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Actuary – The best job in America

Jerry Tuttle, FCAS, CPCU

Senior Vice President & Actuary (Retired)

Adjunct instructor of Mathematics

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Outline

  • What is an actuary?
  • How has the profession been rated?
  • How much money can actuaries make?
  • What do casualty actuaries do?
  • How do you prepare for an actuarial career?
  • How can I find out more?

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What is an Actuary?

  • The mathematicians of the insurance industry.
  • A business professional who deals with the financial impact of risk and uncertainty
  • Analyzes, manages and measures the financial implications of future risk
  • Develops and validates models and communicates results to guide decision-making

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Why be an Actuary?

  • High earnings potential
  • Graduate school not required
  • Advance by examinations
  • Advancement opportunities expand throughour career
  • Variety of career paths within profession
  • Interact with senior management
  • Newsworthy projects
  • High demand – insurance is less sensitive to economic cycles than other industries
  • Job security
  • Highly rated profession by many indep bodies

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Areas of work

  • Insurance Industry
    • Property and casualty (P/C)
    • Life and annuities
  • Employee Benefit Industry
    • Retirement benefits
    • Health benefits
  • Financial Services Industry
    • Banks, investments, risk management
    • Mergers & Acquisitions
  • Government
    • Social Security
    • Regulation of insurance companies

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Typical Actuarial Projects

  • Property/Casualty: Estimating the amount of money to be set aside for insurance claims that have not been paid
  • Life Insurance: Designing and pricing life insurance products
  • Health Insurance: Setting HMO premium rates.
  • Retirement Systems: Pricing the cost of increasing retirement benefits.
  • Finance & Investments: Portfolio diversification studies
  • Government: Reviewing an insurance co filing to change rates.

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What do casualty actuaries do?

  • Ratemaking/Pricing
  • Loss Reserving
  • Capital Adequacy
  • Reinsurance Evaluation
  • Enterprise Risk Management
  • And more…

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Ratemaking/Pricing

  • Are current rates meeting our objectives?
  • Are some classes performing better/worse than others?
  • How do driving patterns influence risk of loss?
  • How does a buyer’s claims experience influence its premium?

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Loss Reserving

  • What is company’s ultimate claim liability as of 12/31, recognizing claims take many years to estimate and settle?
  • Calculate estimates with several models, develop range of estimates, select one.
  • What is the probability distribution of the claim liability?

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Capital Adequacy

  • How adequate is company surplus to respond to adverse results (e.g., loss reserves higher than estimated, sudden catastrophes)?

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  • How much capital is required to support different types of business?

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Reinsurance Evaluation

  • (Insurer) How much of company’s liability should be ceded (laid off) to a reinsurer? What are risk/reward trade-offs related to different reinsurance structures?

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  • (Reinsurer) Pricing and reserving issues, but with much less data.

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Emerging P/C fields

  • Catastrophe modeling
  • Predictive analytics
  • Enterprise risk management (holistic, co-wide)
  • Do rates have unintentional disparate impact?
  • Newer exposures: self-driving cars, drones, terrorism, cyberterrorism, social media liability, climate change, school violence, wildfires, massive toxic torts, nanotechnology, fracking – an endless list that makes casualty actuarial work interesting!

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How has the profession been rated?

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    • Actuary is rated the #6 business job in America, according to a 2019 US News & World report. (Beaten by statistician, mathematician.)

money.usnews.com/careers/best-jobs/rankings/best-business-jobs

  • Highly ranked by WSJ, CNN Money, BLS, Time, Jobs Rated Almanac, others

http://www.beanactuary.org/what/top/?fa=articles

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�How much money can actuaries make?�

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  • One NYC company starts cas. actuarial trainees at $65K, plus $2,500 per exam
  • Raises for promotions and exams
  • Consulting actuaries and company presidents who are actuaries can make enormous amounts.

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Salaries for FCAS vs. FSA

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Used with permission, derived from Ezra Penland Actuarial Recruitment (http://www.ezrapenland.com/salary/), 2018

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�How do you prepare for an actuarial career?�

  • Exam 1: calculus-based probability & statistics
  • Exam 2: financial math
  • Exam 3F: models for financial economics
  • Exam MAS 1: stochastic proc, linear models
  • Exam MAS 2: linear mixed models, data analysis
  • Validation by Educational Experience (VEE) – credit for college coursework: corp. finance, economics
  • Online course 1: risk mgmt & insurance operations
  • Online course 2: accounting, coverage,law, regulation
  • Professionalism, ethics, standards of practice
  • Additional exams: regulation, financial reporting, estimating liabilities, co valuation, financial risk, ROR

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�Computer-based exams�

  • CAS uses computer-based exams
  • Students will take exams at a Prometric or Pearson VUE location
  • Higher exams may include datasets plus Excel and potential to ask more realistic questions than traditional exams

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Employers of CAS Members

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Where are the jobs?

  • Mostly big cities and suburbs, esp IL, CT, NY, NJ, CA. Canada, Bda, China.
  • Insurance/reinsurance companies, consulting & accounting firms, firms serving insurance industry, brokers & agents, state government
  • Some big employers: Google, Uber, Hertz
  • How to find employers of casualty actuaries in a particular city:

actuarialdirectory.org, search CITY,

search for CAS designations

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What Skills are Needed?

  • Analytical, project management and problem solving skills
  • Good business sense
  • Solid communication skills (oral & written)
  • Strong computer skills
  • Knowledge of math and finance
  • Employers want to know: will you get along with peers, will you get along with non-actuaries, will you pass exams?

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How can I find out more?�

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I also speak on:�

  • Actuaries and data science – what are some examples of how actuaries use data science in their work?
  • Actuaries and computer simulation –some problems do not have neat analytical solutions, so computer simulation is a way to solve them.
  • Non-actuarial talks: copyright and math teaching, the mathematics of love, data science and speed dating

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Casualty Actuarial Society

4350 North Fairfax Drive, Suite 250

Arlington, Virginia 22203

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www.casact.org

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