Actuarial Consulting VS Insurance
Actuaries work in two main industries: insurance companies and consulting firms. Many people ask about what the difference is between actuaries working in insurance companies compared to actuaries working in consulting firms. Which is better in terms of insurance vs consulting? It depends on the person, their career level, and the city where they plan to work.
Actuarial Jobs in Insurance Companies
Insurance companies can be separated into primary insurers and reinsurers. Primary insurers offer end users insurance coverage. For example, when you buy auto insurance for your car, you’re likely buying from a direct insurer. When that insurance company is buying insurance coverage in case the losses get too high, that is from a reinsurer. Reinsurers are insurance companies that provide insurance (called reinsurance) to primary insurers and to each other. So for example, when you buy auto insurance for your personal car, it’s likely from a primary insurer. A reinsurance company may be reinsuring another reinsurer who’s reinsuring a primary insurer.
Insurance companies hire actuaries into typically one of two main roles – pricing and valuation. These will be explained in another article.
Working in an insurance company gets you exposed to the inner workings of the company. You learn a lot of company specific information. The work you do is less standardized and more specific to the insurance company. Some companies do things very differently from industry, from using differing terminology, technology, practices, etc. You also learn skills in addition to actuarial skills as you interact with different departments to provide business intelligence. This may involve working with accounting on financial reporting, reinsurance on setting up reinsurance treaties, and IT on developing new systems and processes.
Actuarial Jobs in Consulting Firms
As actuarial consulting firms consult to a wide range of clients, you gain a better birds eye view of the industry. You also get exposed to industry stand best practices, as actuarial methods and practices tend to be standardized across clients that you consult to.
Consulting firms provide actuarial services on an external basis to clients (as opposed to or in addition to the client having their own internal, in house team of actuaries). Who these companies serve and the nature of the work usually depends on which streams of actuarial services they provide (eg: pension, life, etc.).
Final Verdict – Consulting vs Insurance
Final verdict on insurance vs consulting when choosing your career: It depends on YOU. Personally speaking, I prefer consulting (at least early on in your actuarial career) as you learn industry standard techniques and understand the industry from the birds eye view. There is a stereotype that at consulting firms you work longer hours and therefore might make it harder to pass the SOA/CAS exams, but I believe the hours and work-life balance hugely depend on the team, the firm, and the timing more than the category of consulting vs insurance. I’ve worked plenty of late nights while in insurance, and I’ve occasionally gone home at 5pm in actuarial consulting.