How to Be an Actuary

How to Become an Actuary: A Comprehensive Career Guide #

Author: Chinese Man
Published: January 2, 2023

Introduction #

Actuarial science represents one of the most intellectually stimulating and financially rewarding career paths in the modern business world. Actuaries are highly skilled professionals who use mathematics, statistics, and financial theory to assess risk and uncertainty in insurance, finance, and other industries. This comprehensive guide will walk you through every step of becoming an actuary, from educational requirements to professional certification and beyond.

What is an Actuary? #

An actuary is a business professional who analyzes the financial costs of risk and uncertainty. Using mathematics, statistics, and financial theory, actuaries assess the risk of potential events and help businesses and clients develop policies that minimize the cost of that risk. Actuaries are essential to the insurance and finance industries, though they also work in consulting, government, and various other sectors.

The primary responsibilities of actuaries include:

  • Analyzing statistical data and trends to estimate the probability and likely economic cost of events
  • Designing insurance policies and pension plans
  • Determining premium rates and reserve amounts
  • Creating charts, tables, and reports that explain their calculations and proposals
  • Working with underwriters, accountants, and other professionals to help companies develop business strategies

Educational Requirements #

Bachelor’s Degree Foundation #

The journey to becoming an actuary begins with earning a bachelor’s degree. While there is no specific major required to become an actuary, certain fields of study provide the strongest foundation:

Mathematics: Pure mathematics provides the theoretical foundation for actuarial work. Courses in calculus, linear algebra, differential equations, and advanced statistics are particularly valuable.

Statistics: A statistics major offers direct preparation for actuarial work, with emphasis on probability theory, statistical inference, and data analysis methods.

Economics: Understanding economic principles helps actuaries analyze market trends and make informed predictions about financial risks.

Finance: A finance background provides knowledge of financial markets, investment principles, and risk management strategies.

Actuarial Science: Some universities offer dedicated actuarial science programs that combine mathematics, statistics, economics, and business courses specifically tailored for aspiring actuaries.

Essential Coursework #

Regardless of your major, certain courses are crucial for actuarial success:

  • Calculus I, II, and III: Fundamental mathematical concepts used throughout actuarial science
  • Linear Algebra: Matrix operations and linear transformations used in complex calculations
  • Probability and Statistics: The core of actuarial mathematics
  • Economics (Micro and Macro): Understanding economic principles and market behavior
  • Finance: Corporate finance, investments, and financial markets
  • Accounting: Financial reporting and analysis skills
  • Computer Science: Programming languages like R, Python, SQL, and Excel proficiency

Professional Examinations #

The actuarial profession requires passing a rigorous series of examinations administered by professional actuarial organizations. In North America, the two primary organizations are:

  • Society of Actuaries (SOA): Focuses on life insurance, health insurance, retirement benefits, and investments
  • Casualty Actuarial Society (CAS): Specializes in property and casualty insurance

SOA Examination Path #

Preliminary Exams:

  1. Exam P (Probability): Covers probability theory, random variables, and probability distributions
  2. Exam FM (Financial Mathematics): Focuses on interest theory, annuities, loans, bonds, and financial derivatives
  3. Exam STAM (Short-Term Actuarial Mathematics): Covers short-term insurance mathematics and statistics

Advanced Exams:

  • Exam LTAM (Long-Term Actuarial Mathematics): Long-term insurance and pension mathematics
  • Exam SRM (Statistics for Risk Modeling): Statistical methods for predictive modeling
  • Exam PA (Predictive Analytics): Hands-on predictive analytics project

Fellowship Track Specializations:

  • Group & Health Insurance
  • Individual Life & Annuities
  • Retirement Benefits
  • Quantitative Finance & Investments
  • General Insurance

CAS Examination Path #

Preliminary Exams:

  1. Exam P: Same as SOA Exam P
  2. Exam FM: Same as SOA Exam FM
  3. Exam MAS-I (Modern Actuarial Statistics I): Statistics and risk theory
  4. Exam MAS-II (Modern Actuarial Statistics II): Advanced statistical methods

CAS-Specific Exams:

  • Exam 5 (Basic Techniques for Ratemaking and Estimating Claim Liabilities)
  • Exam 6 (Regulation and Financial Reporting)
  • Exam 7 (Estimation of Policy Liabilities, Insurance Company Valuation, and Enterprise Risk Management)
  • Exam 8 (Advanced Ratemaking)
  • Exam 9 (Financial Risk and Rate of Return)

Gaining Work Experience #

Entry-Level Opportunities #

Actuarial Analyst: Entry-level position that involves data analysis, report preparation, and supporting senior actuaries with various projects.

Actuarial Trainee: Many insurance companies offer structured training programs for recent graduates, combining work experience with exam support.

Risk Analyst: Positions in risk management departments provide relevant experience in analyzing and quantifying various types of risk.

