Actuary
Encyclopedia
An actuary is a business professional who deals with the financial impact of risk
and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms .
Actuaries mathematically evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events. Since many events, such as death, cannot be avoided, it is helpful to take measures to minimize their financial impact when they occur. These risks can affect both sides of the balance sheet
, and require asset management
, liability
management, and valuation skills. Analytical skills, business knowledge and understanding of human behavior and the vagaries of information systems are required to design and manage programs that control risk .
The profession has consistently ranked as one of the most desirable in various studies over the years. In 2006, a study by U.S. News & World Report
in included actuaries among the 25 Best Professions that it expects will be in great demand in the future . In 2010, a study published by job search website CareerCast ranked actuary as the #1 job in the United States . The study used five key criteria to rank jobs: environment, income, employment outlook, physical demands and stress. In 2011, the same study ranked the profession as the third best job .
disciplines may be classified as life
; health
; pensions, annuities, and asset management
; social welfare programs
; property
; casualty
; general insurance
; and reinsurance
. Life, health, and pension actuaries deal with mortality
risk, morbidity, and consumer choice regarding the ongoing utilization of drugs and medical services risk, and investment risk. Products prominent in their work include life insurance
, annuities, pension
s, mortgage
and credit insurance
, short and long term disability
, and medical, dental
, health savings account
s and long term care
insurance. In addition to these risks, social insurance
programs are greatly influenced by public opinion
, politics
, budget constraints, changing demographics
and other factors such as medical technology
, inflation
and cost of living
considerations .
Casualty actuaries, also known as non-life or general insurance
actuaries, deal with catastrophic, unnatural risks that can occur to people or property. Products prominent in their work include auto insurance, homeowners insurance
, commercial property insurance, workers’ compensation
, title insurance
, malpractice
insurance, products liability insurance
, directors and officers liability insurance
, environmental and marine insurance, terrorism insurance
and other types of liability insurance
. Reinsurance
products have to accommodate all of the previously mentioned products, and in addition have to reflect properly the increasing long term risks associated with climate change
, cultural litigiousness, acts of war
, terrorism
and politics .
. For example, people who lived their entire lives in a camp had the risk of fire, which would leave their band or family without shelter. After basic exchange came into existence, more complex forms developed beyond a basic barter economy, and new forms of risk manifested. Merchant
s embarking on trade journeys bore the risk of losing goods entrusted to them, their own possessions, or even their lives. Intermediaries
developed to warehouse and trade goods, and they often suffered from financial risk
. The primary providers in any extended families or household always ran the risk of premature death, disability or infirmity, leaving their dependents to starve. Credit
procurement was difficult if the lender worried about repayment in the event of the borrower's death or infirmity. Alternatively, people sometimes lived too long, exhausting their savings, if any, or becoming a burden on others in the extended family or society .
of societies . Early methods of protection, aside from the normal support of the extended family, involved charity
; religious organizations
or neighbors would collect for the destitute and needy. By the middle of the 3rd century, 1,500 suffering people were being supported by charitable operations in Rome
. Charitable protection is still an active form of support to this very day . However, receiving charity is uncertain and is often accompanied by social stigma
. Elementary mutual aid agreements and pensions did arise in antiquity . Early in the Roman empire
, associations were formed to meet the expenses of burial, cremation, and monuments—precursors to burial insurance
and friendly societies
. A small sum was paid into a communal fund on a weekly basis, and upon the death of a member, the fund would cover the expenses of rites and burial. These societies sometimes sold shares in the building of columbāria
, or burial vaults, owned by the fund—the precursor to mutual insurance companies
. Other early examples of mutual surety
and assurance
pacts can be traced back to various forms of fellowship within the Saxon clans of England and their Germanic forbears, and to Celtic society . However, many of these earlier forms of surety and aid would fail due to lack of understanding and knowledge .
was studied and probability theory
emerged as a well understood mathematical discipline. Another important advance came in 1662 from a London
draper
named John Graunt
, who showed that there were predictable patterns of longevity and death in a defined group, or cohort
, of people, despite the uncertainty about the future longevity or mortality of any one individual person. This study became the basis for the original life table
. It was now possible to set up an insurance scheme to provide life insurance or pensions for a group of people, and to calculate with some degree of accuracy how much each person in the group should contribute to a common fund assumed to earn a fixed rate of interest. The first person to demonstrate publicly how this could be done was Edmond Halley
. In addition to constructing his own life table, Halley demonstrated a method of using his life table to calculate the premium
someone of a given age should pay to purchase a life-annuity .
’s pioneering work on the level premium system led to the formation of the Society for Equitable Assurances on Lives and Survivorship (now commonly known as Equitable Life) in London in 1762. This was the first life insurance company to use premium rates which were calculated scientifically for long-term life policies, using Dodson’s work. The company still exists, though it has run into difficulties recently. After Dodson’s death in 1757, Edward Rowe Mores
took over the leadership of the group that eventually became the Society for Equitable Assurances in 1762. It was he who specified that the chief official should be called an ‘actuary’ . Previously, the use of the term had been restricted to an official who recorded the decisions, or ‘acts’, of ecclesiastical courts, in ancient times originally the secretary of the Roman senate
, responsible for compiling the Acta Senatus
. Other companies which did not originally use such mathematical and scientific methods most often failed or were forced to adopt the methods pioneered by Equitable .
, and to protect the public interest by ensuring competency and ethical standards . However, calculations remained cumbersome, and actuarial shortcuts were commonplace. Non-life actuaries followed in the footsteps of their life compatriots in the early 20th century. In the United States, the 1920 revision to workers' compensation rates took over two months of around-the-clock work by day and night teams of actuaries . In the 1930s and 1940s, however, rigorous mathematical foundations for stochastic
processes were developed . Actuaries could now begin to forecast losses using models of random events instead of deterministic methods. Computers further revolutionized the actuarial profession. From pencil-and-paper to punchcards to microcomputers, the modeling and forecasting ability of the actuary has grown exponentially .
Another modern development is the convergence of modern financial theory with actuarial science . In the early 20th century, actuaries were developing many techniques that can be found in modern financial theory, but for various historical reasons, these developments did not achieve much recognition . However, in the late 1980s and early 1990s, there was a distinct effort for actuaries to combine financial theory and stochastic methods into their established models . Today, the profession, both in practice and in the educational syllabi of many actuarial organizations, combines tables, loss models, stochastic methods, and financial theory , but is still not completely aligned with modern financial economics
.
, economics
, computer science
, finance
, probability
and statistics
, and business
to help businesses assess the risk of certain events occurring and to formulate policies that minimize the cost of that risk. For this reason, actuaries are essential to the insurance and reinsurance industry, either as staff employees or as consultants; to other businesses, including sponsors of pension plans; and to government
agencies such as the Government Actuary’s Department
in the UK or the Social Security Administration
in the US. Actuaries assemble and analyze data to estimate the probability and likely cost of the occurrence of an event such as death, sickness, injury, disability, or loss of property. Actuaries also address financial questions, including those involving the level of pension contributions required to produce a certain retirement income and the way in which a company should invest resources to maximize its return on investments in light of potential risk. Using their broad knowledge, actuaries help design and price insurance policies, pension plans, and other financial strategies in a manner which will help ensure that the plans are maintained on a sound financial basis .
On the casualty side, this analysis often involves quantifying the probability of a loss event, called the frequency, and the size of that loss event, called the severity. Further, the amount of time that occurs before the loss event is also important, as the insurer will not have to pay anything until after the event has occurred. On the life side, the analysis often involves quantifying how much a potential sum of money or a financial liability will be worth at different points in the future. Since neither of these kinds of analysis are purely deterministic processes, stochastic
models are often used to determine frequency and severity distributions
and the parameter
s of these distributions. Forecasting interest yields and currency movements also plays a role in determining future costs, especially on the life side.
Actuaries do not always attempt to predict aggregate future events. Often, their work may relate to determining the cost of financial liabilities that have already occurred, called retrospective reinsurance, or the development or re-pricing of new products.
Actuaries also design and maintain products and systems. They are involved in financial reporting of companies’ assets and liabilities. They must communicate complex concepts to clients who may not share their language or depth of knowledge. Actuaries work under a strict code of ethics that covers their communications and work products, but their clients may not adhere to those same standards when interpreting the data or using it within different kinds of businesses.
es by applying their analysis in court trials to estimate the economic value of losses such as lost profits or lost wages.
There has been a recent widening of the scope of the actuarial field to include investment
advice and asset management. Further, there has been a convergence from the financial fields of risk management
and quantitative analysis
with actuarial science
. Now, actuaries also work as risk managers, quantitative analysts, or investment specialists. Even actuaries in traditional roles are now studying and using the tools and data previously in the domain of finance . One of the latest developments in the industry, insurance securitization, requires both the actuarial and finance skills .
