What is it?
Actuaries are most commonly thought of as number crunchers. Whilst this is true, it perhaps does not give enough credit to what they do with those numbers. They are innovative thinkers who use data to help solve business problems; they apply value to anything from a share in a company to a human life and calculate compensation. They also analyse numbers to identify trends and thus predict the future, so that business can make sound decisions and so that pension and insurance companies
know what to expect.
For a long time the profession has been broken down into four areas: life and general insurance, investment, pensions and consultancy. But these days there’s increased movement within the field enabling actuaries to work across the financial sector in areas including risk management, banking and capital project management: working out the costs and requirements of implementing new strategies or processes – where their analytical skills prove essential. Movement between sector areas – from general insurance to pensions to investment for example – is a rather open possibility.
Most actuaries work across the four traditional areas as outlined below:
Actuaries working in investment find themselves at the most theoretical and complex end of finance. Work varies from dealing with huge figures involved in fund management, to even more complex areas like quantitative investment research and pricing financial derivatives. This involves valuing an item, such as shares, and then advising traders on making investments based on future predictions of that items value.
Investment actuaries commonly work in areas where their knowledge of pension liabilities or insurance helps them to manage the assets that are being invested and to ensure firms are leaping all the legal hurdles when dealing with large sums of capital.
Devising and advising occupation pension schemes is the work of actuaries. The work involved can range from a formal evaluation of an individual to calculate benefits or a salary, to assessing an entire scheme with over a million members.
As actuaries gain experience, they spend more time applying their skills to bigger business challenges rather than the technical elements. This can cover issues such as advising a client on remuneration policy, financial strategy or providing consultancy during a corporate takeover or a major project such as expansion into new markets.
Advice services available at actuarial consultancies vary from mergers and acquisitions to corporate recovery and financing capital projects. They may also advise both employers and trustees in charge of occupational pension schemes. Consultancies are almost certainly the biggest employers of actuaries in the UK.
Life and general insurance
For actuaries working in insurance, the work ranges from setting premium rates, designing new insurance policies, calculating a company’s financial status (based on policies already sold) and answering technical queries on behalf of policyholders. On top of this, actuaries may lead detailed investigations of anything risky – from car theft for motor insurance to health statistics for life insurance claims.
Did you know?
Edmond Halley, most famous for computing the orbit of Halley’s comet, is regarded as one of the first to apply mathematical and statistical calculations to work out premiums for life insurance policies.
In 2004 rom-com Along Came Polly, Ben Stiller plays an actuary who, because his jobs involves calculating risks, is unable to do anything spontaneous or risky – something real-life actuaries would no doubt contest!
Actuaries often have skills that make them particularly adept at solving crosswords.