Internship Programs #

Internships are invaluable for gaining practical experience and making professional connections. Many major insurance companies, consulting firms, and government agencies offer summer internship programs specifically designed for actuarial students. These internships typically:

  • Provide hands-on experience with actuarial software and methodologies
  • Offer mentorship from experienced actuaries
  • Include study time and financial support for exam preparation
  • Often lead to full-time job offers upon graduation

Building Relevant Skills #

Technical Skills:

  • Excel: Advanced spreadsheet modeling and analysis
  • Programming Languages: R, Python, SAS, SQL for data analysis and modeling
  • Actuarial Software: Specialized tools like Prophet, AXIS, or MoSes
  • Database Management: Understanding of data warehousing and manipulation

Professional Skills:

  • Communication: Ability to explain complex technical concepts to non-technical stakeholders
  • Project Management: Coordinating multiple projects and meeting deadlines
  • Business Acumen: Understanding of business operations and strategic decision-making
  • Attention to Detail: Precision in calculations and analysis

Professional Certification and Designations #

Associate Level (ASA/ACAS) #

After passing the preliminary exams and meeting experience requirements, actuaries can earn their Associate designation:

ASA (Associate of the Society of Actuaries):

  • Pass preliminary and intermediate examinations
  • Complete modules on professionalism and applied statistics
  • Demonstrate relevant work experience

ACAS (Associate of the Casualty Actuarial Society):

  • Pass preliminary and intermediate CAS examinations
  • Complete online courses on professionalism
  • Meet work experience requirements

Fellowship Level (FSA/FCAS) #

The Fellowship designation represents the highest level of actuarial certification:

FSA (Fellow of the Society of Actuaries):

  • Complete all required examinations in chosen track
  • Meet advanced work experience requirements
  • Demonstrate leadership and professional contribution

FCAS (Fellow of the Casualty Actuarial Society):

  • Pass all CAS fellowship examinations
  • Complete continuing education requirements
  • Demonstrate significant professional experience

Career Paths and Specializations #

Insurance Industry #

Life Insurance: Analyzing mortality rates, designing life insurance products, and determining premium rates for various life insurance policies.

Health Insurance: Evaluating medical costs, designing health insurance plans, and analyzing healthcare utilization trends.

Property & Casualty Insurance: Assessing risks for auto, home, and commercial insurance policies.

Consulting #

Actuarial consultants work with multiple clients across various industries, providing expertise in:

  • Risk assessment and management
  • Insurance product development
  • Regulatory compliance
  • Mergers and acquisitions analysis

Government and Regulation #

Government actuaries work for regulatory bodies, social security systems, and other public institutions, focusing on:

  • Policy development and analysis
  • Regulatory oversight of insurance companies
  • Public pension system management
  • Healthcare program evaluation

Corporate Risk Management #

Many large corporations employ actuaries in their risk management departments to:

  • Assess enterprise-wide risks
  • Develop risk mitigation strategies
  • Evaluate investment opportunities
  • Support strategic decision-making

Salary and Career Outlook #

Compensation Levels #

Actuarial careers offer excellent earning potential that increases significantly with experience and professional credentials:

Entry Level (0-2 years): $65,000 - $80,000 annually Mid-Level (3-7 years): $85,000 - $130,000 annually Senior Level (8-15 years): $140,000 - $200,000 annually Executive Level (15+ years): $200,000 - $400,000+ annually

Additional factors affecting compensation include:

  • Geographic location
  • Industry sector
  • Company size
  • Number of exams passed
  • Professional designations held

Job Market Outlook #

The Bureau of Labor Statistics projects 18% growth in actuarial employment from 2019 to 2029, much faster than the average for all occupations. This growth is driven by:

  • Increasing complexity of risk assessment
  • Growing need for risk management across industries
  • Expansion of insurance markets globally
  • Regulatory changes requiring more sophisticated analysis

Tips for Success #

Exam Strategy #

Create a Study Plan: Develop a structured study schedule allowing 3-4 months of preparation per exam.

Use Multiple Resources: Combine study manuals, online courses, practice exams, and study groups for comprehensive preparation.

Join Study Groups: Collaborate with other candidates to share knowledge and maintain motivation.

Seek Employer Support: Many employers provide study time, financial assistance, and exam bonuses.

Professional Development #

Join Professional Organizations: Participate in SOA or CAS local meetings and national conferences.

Pursue Continuing Education: Stay current with industry developments through webinars, seminars, and additional coursework.

Develop Communication Skills: Practice presenting complex information clearly to diverse audiences.

Build a Professional Network: Establish relationships with experienced actuaries and industry professionals.

Conclusion #

Becoming an actuary requires dedication, intellectual rigor, and persistence, but the rewards are substantial. The combination of excellent compensation, job security, intellectual challenge, and the opportunity to make meaningful contributions to business and society makes actuarial science an attractive career choice.

The path involves rigorous academic preparation, passing challenging professional examinations, gaining relevant work experience, and committing to lifelong learning. While the journey is demanding, those who succeed in the actuarial profession enjoy prestigious careers with excellent growth prospects and the satisfaction of applying advanced mathematics to solve real-world problems.

Success as an actuary depends not only on technical skills but also on developing strong communication abilities, business acumen, and professional relationships. By following the steps outlined in this guide and maintaining commitment to excellence, aspiring actuaries can build rewarding careers in this dynamic and essential profession.

The actuarial profession continues to evolve with advances in technology, data analytics, and risk management techniques. Those entering the field today have the opportunity to shape the future of risk assessment and contribute to innovations that will benefit businesses and society for years to come.