Another field in which actuaries are becoming more prominent is that of Enterprise Risk Management
, for both financial and non-financial corporations . For example, the Basel II
accord for financial institutions, and its analogue, the Solvency II
accord for insurance companies, requires such institutions to account for operational risk
separately and in addition to credit
, reserve
, asset
, and insolvency
risk. Actuarial skills are well suited to this environment because of their training in analyzing various forms of risk, and judging the potential for upside gain, as well as downside loss associated with these forms of risk .
£25,300 and £35,000 and successful more experienced actuaries can earn well in excess of £100,000 a year .
.
The exam-based curriculum is in three parts. Part I relies on exemptions from an accredited under-graduate degree from either Macquarie University
, University of New South Wales
, University of Melbourne
, Australian National University
or Curtin University . The courses cover subjects including finance, financial mathematics, economics, contingencies, demography, models, probability and statistics. Students may also gain exemptions by passing the exams of the Institute of Actuaries
in London . Part II is the Actuarial control cycle
and is offered by the first four universities above . Part III consists of four half-year courses of which two are compulsory and the other two allow specialization .
To become an Associate, one needs to complete Part I and Part II of the accreditation process, perform 3 years of recognized work experience, and complete a professionalism course.
To become a Fellow, Part I, II, III need to be all completed, and a professionalism course. Work experience is not required however, as the Institute deems that those who've successfully completed Part III have shown enough level of professionalism.
(the CIA) recognizes fellows of both the Society of Actuaries and the Casualty Actuary Society, provided that they have specialized study in Canadian actuarial practice. For fellows of the SOA, this is fulfilled by taking the CIA’s Practice Education Course (PEC). For fellows of the Casualty Actuarial Society, this is fulfilled by taking the nation specific Exam 6-Canada, instead of Exam 6-United States . Unlike their American counterparts, the CIA only has one class of actuary: Fellow. Further, the CIA requires three years of actuarial practice within the previous decade, and 18 months of Canadian actuarial practice within the last three years, to become a fellow .
The CIA also offers an associate designation however this offered without any voting rights and associates are not permitted to add this designation to their signature.
to become an actuary with no professional experience requirement. There is a focus on statistics
and probability theory
, and a requirement for a master's
thesis
. By Danish law, responsibility for the practise of any life insurance business must be taken by a formally acknowledged and approved actuary. In order to be approved as a formally responsible actuary, three to five years of professional experience is required .
the only specialized school of actuaries is the Department of Statistics and Actuary-Finance Mathematics of the University of the Aegean
, in Samos
. The duration of studies is four years, with a practice period included, and the certificate given is a Bachelor's Degree. The Diploma of Actuary is given by the Actuaries Union of Greece, after successful exams within the Union. Other schools that offer actuary directions can be found throughout the rest departments of Statistics
in the various universities of the country, most notably that of the Athens University of Economics and Business (OPA/ASOEE), which is also the top economic university of Greece
.
(now converted into Institute of Actuaries of India) offers both associateship and fellowship classes of membership. However, prospective candidates must be admitted to the society as students before they achieve associateship or fellowship. The exam sequence is similar to the British model, with Core and Specialty technical and application exams. The exams are conducted twice a year during the months of May–June and October–November .
and Trieste
; the Esame di Stato consists of two written sections, a practical portion, and an oral exam. The association of qualified actuaries is called "Ordine degli Attuari" ("Order of Actuaries").
), Universidad de las Americas Puebla (UDLAP), Universidad Anahuac, Autonomous Technological Institute of Mexico (ITAM
), Autonomous University of Guadalajara (UAG
), and Autonomous University of Nuevo León (UANL
).
the education to become an actuary takes five years. The education usually consists of a bachelors degree (three years) and a masters degree (two years). The bachelors degree needs to contain a specific amount of courses in mathematics and statistics. The masters degree usually consists of one year of courses and one year writing a masters degree about a topic related to the actuarial profession. The University of Bergen
and The University of Oslo
offers the education to become an actuary in Norway
.
In order to become an international qualified actuary a person with an Norwegian actuarial education also need to take two courses in economics (macroeconomics and accounting) and a course in ethics. The course in ethics lasts a day and is offered by the Norwegian Society of Actuaries
.
the only school offering a degree in actuarial science is ISEG at the Technical University of Lisbon
. It is a two-year master's degree, fully integrated into the Bologna regimen. If the student does sufficiently well in the programme, as determined by an examiner appointed by the Institute and Faculty of Actuaries, he/she will be exempt from some of the UK professional actuarial examinations.
(ASSA). Until recently the requirement to qualify as an actuary in South Africa was to pass the exams hosted by the UK bodies. Starting in 2010, a South African actuarial qualification hosted by ASSA has replaced this arrangement (ASSA's website). Key changes include exam syllabuses based on South African specific content. The UK actuarial professional bodies however still supports Actuaries qualification through the UK. Students may receive exemption from part of the examinations for qualification from approved universities. The South Africa qualification does have mutual recognition with many of the international actuarial bodies as well as approval of the syllabus from the International Actuarial Association.
takes place at Stockholm University
. The four-year master's
program covers the subjects mathematics
, mathematical statistics
, insurance mathematics
, financial mathematics
, insurance law
and insurance economics
. The program operates under the Division of Mathematical Statistics .
and the Republic of Ireland
consists of a combination of exams and courses provided by the professional body, the Institute and Faculty of Actuaries
. The exams may only be taken upon having officially joined the body, unlike many other countries where exams may be taken earlier. However, a candidate may offer proof of having previously covered topics, usually while at university, in order to be exempt from taking certain subjects. The exams themselves are now split into four sections: Core Technical (CT), Core Applications (CA), Specialist Technical (ST), and Specialist Applications (SA). For students who joined the Profession after June 2004, a further requirement that the student carry out a "Work-based skills" exercise has been brought into effect. This involves the student submitting a series of essays to the Profession detailing the work that he or she has performed. In addition to exams, essays and courses, it is required that the candidate have at least three years' experience of actuarial work under supervision of a recognized actuary in order to qualify as a Fellow of the Institute of Actuaries (FIA) or of the Faculty of Actuaries (FFA) .
Actuaries can also gain partial credit towards Fellowship of the Institute and Faculty of Actuaries by following an actuarial science
degree at an accredited university. At the undergraduate level the only locally accredited programmes are currently at University of Manchester
, University College Dublin
, Queen's University Belfast, Heriot-Watt University
, University of Edinburgh
, the London School of Economics
, University of Southampton
, City University, London
and the University of Kent
. Full-time accredited masters programmes are provided only by the University of Kent, Heriot-Watt University and City University; part-time accredited masters degrees are offered by Imperial College London
and the University of Leicester
. Actuarial programmes that offer the possibility of exemption from individual professional exams are also available at City University, London, Heriot-Watt University, the London School of Economics, the University of Southampton
, Swansea University
, the University of Kent and the University of Warwick
. In the Republic of Ireland exemptions are offered by National University of Ireland, Galway
, Dublin City University
, University College Cork. Some South African universities are also accredited by the Institute and Faculty of Actuaries. These universities include the University of Pretoria
, University of Cape Town
, Stellenbosch University
, University of the Free State
and the University of the Witwatersrand
. ISEG in Lisbon, Portugal, offers the possibility of exemption from some professional exams of the Institute and Faculty of Actuaries.
, while for property and casualty actuaries the exams are administered by the Casualty Actuarial Society
. The Society of Actuaries’ requirements for Associateship include passing five preliminary examinations, demonstrating educational experience in economics
, corporate finance
and applied statistics—called validation by educational experience (VEE), completing an eight-module self-learning series, and taking a course on professionalism. For Fellowship, four other modules, two exams, and a special fellowship admission course is added . The Casualty Actuarial Society requires the successful completion of seven examinations, two modules and VEE for Associateship and three additional exams for Fellowship. In addition to these requirements, casualty actuarial candidates must also complete professionalism education and be recommended for membership by existing members .
In order to sign statements of actuarial opinion, however, American actuaries must be members of the American Academy of Actuaries
. Academy membership requirements include membership in one of the recognized actuarial societies, at least three years of full-time equivalent experience in responsible actuarial work, and either residency in the United States for at least three years or a non-resident or new resident who meets certain requirements . Continuing education is required after certification for all actuaries who sign statements of actuarial opinion .
In the pension area, American actuaries must pass three examinations to become an Enrolled Actuary
. Some pension-related filings to the Internal Revenue Service
and the Pension Benefit Guaranty Corporation
require the signature of an Enrolled Actuary. Many Enrolled Actuaries belong to the Conference of Consulting Actuaries
or the American Society of Pension Professionals and Actuaries
.
In 2009, the Society of Actuaries began a high-level accreditation system for universities, recognizing the best actuarial schools as Centers of Actuarial Excellence.
:Swedish actuary and probabilist notable for his contributions in the area mathematical statistics, such as the Cramér–Rao inequality . Professor Cramér was an Honorary President of the Swedish Actuarial Society .
James Dodson
:Head of the Royal Mathematical School, and Stone's School, Dodson built on the statistical mortality tables developed by Edmund Halley in 1693 .
