as well as in management. They play a leading role in the design and pricing of life insurance products, which are broadly divided into two categories: protection and investment. Protection products are those that provide a benefit based on either the death of the insured person, or survival to a specified age, while investment products are primarily designed to provide the policyholder with growth on the premiums they pay. In addition to determining the price of life insurance contracts, actuaries are also responsible for the on going valuation of the business the company has sold, the investment of its assets and ensuring that it has enough money to meet its obligations to policyholders in the future.
There are two main types of pension scheme; defined benefit (where pensions are calculated on a formula, often your salary) and defined contribution (where the member builds up a pot of money and uses this to provide their income in retirement).
In a pensions consultancy it is likely that you will be performing calculations to help estimate how much the employer and employee will have to pay and also advising clients on ways they can reduce the costs and risks associated with pension schemes.
There is currently a lot of activity in the defined contribution pension scheme market given the recent legislation compelling employers to include their employees in a pension scheme. This has led to an increased focus on the governance of such schemes and the risks associated with the increased size of defined benefit pension schemes.
There are many different areas of work that you could be involved in, from capital models or analysing specific risks, like operational risk. You could also be involved in investigating mathematical models of risk to see if they can be used within an organisation.
Communication is an important skill to have as often those working in risk need to explain the theory behind the models to those who are non-actuaries.
Although the risk models should in theory capture everything, it’s important that actuaries analyse new risks that may have materialised to check that the models are still appropriate. It’s unlikely and unrealistic to expect everything in the future to be foreseen now.
To read more from the official guide to actuarial careers please click here.