Edmond Halley
:While Halley actually predated much of what is now considered the start of the actuarial profession, he was the first to mathematically and statistically rigorously calculate premiums for a life insurance policy .
James C. Hickman
:Notable actuarial educator, researcher, and author .
David X. Li
: a Canadian qualified actuary who in the first decade of the 21st century pioneered the use of Gaussian copula models for the pricing of collateralized debt obligation
s (CDOs). The Financial Times called him "the world’s most influential actuary," while in the aftermath of the Global financial crisis of 2008–2009, to which Li's model has been credited partly to blame, his model has been called a "recipe for disaster".
Edward Rowe Mores
:First person to use the title ‘actuary’ with respect to a business position .
William Morgan
:Morgan was the appointed Actuary of the Society for Equitable Assurances in 1775. He expanded on Mores's and Dodson's work, and may be rightly considered the father of the actuarial profession in that his title became applied to the field as a whole..
Anette Norberg
:Skip
for the Swedish Women's Curling
Team at the 2010 Winter Olympics
. Norberg has won gold medals at the 2010 Winter Olympics, the 2006 Winter Olympics
, seven European Curling Championships
, and two World Curling Championships
.
Maurice Princet
:French actuary and close associate of artist Pablo Picasso
. Princet is considered "Le Mathématicien du Cubisme" ("The Mathematician of Cubism") for his "critical influence on Picasso’s development as an artist at the birth of cubism
" .
Frank Redington
:Developed the Redington Immunization Theory
Isaac M. Rubinow
:Founder and first president of the Casualty Actuarial Society
.
Elizur Wright
:American actuary and abolitionist, professor of mathematics at Western Reserve College (Ohio). He campaigned for laws that required life insurance companies to hold sufficient reserves to guarantee that policies would be paid .
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms .
Actuaries mathematically evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events. Since many events, such as death, cannot be avoided, it is helpful to take measures to minimize their financial impact when they occur. These risks can affect both sides of the balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
, and require asset management
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...
, liability
Liability (financial accounting)
In financial accounting, a liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.A liability is defined by the...
management, and valuation skills. Analytical skills, business knowledge and understanding of human behavior and the vagaries of information systems are required to design and manage programs that control risk .
The profession has consistently ranked as one of the most desirable in various studies over the years. In 2006, a study by U.S. News & World Report
U.S. News & World Report
U.S. News & World Report is an American news magazine published from Washington, D.C. Along with Time and Newsweek it was for many years a leading news weekly, focusing more than its counterparts on political, economic, health and education stories...
in included actuaries among the 25 Best Professions that it expects will be in great demand in the future . In 2010, a study published by job search website CareerCast ranked actuary as the #1 job in the United States . The study used five key criteria to rank jobs: environment, income, employment outlook, physical demands and stress. In 2011, the same study ranked the profession as the third best job .
Disciplines
Actuaries' insuranceInsurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
disciplines may be classified as life
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
; health
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
; pensions, annuities, and asset management
Mathematical finance
Mathematical finance is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory. Generally, mathematical finance will derive and extend the mathematical...
; social welfare programs
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
; property
Property insurance
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insurance. Property is insured in two main...
; casualty
Casualty insurance
Casualty insurance, often equated to liability insurance, is used to describe an area of insurance not directly concerned with life insurance, health insurance, or property insurance. It is mainly used to describe the liability coverage of an individual or organization's for negligent acts or...
; general insurance
General insurance
General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance typically comprises any insurance that is not determined to be life insurance. It is called property and...
; and reinsurance
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from another insurance company as a means of risk management...
. Life, health, and pension actuaries deal with mortality
Mortality rate
Mortality rate is a measure of the number of deaths in a population, scaled to the size of that population, per unit time...
risk, morbidity, and consumer choice regarding the ongoing utilization of drugs and medical services risk, and investment risk. Products prominent in their work include life insurance
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
, annuities, pension
Pension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
s, mortgage
Mortgage insurance
Mortgage insurance is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending upon the insurer...
and credit insurance
Credit insurance
Credit insurance is a term used to describe both business credit insurance and consumer credit insurance, e.g., credit life insurance, credit disability insurance Credit insurance is a term used to describe both business credit insurance (a.k.a. trade credit insurance) and consumer credit...
, short and long term disability
Disability
A disability may be physical, cognitive, mental, sensory, emotional, developmental or some combination of these.Many people would rather be referred to as a person with a disability instead of handicapped...
, and medical, dental
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
, health savings account
Health savings account
A health savings account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan . The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account...
s and long term care
Long-term care
Long-term care is a variety of services which help meet both the medical and non-medical need of people with a chronic illness or disability who cannot care for themselves for long periods of time....
insurance. In addition to these risks, social insurance
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
programs are greatly influenced by public opinion
Public opinion
Public opinion is the aggregate of individual attitudes or beliefs held by the adult population. Public opinion can also be defined as the complex collection of opinions of many different people and the sum of all their views....
, politics
Politics
Politics is a process by which groups of people make collective decisions. The term is generally applied to the art or science of running governmental or state affairs, including behavior within civil governments, but also applies to institutions, fields, and special interest groups such as the...
, budget constraints, changing demographics
Demographics
Demographics are the most recent statistical characteristics of a population. These types of data are used widely in sociology , public policy, and marketing. Commonly examined demographics include gender, race, age, disabilities, mobility, home ownership, employment status, and even location...
and other factors such as medical technology
Medical technology
Medical Technology encompasses a wide range of healthcare products and is used to diagnose, monitor or treat diseases or medical conditions affecting humans. Such technologies are intended to improve the quality of healthcare delivered through earlier diagnosis, less invasive treatment options and...
, inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and cost of living
Cost-of-living index
Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time are often operationalized in a cost of living index. Cost of living calculations are also used to compare the cost of maintaining a certain standard of living in different geographic areas...
considerations .
Casualty actuaries, also known as non-life or general insurance
General insurance
General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance typically comprises any insurance that is not determined to be life insurance. It is called property and...
actuaries, deal with catastrophic, unnatural risks that can occur to people or property. Products prominent in their work include auto insurance, homeowners insurance
Home insurance
Home insurance, also commonly called hazard insurance or homeowner's insurance , is the type of property insurance that covers private homes...
, commercial property insurance, workers’ compensation
Workers' compensation
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence...
, title insurance
Title insurance
Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is principally a product developed and sold in the...
, malpractice
Malpractice
In law, malpractice is a type of negligence in, which the professional under a duty to act, fails to follow generally accepted professional standards, and that breach of duty is the proximate cause of injury to a plaintiff who suffers harm...
insurance, products liability insurance
Product liability
Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause...
, directors and officers liability insurance
Directors and officers liability insurance
Directors and Officers Liability Insurance is liability insurance payable to the directors and officers of a company, or to the organization itself, to cover damages or defense costs in the event they suffer such losses as a result of a lawsuit for alleged wrongful acts while acting in their...
, environmental and marine insurance, terrorism insurance
Terrorism insurance
Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities....
and other types of liability insurance
Liability insurance
Liability insurance is a part of the general insurance system of risk financing to protect the purchaser from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy...
. Reinsurance
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from another insurance company as a means of risk management...
products have to accommodate all of the previously mentioned products, and in addition have to reflect properly the increasing long term risks associated with climate change
Climate change
Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average...
, cultural litigiousness, acts of war
War
War is a state of organized, armed, and often prolonged conflict carried on between states, nations, or other parties typified by extreme aggression, social disruption, and usually high mortality. War should be understood as an actual, intentional and widespread armed conflict between political...
, terrorism
Terrorism
Terrorism is the systematic use of terror, especially as a means of coercion. In the international community, however, terrorism has no universally agreed, legally binding, criminal law definition...
and politics .
Need for insurance
The basic requirements of communal interests gave rise to risk sharing since the dawn of civilizationCivilization
Civilization is a sometimes controversial term that has been used in several related ways. Primarily, the term has been used to refer to the material and instrumental side of human cultures that are complex in terms of technology, science, and division of labor. Such civilizations are generally...
. For example, people who lived their entire lives in a camp had the risk of fire, which would leave their band or family without shelter. After basic exchange came into existence, more complex forms developed beyond a basic barter economy, and new forms of risk manifested. Merchant
Merchant
A merchant is a businessperson who trades in commodities that were produced by others, in order to earn a profit.Merchants can be one of two types:# A wholesale merchant operates in the chain between producer and retail merchant...
s embarking on trade journeys bore the risk of losing goods entrusted to them, their own possessions, or even their lives. Intermediaries
Intermediary
An intermediary is a third party that offers intermediation services between two trading parties. The intermediary acts as a conduit for goods or services offered by a supplier to a consumer...
developed to warehouse and trade goods, and they often suffered from financial risk
Financial risk
Financial risk an umbrella term for multiple types of risk associated with financing, including financial transactions that include company loans in risk of default. Risk is a term often used to imply downside risk, meaning the uncertainty of a return and the potential for financial loss...
. The primary providers in any extended families or household always ran the risk of premature death, disability or infirmity, leaving their dependents to starve. Credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
procurement was difficult if the lender worried about repayment in the event of the borrower's death or infirmity. Alternatively, people sometimes lived too long, exhausting their savings, if any, or becoming a burden on others in the extended family or society .
Early attempts
In the ancient world there was not always room for the sick, suffering, disabled, aged, or the poor—these were often not part of the cultural consciousnessCollective consciousness
Collective consciousness was a term coined by the French sociologist Émile Durkheim to refer to the shared beliefs and moral attitudes which operate as a unifying force within society...
of societies . Early methods of protection, aside from the normal support of the extended family, involved charity
Charitable organization
A charitable organization is a type of non-profit organization . It differs from other types of NPOs in that it centers on philanthropic goals A charitable organization is a type of non-profit organization (NPO). It differs from other types of NPOs in that it centers on philanthropic goals A...
; religious organizations
Religion-supporting organization
Religious activities generally need some infrastructure to be conducted. For this reason, there generally exist religion-supporting organizations, which are some form of organization that manage:* the upkeep of places of worship, e.g...
or neighbors would collect for the destitute and needy. By the middle of the 3rd century, 1,500 suffering people were being supported by charitable operations in Rome
Ancient Rome
Ancient Rome was a thriving civilization that grew on the Italian Peninsula as early as the 8th century BC. Located along the Mediterranean Sea and centered on the city of Rome, it expanded to one of the largest empires in the ancient world....
. Charitable protection is still an active form of support to this very day . However, receiving charity is uncertain and is often accompanied by social stigma
Social stigma
Social stigma is the severe disapproval of or discontent with a person on the grounds of characteristics that distinguish them from other members of a society.Almost all stigma is based on a person differing from social or cultural norms...
. Elementary mutual aid agreements and pensions did arise in antiquity . Early in the Roman empire
Roman Empire
The Roman Empire was the post-Republican period of the ancient Roman civilization, characterised by an autocratic form of government and large territorial holdings in Europe and around the Mediterranean....
, associations were formed to meet the expenses of burial, cremation, and monuments—precursors to burial insurance
Burial society
A burial society is a form of friendly society. These groups historically existed in England, and constituted for the purpose of providing by voluntary subscriptions, for insuring money to be paid on the death of a member, or for the funeral expenses of the husband, wife or child of a member, or of...
and friendly societies
Friendly society
A friendly society is a mutual association for insurance, pensions or savings and loan-like purposes, or cooperative banking. It is a mutual organization or benefit society composed of a body of people who join together for a common financial or social purpose...
. A small sum was paid into a communal fund on a weekly basis, and upon the death of a member, the fund would cover the expenses of rites and burial. These societies sometimes sold shares in the building of columbāria
Columbarium
A columbarium is a place for the respectful and usually public storage of cinerary urns . The term comes from the Latin columba and originally referred to compartmentalized housing for doves and pigeons .The Columbarium of Pomponius Hylas is a particularly fine ancient Roman example, rich in...
, or burial vaults, owned by the fund—the precursor to mutual insurance companies
Mutual insurance
A mutual insurance company is an insurance company which has no shareholders but instead is owned entirely by its policyholders. The primary form of financial business set up as a mutual company in the United States has been mutual insurance. Under this idea, what would have been profits are...
. Other early examples of mutual surety
Surety
A surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...
and assurance
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
pacts can be traced back to various forms of fellowship within the Saxon clans of England and their Germanic forbears, and to Celtic society . However, many of these earlier forms of surety and aid would fail due to lack of understanding and knowledge .
Development of theory
The 17th century was a period of extraordinary advances in mathematics in Germany, France, and England. At the same time there was a rapidly growing desire and need to place the valuation of personal risk on a more scientific basis. Independently from each other, compound interestCompound interest
Compound interest arises when interest is added to the principal, so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the principal is called compounding...
was studied and probability theory
Probability theory
Probability theory is the branch of mathematics concerned with analysis of random phenomena. The central objects of probability theory are random variables, stochastic processes, and events: mathematical abstractions of non-deterministic events or measured quantities that may either be single...
emerged as a well understood mathematical discipline. Another important advance came in 1662 from a London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
draper
Draper
Draper is the now largely obsolete term for a wholesaler, or especially retailer, of cloth, mainly for clothing, or one who works in a draper's shop. A draper may additionally operate as a cloth merchant or a haberdasher. The drapers were an important trade guild...
named John Graunt
John Graunt
John Graunt was one of the first demographers, though by profession he was a haberdasher. Born in London, the eldest of seven or eight children of Henry and Mary Graunt. His father was a draper who had moved to London from Hampshire...
, who showed that there were predictable patterns of longevity and death in a defined group, or cohort
Cohort (statistics)
In statistics and demography, a cohort is a group of subjects who have shared a particular time together during a particular time span . Cohorts may be tracked over extended periods in a cohort study. The cohort can be modified by censoring, i.e...
, of people, despite the uncertainty about the future longevity or mortality of any one individual person. This study became the basis for the original life table
Life table
In actuarial science, a life table is a table which shows, for each age, what the probability is that a person of that age will die before his or her next birthday...
. It was now possible to set up an insurance scheme to provide life insurance or pensions for a group of people, and to calculate with some degree of accuracy how much each person in the group should contribute to a common fund assumed to earn a fixed rate of interest. The first person to demonstrate publicly how this could be done was Edmond Halley
Edmond Halley
Edmond Halley FRS was an English astronomer, geophysicist, mathematician, meteorologist, and physicist who is best known for computing the orbit of the eponymous Halley's Comet. He was the second Astronomer Royal in Britain, following in the footsteps of John Flamsteed.-Biography and career:Halley...
. In addition to constructing his own life table, Halley demonstrated a method of using his life table to calculate the premium
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
someone of a given age should pay to purchase a life-annuity .
Early actuaries
James DodsonJames Dodson
James Dodson FRS was a British mathematician, actuary and innovator in the insurance industry.-Life:Matthew Maty, in his Mémoire sur la vie et sur les écrits de M. A. de Moivre, wrote that Dodson was a pupil of Abraham de Moivre. He worked as an accountant and teacher...
’s pioneering work on the level premium system led to the formation of the Society for Equitable Assurances on Lives and Survivorship (now commonly known as Equitable Life) in London in 1762. This was the first life insurance company to use premium rates which were calculated scientifically for long-term life policies, using Dodson’s work. The company still exists, though it has run into difficulties recently. After Dodson’s death in 1757, Edward Rowe Mores
Edward Rowe Mores
Edward Rowe Mores, FSA was an English antiquarian and scholar, with works on history and typography...
took over the leadership of the group that eventually became the Society for Equitable Assurances in 1762. It was he who specified that the chief official should be called an ‘actuary’ . Previously, the use of the term had been restricted to an official who recorded the decisions, or ‘acts’, of ecclesiastical courts, in ancient times originally the secretary of the Roman senate
Roman Senate
The Senate of the Roman Republic was a political institution in the ancient Roman Republic, however, it was not an elected body, but one whose members were appointed by the consuls, and later by the censors. After a magistrate served his term in office, it usually was followed with automatic...
, responsible for compiling the Acta Senatus
Acta Senatus
Acta Senatus, or Commentarii Senatus, are minutes of the discussions and decisions of the Roman Senate. Before the first consulship of Julius Caesar , minutes of the proceedings of the Senate were written and occasionally published, but unofficially; Caesar, desiring to tear away the veil of...
. Other companies which did not originally use such mathematical and scientific methods most often failed or were forced to adopt the methods pioneered by Equitable .
Development of the modern profession
In the 18th and 19th centuries, computational complexity was limited to manual calculations. The actual calculations required to compute fair insurance premiums are rather complex. The actuaries of that time developed methods to construct easily-used tables, using sophisticated approximations called commutation functions, to facilitate timely, accurate, manual calculations of premiums . Over time, actuarial organizations were founded to support and further both actuaries and actuarial scienceActuarial science
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries are professionals who are qualified in this field through education and experience...
, and to protect the public interest by ensuring competency and ethical standards . However, calculations remained cumbersome, and actuarial shortcuts were commonplace. Non-life actuaries followed in the footsteps of their life compatriots in the early 20th century. In the United States, the 1920 revision to workers' compensation rates took over two months of around-the-clock work by day and night teams of actuaries . In the 1930s and 1940s, however, rigorous mathematical foundations for stochastic
Stochastic
Stochastic refers to systems whose behaviour is intrinsically non-deterministic. A stochastic process is one whose behavior is non-deterministic, in that a system's subsequent state is determined both by the process's predictable actions and by a random element. However, according to M. Kac and E...
processes were developed . Actuaries could now begin to forecast losses using models of random events instead of deterministic methods. Computers further revolutionized the actuarial profession. From pencil-and-paper to punchcards to microcomputers, the modeling and forecasting ability of the actuary has grown exponentially .
Another modern development is the convergence of modern financial theory with actuarial science . In the early 20th century, actuaries were developing many techniques that can be found in modern financial theory, but for various historical reasons, these developments did not achieve much recognition . However, in the late 1980s and early 1990s, there was a distinct effort for actuaries to combine financial theory and stochastic methods into their established models . Today, the profession, both in practice and in the educational syllabi of many actuarial organizations, combines tables, loss models, stochastic methods, and financial theory , but is still not completely aligned with modern financial economics
Financial economics
Financial Economics is the branch of economics concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment"....
.
Responsibilities
Actuaries use skills in mathematicsMathematics
Mathematics is the study of quantity, space, structure, and change. Mathematicians seek out patterns and formulate new conjectures. Mathematicians resolve the truth or falsity of conjectures by mathematical proofs, which are arguments sufficient to convince other mathematicians of their validity...
, economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, computer science
Computer science
Computer science or computing science is the study of the theoretical foundations of information and computation and of practical techniques for their implementation and application in computer systems...
, finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, probability
Probability
Probability is ordinarily used to describe an attitude of mind towards some proposition of whose truth we arenot certain. The proposition of interest is usually of the form "Will a specific event occur?" The attitude of mind is of the form "How certain are we that the event will occur?" The...
and statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
, and business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
to help businesses assess the risk of certain events occurring and to formulate policies that minimize the cost of that risk. For this reason, actuaries are essential to the insurance and reinsurance industry, either as staff employees or as consultants; to other businesses, including sponsors of pension plans; and to government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
agencies such as the Government Actuary’s Department
Government Actuary's Department
The Government Actuary’s Department is a department of the Government of the United Kingdom responsible for providing actuarial advice to public sector clients....
in the UK or the Social Security Administration
Social Security Administration
The United States Social Security Administration is an independent agency of the United States federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors' benefits...
in the US. Actuaries assemble and analyze data to estimate the probability and likely cost of the occurrence of an event such as death, sickness, injury, disability, or loss of property. Actuaries also address financial questions, including those involving the level of pension contributions required to produce a certain retirement income and the way in which a company should invest resources to maximize its return on investments in light of potential risk. Using their broad knowledge, actuaries help design and price insurance policies, pension plans, and other financial strategies in a manner which will help ensure that the plans are maintained on a sound financial basis .
Traditional employment
On both the life and casualty sides, the classical function of actuaries is to calculate premiums and reserves for insurance policies covering various risks. Premiums are the amount of money the insurer needs to collect from the policyholder in order to cover the expected losses, expenses, and a provision for profit. Reserves are provisions for future liabilities and indicate how much money should be set aside now to reasonably provide for future payouts. If you inspect the balance sheet of an insurance company, you will find that the liability side consists mainly of reserves.On the casualty side, this analysis often involves quantifying the probability of a loss event, called the frequency, and the size of that loss event, called the severity. Further, the amount of time that occurs before the loss event is also important, as the insurer will not have to pay anything until after the event has occurred. On the life side, the analysis often involves quantifying how much a potential sum of money or a financial liability will be worth at different points in the future. Since neither of these kinds of analysis are purely deterministic processes, stochastic
Stochastic
Stochastic refers to systems whose behaviour is intrinsically non-deterministic. A stochastic process is one whose behavior is non-deterministic, in that a system's subsequent state is determined both by the process's predictable actions and by a random element. However, according to M. Kac and E...
models are often used to determine frequency and severity distributions
Frequency distribution
In statistics, a frequency distribution is an arrangement of the values that one or more variables take in a sample. Each entry in the table contains the frequency or count of the occurrences of values within a particular group or interval, and in this way, the table summarizes the distribution of...
and the parameter
Parameter
Parameter from Ancient Greek παρά also “para” meaning “beside, subsidiary” and μέτρον also “metron” meaning “measure”, can be interpreted in mathematics, logic, linguistics, environmental science and other disciplines....
s of these distributions. Forecasting interest yields and currency movements also plays a role in determining future costs, especially on the life side.
Actuaries do not always attempt to predict aggregate future events. Often, their work may relate to determining the cost of financial liabilities that have already occurred, called retrospective reinsurance, or the development or re-pricing of new products.
Actuaries also design and maintain products and systems. They are involved in financial reporting of companies’ assets and liabilities. They must communicate complex concepts to clients who may not share their language or depth of knowledge. Actuaries work under a strict code of ethics that covers their communications and work products, but their clients may not adhere to those same standards when interpreting the data or using it within different kinds of businesses.
Non-traditional employment
Many actuaries are general business managers or financial officers. They analyze business prospects with their financial skills in valuing or discounting risky future cash flows, and many apply their pricing expertise from insurance to other lines of business. Some actuaries act as expert witnessExpert witness
An expert witness, professional witness or judicial expert is a witness, who by virtue of education, training, skill, or experience, is believed to have expertise and specialised knowledge in a particular subject beyond that of the average person, sufficient that others may officially and legally...
es by applying their analysis in court trials to estimate the economic value of losses such as lost profits or lost wages.
There has been a recent widening of the scope of the actuarial field to include investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
advice and asset management. Further, there has been a convergence from the financial fields of risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
and quantitative analysis
Quantitative analyst
A quantitative analyst is a person who works in finance using numerical or quantitative techniques. Similar work is done in most other modern industries, but the work is not always called quantitative analysis...
with actuarial science
Actuarial science
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries are professionals who are qualified in this field through education and experience...
. Now, actuaries also work as risk managers, quantitative analysts, or investment specialists. Even actuaries in traditional roles are now studying and using the tools and data previously in the domain of finance . One of the latest developments in the industry, insurance securitization, requires both the actuarial and finance skills .
Another field in which actuaries are becoming more prominent is that of Enterprise Risk Management
Enterprise Risk Management
Enterprise risk management in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives...
, for both financial and non-financial corporations . For example, the Basel II
Basel II
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision...
accord for financial institutions, and its analogue, the Solvency II
Solvency II
The Solvency II Directive is an EU Directive that codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency....
accord for insurance companies, requires such institutions to account for operational risk
Operational risk
An operational risk is, as the name suggests, a risk arising from execution of a company's business functions. It is a very broad concept which focuses on the risks arising from the people, systems and processes through which a company operates...
separately and in addition to credit
Credit risk
Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Other terms for credit risk are default risk and counterparty risk....
, reserve
Actuarial reserves
An actuarial reserve is a liability equal to the net present value of the future expected cash flows of a contingent event. In the insurance context an actuarial reserve is the present value of the future cash flows of an insurance policy and the total liability of the insurer is the sum of the...
, asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
, and insolvency
Insolvency
Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...
risk. Actuarial skills are well suited to this environment because of their training in analyzing various forms of risk, and judging the potential for upside gain, as well as downside loss associated with these forms of risk .
Remuneration
The credentialing and examination procedure for becoming a fully qualified actuary can be intensely demanding. Consequently, the profession remains very small throughout the world. As a result, actuaries are in high demand, and they are highly paid for the services they render . In the UK, where there are approximately 9,000 fully qualified actuaries, typical post-university starting salaries range between GBPPound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
£25,300 and £35,000 and successful more experienced actuaries can earn well in excess of £100,000 a year .
Credentialing and exams
Becoming a fully credentialed actuary requires passing a rigorous series of professional examinations, usually taking several years in total. In some countries, such as France, most study takes place in a university setting. In others, such as the U.S. and the UK, most study takes place during employment.Australia
The education system in Australia is divided into three components: an exam-based curriculum; a professionalism course; and work experience . The system is governed by the Institute of Actuaries of AustraliaInstitute of Actuaries of Australia
The Institute of Actuaries of Australia , commonly referred to as the Institute, is an organisation representing the actuarial profession in Australia. The Institute has origins which trace back to 1897.- History :...
.
The exam-based curriculum is in three parts. Part I relies on exemptions from an accredited under-graduate degree from either Macquarie University
Macquarie University
Macquarie University is an Australian public teaching and research university located in Sydney, with its main campus situated in Macquarie Park. Founded in 1964 by the New South Wales Government, it was the third university to be established in the metropolitan area of Sydney...
, University of New South Wales
University of New South Wales
The University of New South Wales , is a research-focused university based in Kensington, a suburb in Sydney, New South Wales, Australia...
, University of Melbourne
University of Melbourne
The University of Melbourne is a public university located in Melbourne, Victoria. Founded in 1853, it is the second oldest university in Australia and the oldest in Victoria...
, Australian National University
Australian National University
The Australian National University is a teaching and research university located in the Australian capital, Canberra.As of 2009, the ANU employs 3,945 administrative staff who teach approximately 10,000 undergraduates, and 7,500 postgraduate students...
or Curtin University . The courses cover subjects including finance, financial mathematics, economics, contingencies, demography, models, probability and statistics. Students may also gain exemptions by passing the exams of the Institute of Actuaries
Institute of Actuaries
The Institute of Actuaries was one of the two professional which represented actuaries in the United Kingdom . The Institute was based in England, while the other body, the Faculty of Actuaries, was based in Scotland...
in London . Part II is the Actuarial control cycle
Actuarial control cycle
The actuarial control cycle is a specific business activity which involves the application of actuarial science to real world business problems. Much like the accounting control cycle, the actuarial control cycle requires a professional within that field to specify a problem, develop a solution,...
and is offered by the first four universities above . Part III consists of four half-year courses of which two are compulsory and the other two allow specialization .
To become an Associate, one needs to complete Part I and Part II of the accreditation process, perform 3 years of recognized work experience, and complete a professionalism course.
To become a Fellow, Part I, II, III need to be all completed, and a professionalism course. Work experience is not required however, as the Institute deems that those who've successfully completed Part III have shown enough level of professionalism.
Canada
The Canadian Institute of ActuariesCanadian Institute of Actuaries
The Canadian Institute of Actuaries is the national organization of the actuarial profession in Canada. It was incorporated on March 18, 1965. The FCIA designation stands for Fellow of the Canadian Institute of Actuaries...
(the CIA) recognizes fellows of both the Society of Actuaries and the Casualty Actuary Society, provided that they have specialized study in Canadian actuarial practice. For fellows of the SOA, this is fulfilled by taking the CIA’s Practice Education Course (PEC). For fellows of the Casualty Actuarial Society, this is fulfilled by taking the nation specific Exam 6-Canada, instead of Exam 6-United States . Unlike their American counterparts, the CIA only has one class of actuary: Fellow. Further, the CIA requires three years of actuarial practice within the previous decade, and 18 months of Canadian actuarial practice within the last three years, to become a fellow .
The CIA also offers an associate designation however this offered without any voting rights and associates are not permitted to add this designation to their signature.
Denmark
In Denmark it normally takes five years of study at the University of CopenhagenUniversity of Copenhagen
The University of Copenhagen is the oldest and largest university and research institution in Denmark. Founded in 1479, it has more than 37,000 students, the majority of whom are female , and more than 7,000 employees. The university has several campuses located in and around Copenhagen, with the...
to become an actuary with no professional experience requirement. There is a focus on statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
and probability theory
Probability theory
Probability theory is the branch of mathematics concerned with analysis of random phenomena. The central objects of probability theory are random variables, stochastic processes, and events: mathematical abstractions of non-deterministic events or measured quantities that may either be single...
, and a requirement for a master's
Master's degree
A master's is an academic degree granted to individuals who have undergone study demonstrating a mastery or high-order overview of a specific field of study or area of professional practice...
thesis
Thesis
A dissertation or thesis is a document submitted in support of candidature for an academic degree or professional qualification presenting the author's research and findings...
. By Danish law, responsibility for the practise of any life insurance business must be taken by a formally acknowledged and approved actuary. In order to be approved as a formally responsible actuary, three to five years of professional experience is required .
Germany
The current rules for the German Actuarial Society require an actuary to pass more than 13 exams .Greece
In GreeceGreece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
the only specialized school of actuaries is the Department of Statistics and Actuary-Finance Mathematics of the University of the Aegean
University of the Aegean
The University of the Aegean is a state, multi-campus university located in Mytilene, Greece. The university was officially founded in 1984, although its historical roots date back to the early 1920s...
, in Samos
Samoš
Samoš is a village in Serbia. It is situated in the Kovačica municipality, in the South Banat District, Vojvodina province. The village has a Serb ethnic majority and its population numbering 1,247 people .-See also:...
. The duration of studies is four years, with a practice period included, and the certificate given is a Bachelor's Degree. The Diploma of Actuary is given by the Actuaries Union of Greece, after successful exams within the Union. Other schools that offer actuary directions can be found throughout the rest departments of Statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
in the various universities of the country, most notably that of the Athens University of Economics and Business (OPA/ASOEE), which is also the top economic university of Greece
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
.
India
The Actuarial Society of IndiaActuarial Society Of India
The Institute of Actuaries of India, is the sole professional body of actuaries in India, and was formed in September 1944. It was formed by the conversion of the Actuarial Society of India into a body corporate by virtue of the Acturies Act, 2006....
(now converted into Institute of Actuaries of India) offers both associateship and fellowship classes of membership. However, prospective candidates must be admitted to the society as students before they achieve associateship or fellowship. The exam sequence is similar to the British model, with Core and Specialty technical and application exams. The exams are conducted twice a year during the months of May–June and October–November .
Italy
Italian actuaries also receive their training through university plus a single examination given by the state (Esame di Stato). The studies usually take a total of five years to complete, three (Triennale) plus two (Specialistica), because students need to pass at least 30 exams (the exact number depends on the university and curriculum), many with both written and oral components on actuarial and economic topics. After university, to become qualified to sign statements of actuarial opinion, students must pass the Esame di Stato, which is offered twice a year in RomeRome
Rome is the capital of Italy and the country's largest and most populated city and comune, with over 2.7 million residents in . The city is located in the central-western portion of the Italian Peninsula, on the Tiber River within the Lazio region of Italy.Rome's history spans two and a half...
and Trieste
Trieste
Trieste is a city and seaport in northeastern Italy. It is situated towards the end of a narrow strip of land lying between the Adriatic Sea and Italy's border with Slovenia, which lies almost immediately south and east of the city...
; the Esame di Stato consists of two written sections, a practical portion, and an oral exam. The association of qualified actuaries is called "Ordine degli Attuari" ("Order of Actuaries").
Mexico
Unlike in the United States, in Mexico actuarial training consists of a full four or five-year licenciatura (bachelor) degree course. Only a few universities in the country offer the degree; some of them are the National Autonomous University of Mexico (UNAMUnam
UNAM or UNaM may refer to:* National University of Misiones, a National University in Posadas, Argentina*National Autonomous University of Mexico , the large public autonomous university based in Mexico City...
), Universidad de las Americas Puebla (UDLAP), Universidad Anahuac, Autonomous Technological Institute of Mexico (ITAM
Instituto Tecnológico Autónomo de México
The Instituto Tecnológico Autónomo de México , commonly known as ITAM, is a private Ph.D.-granting research university located in Mexico City, Mexico...
), Autonomous University of Guadalajara (UAG
Universidad Autónoma de Guadalajara
The Universidad Autónoma de Guadalajara A.C. is a private university in Mexico, the first of its kind.The campuses are located in Zapopan, Jalisco. The university has become one of the most important educational institutions in Latin America, attracting students from Mexico, Europe, South...
), and Autonomous University of Nuevo León (UANL
Universidad Autónoma de Nuevo León
The Autonomous University of Nuevo León is a public university with seven campuses across the Northern state of Nuevo León, Mexico. Founded as University of Nuevo León on 25 September 1933, it is the oldest and largest university in the state in terms of student population and it is currently...
).
Norway
In NorwayNorway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
the education to become an actuary takes five years. The education usually consists of a bachelors degree (three years) and a masters degree (two years). The bachelors degree needs to contain a specific amount of courses in mathematics and statistics. The masters degree usually consists of one year of courses and one year writing a masters degree about a topic related to the actuarial profession. The University of Bergen
University of Bergen
The University of Bergen is located in Bergen, Norway. Although founded as late as 1946, academic activity had taken place at Bergen Museum as far back as 1825. The university today serves more than 14,500 students...
and The University of Oslo
University of Oslo
The University of Oslo , formerly The Royal Frederick University , is the oldest and largest university in Norway, situated in the Norwegian capital of Oslo. The university was founded in 1811 and was modelled after the recently established University of Berlin...
offers the education to become an actuary in Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
.
In order to become an international qualified actuary a person with an Norwegian actuarial education also need to take two courses in economics (macroeconomics and accounting) and a course in ethics. The course in ethics lasts a day and is offered by the Norwegian Society of Actuaries
Norwegian Society of Actuaries
The Norwegian Society of Actuaries is the association of actuaries in Norway. The Society was founded on 11 July 1904. It is a full member of the International Actuarial Association and the Groupe Consultatif. As of 2010, the society has about 284 full members. The current chairman of the society...
.
Portugal
In PortugalPortugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
the only school offering a degree in actuarial science is ISEG at the Technical University of Lisbon
Technical University of Lisbon
The Technical University of Lisbon is a Portuguese public university. It was created in 1930 in Lisbon, as a confederation of older schools, and comprises, nowadays, the faculties and institutes of veterinary medicine; agricultural sciences; economics and business administration; engineering,...
. It is a two-year master's degree, fully integrated into the Bologna regimen. If the student does sufficiently well in the programme, as determined by an examiner appointed by the Institute and Faculty of Actuaries, he/she will be exempt from some of the UK professional actuarial examinations.
South Africa
Actuaries in South Africa are served by the Actuarial Society of South AfricaActuarial Society Of South Africa
The Actuarial Society of South Africa, is the governing body for the actuarial profession in South Africa.Fellowship to the Society is now gained by passing the prescribed examinations of the Actuarial Society. This is a new development with the South African qualification in place from 2010...
(ASSA). Until recently the requirement to qualify as an actuary in South Africa was to pass the exams hosted by the UK bodies. Starting in 2010, a South African actuarial qualification hosted by ASSA has replaced this arrangement (ASSA's website). Key changes include exam syllabuses based on South African specific content. The UK actuarial professional bodies however still supports Actuaries qualification through the UK. Students may receive exemption from part of the examinations for qualification from approved universities. The South Africa qualification does have mutual recognition with many of the international actuarial bodies as well as approval of the syllabus from the International Actuarial Association.
Sweden
Actuarial training in SwedenSweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
takes place at Stockholm University
Stockholm University
Stockholm University is a state university in Stockholm, Sweden. It has over 28,000 students at four faculties, making it one of the largest universities in Scandinavia. The institution is also frequently regarded as one of the top 100 universities in the world...
. The four-year master's
Master's degree
A master's is an academic degree granted to individuals who have undergone study demonstrating a mastery or high-order overview of a specific field of study or area of professional practice...
program covers the subjects mathematics
Mathematics
Mathematics is the study of quantity, space, structure, and change. Mathematicians seek out patterns and formulate new conjectures. Mathematicians resolve the truth or falsity of conjectures by mathematical proofs, which are arguments sufficient to convince other mathematicians of their validity...
, mathematical statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
, insurance mathematics
Actuarial science
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries are professionals who are qualified in this field through education and experience...
, financial mathematics
Mathematical finance
Mathematical finance is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory. Generally, mathematical finance will derive and extend the mathematical...
, insurance law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
and insurance economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
. The program operates under the Division of Mathematical Statistics .
UK and Republic of Ireland
Qualification in the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
consists of a combination of exams and courses provided by the professional body, the Institute and Faculty of Actuaries
Institute and Faculty of Actuaries
The Institute and Faculty of Actuaries is the professional body which represents the actuaries in the United Kingdom. It operates publicly under the name Actuarial Profession.-History:...
. The exams may only be taken upon having officially joined the body, unlike many other countries where exams may be taken earlier. However, a candidate may offer proof of having previously covered topics, usually while at university, in order to be exempt from taking certain subjects. The exams themselves are now split into four sections: Core Technical (CT), Core Applications (CA), Specialist Technical (ST), and Specialist Applications (SA). For students who joined the Profession after June 2004, a further requirement that the student carry out a "Work-based skills" exercise has been brought into effect. This involves the student submitting a series of essays to the Profession detailing the work that he or she has performed. In addition to exams, essays and courses, it is required that the candidate have at least three years' experience of actuarial work under supervision of a recognized actuary in order to qualify as a Fellow of the Institute of Actuaries (FIA) or of the Faculty of Actuaries (FFA) .
Actuaries can also gain partial credit towards Fellowship of the Institute and Faculty of Actuaries by following an actuarial science
Actuarial science
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries are professionals who are qualified in this field through education and experience...
degree at an accredited university. At the undergraduate level the only locally accredited programmes are currently at University of Manchester
University of Manchester
The University of Manchester is a public research university located in Manchester, United Kingdom. It is a "red brick" university and a member of the Russell Group of research-intensive British universities and the N8 Group...
, University College Dublin
University College Dublin
University College Dublin ) - formally known as University College Dublin - National University of Ireland, Dublin is the Republic of Ireland's largest, and Ireland's second largest, university, with over 1,300 faculty and 17,000 students...
, Queen's University Belfast, Heriot-Watt University
Heriot-Watt University
Heriot-Watt University is a university based in Edinburgh, Scotland. The name commemorates George Heriot, the 16th century financier to King James, and James Watt, the great 18th century inventor and engineer....
, University of Edinburgh
University of Edinburgh
The University of Edinburgh, founded in 1583, is a public research university located in Edinburgh, the capital of Scotland, and a UNESCO World Heritage Site. The university is deeply embedded in the fabric of the city, with many of the buildings in the historic Old Town belonging to the university...
, the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
, University of Southampton
University of Southampton
The University of Southampton is a British public university located in the city of Southampton, England, a member of the Russell Group. The origins of the university can be dated back to the founding of the Hartley Institution in 1862 by Henry Robertson Hartley. In 1902, the Institution developed...
, City University, London
City University, London
City University London , is a public research university located in London, United Kingdom. It was founded in 1894 as the Northampton Institute and became a university in 1966, when it adopted its present name....
and the University of Kent
University of Kent
The University of Kent, previously the University of Kent at Canterbury, is a public research university based in Kent, United Kingdom...
. Full-time accredited masters programmes are provided only by the University of Kent, Heriot-Watt University and City University; part-time accredited masters degrees are offered by Imperial College London
Imperial College London
Imperial College London is a public research university located in London, United Kingdom, specialising in science, engineering, business and medicine...
and the University of Leicester
University of Leicester
The University of Leicester is a research-led university based in Leicester, England. The main campus is a mile south of the city centre, adjacent to Victoria Park and Wyggeston and Queen Elizabeth I College....
. Actuarial programmes that offer the possibility of exemption from individual professional exams are also available at City University, London, Heriot-Watt University, the London School of Economics, the University of Southampton
University of Southampton
The University of Southampton is a British public university located in the city of Southampton, England, a member of the Russell Group. The origins of the university can be dated back to the founding of the Hartley Institution in 1862 by Henry Robertson Hartley. In 1902, the Institution developed...
, Swansea University
Swansea University
Swansea University is a university located in Swansea, Wales, United Kingdom. Swansea University was chartered as University College of Swansea in 1920, as the fourth college of the University of Wales. In 1996, it changed its name to the University of Wales Swansea following structural changes...
, the University of Kent and the University of Warwick
University of Warwick
The University of Warwick is a public research university located in Coventry, United Kingdom...
. In the Republic of Ireland exemptions are offered by National University of Ireland, Galway
National University of Ireland, Galway
The National University of Ireland, Galway is a constituent university of the National University of Ireland...
, Dublin City University
Dublin City University
Dublin City University is a university situated between Glasnevin, Santry, Ballymun and Whitehall on the Northside of Dublin in Ireland...
, University College Cork. Some South African universities are also accredited by the Institute and Faculty of Actuaries. These universities include the University of Pretoria
University of Pretoria
The University of Pretoria is a multi campus public research university located in Pretoria, the administrative and de facto capital of South Africa...
, University of Cape Town
University of Cape Town
The University of Cape Town is a public research university located in Cape Town in the Western Cape province of South Africa. UCT was founded in 1829 as the South African College, and is the oldest university in South Africa and the second oldest extant university in Africa.-History:The roots of...
, Stellenbosch University
Stellenbosch University
Stellenbosch University is a public research university situated in the town of Stellenbosch, South Africa. Other nearby universities are the University of Cape Town and University of the Western Cape....
, University of the Free State
University of the Free State
The University of the Free State is situated in Bloemfontein, the capital of the Free State, South Africa. The university also has a satellite campus in Qwaqwa that was, until 2003, part of the University of the North.-Academic Divisions:...
and the University of the Witwatersrand
University of the Witwatersrand
The University of the Witwatersrand, Johannesburg is a South African university situated in the northern areas of central Johannesburg. It is more commonly known as Wits University...
. ISEG in Lisbon, Portugal, offers the possibility of exemption from some professional exams of the Institute and Faculty of Actuaries.
United States
In the U.S., for life, health, and pension actuaries, exams are given by the Society of ActuariesSociety of Actuaries
The Society of Actuaries is a professional organization for actuaries based in North America. It was founded in 1949 as the merger of two major actuarial organizations in the United States: the Actuarial Society of America and the American Institute of Actuaries...
, while for property and casualty actuaries the exams are administered by the Casualty Actuarial Society
Casualty Actuarial Society
The Casualty Actuarial Society is a professional society of actuaries whose goal is "the advancement of the body of knowledge of actuarial science applied to property, casualty, and similar risk exposures." Its members are mainly involved in the property and casualty areas of the actuarial...
. The Society of Actuaries’ requirements for Associateship include passing five preliminary examinations, demonstrating educational experience in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
and applied statistics—called validation by educational experience (VEE), completing an eight-module self-learning series, and taking a course on professionalism. For Fellowship, four other modules, two exams, and a special fellowship admission course is added . The Casualty Actuarial Society requires the successful completion of seven examinations, two modules and VEE for Associateship and three additional exams for Fellowship. In addition to these requirements, casualty actuarial candidates must also complete professionalism education and be recommended for membership by existing members .
In order to sign statements of actuarial opinion, however, American actuaries must be members of the American Academy of Actuaries
American Academy of Actuaries
The American Academy of Actuaries, also known as the “Academy” or the AAA, is the body that represents and unites United States actuaries in all practice areas...
. Academy membership requirements include membership in one of the recognized actuarial societies, at least three years of full-time equivalent experience in responsible actuarial work, and either residency in the United States for at least three years or a non-resident or new resident who meets certain requirements . Continuing education is required after certification for all actuaries who sign statements of actuarial opinion .
In the pension area, American actuaries must pass three examinations to become an Enrolled Actuary
Enrolled Actuary
An Enrolled Actuary is an actuary who has been licensed by a Joint Board of the Department of the Treasury and the Department of Labor to perform a variety of actuarial tasks required of pension plans in the United States by the Employee Retirement Income Security Act of 1974...
. Some pension-related filings to the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
and the Pension Benefit Guaranty Corporation
Pension Benefit Guaranty Corporation
The Pension Benefit Guaranty Corporation is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and...
require the signature of an Enrolled Actuary. Many Enrolled Actuaries belong to the Conference of Consulting Actuaries
Conference of Consulting Actuaries
The Conference of Consulting Actuaries, also known as the Conference or the CCA, is a professional society of actuaries engaged in consulting in the United States and Canada, as opposed to those employed by insurance companies...
or the American Society of Pension Professionals and Actuaries
American Society of Pension Professionals and Actuaries
The American Society of Pension Professionals & Actuaries or ASPPA is a national organization for career retirement plan professionals. The membership consists of the many disciplines supporting retirement income management and benefits policy. Its members are part of the diversified, technical,...
.
In 2009, the Society of Actuaries began a high-level accreditation system for universities, recognizing the best actuarial schools as Centers of Actuarial Excellence.
Other countries
Many other countries pattern their requirements after the larger societies of the US or UK. In general, the websites of these organizations are often the easiest source for finding out about membership requirements and resources.Exam support
As these qualifying exams are rigorous, support is usually available to people progressing through the exams. Often, employers provide paid on-the-job study time and paid attendance at seminars designed for the exams . Also, many companies which employ actuaries have automatic pay raises or promotions when exams are passed. As a result, actuarial students have strong incentives for devoting adequate study time during off-work hours. A common rule of thumb for exam students is that, for the Society of Actuaries examinations, roughly 400 hours of study time are necessary for each four-hour exam . Thus, thousands of hours of study time should be anticipated over several years, assuming no failures . In practice, as the historical passing percentages remain below 50% for these exams, the “travel time” to credentialing is extended and more study time is needed. This process resembles formal schooling, so that actuaries who are sitting for exams are still called “students” or “candidates” despite holding important positions with substantial responsibilities.Notable actuaries
Harald CramérHarald Cramér
Harald Cramér was a Swedish mathematician, actuary, and statistician, specializing in mathematical statistics and probabilistic number theory. He was once described by John Kingman as "one of the giants of statistical theory".-Early life:Harald Cramér was born in Stockholm, Sweden on September...
:Swedish actuary and probabilist notable for his contributions in the area mathematical statistics, such as the Cramér–Rao inequality . Professor Cramér was an Honorary President of the Swedish Actuarial Society .
James Dodson
James Dodson
James Dodson FRS was a British mathematician, actuary and innovator in the insurance industry.-Life:Matthew Maty, in his Mémoire sur la vie et sur les écrits de M. A. de Moivre, wrote that Dodson was a pupil of Abraham de Moivre. He worked as an accountant and teacher...
:Head of the Royal Mathematical School, and Stone's School, Dodson built on the statistical mortality tables developed by Edmund Halley in 1693 .
Edmond Halley
Edmond Halley
Edmond Halley FRS was an English astronomer, geophysicist, mathematician, meteorologist, and physicist who is best known for computing the orbit of the eponymous Halley's Comet. He was the second Astronomer Royal in Britain, following in the footsteps of John Flamsteed.-Biography and career:Halley...
:While Halley actually predated much of what is now considered the start of the actuarial profession, he was the first to mathematically and statistically rigorously calculate premiums for a life insurance policy .
James C. Hickman
James C. Hickman
James C. Hickman was an American actuary. He was internationally publicized for his work in actuarial education as well as being a major contribution in the development of the actuarial profession...
:Notable actuarial educator, researcher, and author .
David X. Li
David X. Li
David X. Li is a quantitative analyst and a qualified actuary who in the early 2000s pioneered the use of Gaussian copula models for the pricing of collateralized debt obligations...
: a Canadian qualified actuary who in the first decade of the 21st century pioneered the use of Gaussian copula models for the pricing of collateralized debt obligation
Collateralized debt obligation
Collateralized debt obligations are a type of structured asset-backed security with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand...
s (CDOs). The Financial Times called him "the world’s most influential actuary," while in the aftermath of the Global financial crisis of 2008–2009, to which Li's model has been credited partly to blame, his model has been called a "recipe for disaster".
Edward Rowe Mores
Edward Rowe Mores
Edward Rowe Mores, FSA was an English antiquarian and scholar, with works on history and typography...
:First person to use the title ‘actuary’ with respect to a business position .
William Morgan
William Morgan (scientist)
William Morgan, FRS was a Welsh physician, physicist and statistician, who is considered the father of modern actuarial science....
:Morgan was the appointed Actuary of the Society for Equitable Assurances in 1775. He expanded on Mores's and Dodson's work, and may be rightly considered the father of the actuarial profession in that his title became applied to the field as a whole..
Anette Norberg
Anette Norberg
Anette Norberg is a Swedish curler from Nacka. She and her team are the current Olympic women's curling champions, having won the 2010 Women's Curling tournament in Vancouver...
:Skip
Skip (curling)
The skip, in conjunction with the team, determines strategy. Based on the strategy, the skip holds the broom indicating where the player throwing must aim . When it is the skip's turn to throw, the vice-skip holds the broom...
for the Swedish Women's Curling
Curling
Curling is a sport in which players slide stones across a sheet of ice towards a target area. It is related to bowls, boule and shuffleboard. Two teams, each of four players, take turns sliding heavy, polished granite stones, also called "rocks", across the ice curling sheet towards the house, a...
Team at the 2010 Winter Olympics
2010 Winter Olympics
The 2010 Winter Olympics, officially the XXI Olympic Winter Games or the 21st Winter Olympics, were a major international multi-sport event held from February 12–28, 2010, in Vancouver, British Columbia, Canada, with some events held in the suburbs of Richmond, West Vancouver and the University...
. Norberg has won gold medals at the 2010 Winter Olympics, the 2006 Winter Olympics
2006 Winter Olympics
The 2006 Winter Olympics, officially known as the XX Olympic Winter Games, was a winter multi-sport event which was celebrated in Turin, Italy from February 10, 2006, through February 26, 2006. This marked the second time Italy hosted the Olympic Winter Games, the first being the VII Olympic Winter...
, seven European Curling Championships
European Curling Championships
The European Curling Championships are annual curling tournaments held in Europe between various European nations and hosted by the European Curling Federation. The European Curling Championships are usually held in early to mid December...
, and two World Curling Championships
World Curling Championships
The World Curling Championships are annual curling events which showcase the world's best curlers, organized by the World Curling Federation. There are men's, women's and mixed championships. The men's championship started in 1959, while the women's in 1979...
.
Maurice Princet
Maurice Princet
Maurice Princet was a French mathematician and actuary who played a role in the birth of cubism. He was an associate of Pablo Picasso, Guillaume Apollinaire, Max Jacob, Jean Metzinger, and Marcel Duchamp...
:French actuary and close associate of artist Pablo Picasso
Pablo Picasso
Pablo Diego José Francisco de Paula Juan Nepomuceno María de los Remedios Cipriano de la Santísima Trinidad Ruiz y Picasso known as Pablo Ruiz Picasso was a Spanish expatriate painter, sculptor, printmaker, ceramicist, and stage designer, one of the greatest and most influential artists of the...
. Princet is considered "Le Mathématicien du Cubisme" ("The Mathematician of Cubism") for his "critical influence on Picasso’s development as an artist at the birth of cubism
Cubism
Cubism was a 20th century avant-garde art movement, pioneered by Pablo Picasso and Georges Braque, that revolutionized European painting and sculpture, and inspired related movements in music, literature and architecture...
" .
Frank Redington
Frank Redington
Frank Mitchell Redington was a noted British actuary. Frank Redington was best known for his development of Immunisation Theory which specifies how a fixed income portfolio can be "immunised" against changing interest rates....
:Developed the Redington Immunization Theory
Isaac M. Rubinow
I. M. Rubinow
Isaac Max Rubinow was a leading theorist on social insurance and one of the most influential writers on the subject. Rubinow was an MD, and held a Ph.D. in economics from Columbia University. His 1913 book, Social Insurance, was the most influential early work on social security...
:Founder and first president of the Casualty Actuarial Society
Casualty Actuarial Society
The Casualty Actuarial Society is a professional society of actuaries whose goal is "the advancement of the body of knowledge of actuarial science applied to property, casualty, and similar risk exposures." Its members are mainly involved in the property and casualty areas of the actuarial...
.
Elizur Wright
Elizur Wright
Elizur Wright was an American mathematician and abolitionist. He is sometimes described as the "father of life insurance" for his pioneering work on actuarial tables...
:American actuary and abolitionist, professor of mathematics at Western Reserve College (Ohio). He campaigned for laws that required life insurance companies to hold sufficient reserves to guarantee that policies would be paid .