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Five Industries Actuaries Can Work in Apart From Insurance

Five Industries Actuaries Can Work in Apart From Insurance

For the actuarial profession, there is no denying that things are looking up – that is in terms of employment opportunities. According to the US Bureau of Labor Statistics, it is estimated that by the year 2028, the absorption of actuaries into the profession will have increased by 20%. That’s remarkably way faster than any career path you can think.

What’s the significance of this, though?

People are waking up to the importance of actuaries in solving day to day problems. And that means more companies across different industries are going to be more willing to have some actuarial expertise in their manpower.

So the thought of being confined in only the insurance sector as an actuary will lose meaning altogether. But then, do you have any ideas of alternative industries in which you can show off those risk management skills? What exact role are you going to play if you land there?

As with most professions, the actuarial industry has a learning curve. You’ll start off inexperienced and learn the ropes as you go. With time, you’ll advance in ranks and use the skills you gain along the way to take on more advanced responsibilities. So typically, what you’ll handle can be categorized into:

  • Entry-level and
  • Advanced.

Entry Level Actuaries

At this point, you’ll be doing all the dirty work. That is collecting and interpreting vast amounts of data. You’ll also be expected to ensure that the said data is factual. The next step will be to look into the available information for any patterns.

This will be useful in predicting future occurrences tied to the data. The data analysis and prediction are both dependent on actuarial modeling software.

Advanced Level Actuaries

Your role here will be more of an oversight. A good deal of work will be done by entry-level staff. Yours is to tap into your experience in making sure everything is smooth. That is the methods used in the collection and interpretation of data and the resultant future predictions.

Before delving into alternative industries where you can work as an actuary, it’s perhaps just as useful to have a closer look at your expected responsibilities in the insurance sector as well.

Here we go.

Actuaries in Insurance

This is the area where you’ll expect to find a good deal of actuaries. That also goes to say you have a high likelihood of ending up in this sector. It’s only natural considering that the basis of the insurance sector is risk, and the actuarial science is all about risks. Of course, virtually every little thing around us is underpinned by risk in one way or the other.

For instance, you taking the professional exams is a risk because (God forbid) you could end up failing and incur additional charges to have another attempt. But that’s beside the point.

Here is a breakdown of the various roles of an actuary across the insurance industry.

Health and Care

If you land here, your tasks will be inclined towards morbidity rates – the likelihood that an individual will get sick or disabled, the possibility that such an individual will have to seek medical attention, and whether or not they’ll recover.

This is essential as you’ll be working on products like:

  • Disability insurance – covers the loss of income in the event an employee is unable to work due to a disability.
  • Critical illness insurance – aims to offset the costs that come with life-altering diseases such as cancer and stroke.
  • Medical insurance – covers the costs of getting medical attention in case of illness. The plans are diverse covering medicine, consultation, and lab work bills.
  • Income protection insurance – not as widespread as the above three, it provides cover against the inability to work due to either accident or illness.

Life insurance

As an actuary, your role will be quite immersive as you’ll take part in almost everything that goes on with assurance policies. That is the development of individual products, marketing them, assessing (and managing) the associated risk, and pricing of the policies.

Aside from that, there is the side of managing customers’ funds. You’ll be charged with the responsibility of formulating strategies geared towards turning a profit for the policyholders.

General insurance

Under general insurance, you’ll find policies to do with commercial risk, property (homeowners and motor insurance), terrorism, and natural disaster. Your task here will be to look at vast amounts of data in connection to the mentioned areas.

This analysis is pivotal in rating the risks and is the basis for determining the right amount of reserves to compensate policyholders at any given time.

Pensions

Usually, you’ll be working with employer-based pension funds involving as little as a single person’s benefits to the benefits of millions of people.

You may either have to design a scheme from scratch or work with the one in place. Your role will be to provide professional insight and to ensure these pension plans are adequately funded. That is, the pension assets must match liabilities (expenses and expected future claims). This is what is referred to as actuarial valuation.

So that’s all about the “traditional sector” of actuaries. As mentioned, the times are changing. Below are some of the industries finding actuarial skills to be particularly important.

Away from Insurance

Away from the conventional path, actuarial jobs are branching out to three routes:

  • Consultancy;
  • Finance and investment; and
  • Academia.

Consultancy

Actuarial consultants aren’t so much out of the insurance sector. The possibility of providing professional service in any of the above-mentioned insurance types is still there. In fact, actuarial consultants wear two different hats at the same time, offering their skills across insurance and finance industries.

The only difference here is that you’ll be stepping in as an independent contractor. That is as a business owner as opposed to being an employee. So any firm that might need to employ an actuary can benefit from the consultancy services of the same.

Besides the private insurance companies and financial and investment institutions, government firms can also use some actuarial know-how, cases in point, the Social Security Administration (SSA) and the Government Actuary’s Department (GAD) in the US and the UK respectively.

Finance and investment

The finance and investment areas are quite diverse. This presents a host of opportunities for you when the time for stepping out comes. So under this, you can land a position in any of the following segments:

  • Risk management
  • Investment management
  • Banking
  • Corporate finance

Risk Management

This can be virtually in any industry. It is the underlying role of the actuarial profession, anyway. And as mentioned above, risk is a component of everything in life. So you can land a role at any company where you’re required to analyze the possible risks that the business faces. On top of this, it will be expected that you develop models to minimize these risks.

On a consultancy basis, you’ll need to precisely lay out the nits and grits of the said models so that the company can find them useful even in your absence.

Investment Management

As per the name, your knowledge will be required in every little detail to do with investing. Think of any?

Here are some:

  • Maintaining portfolios at profitable states;
  • Transactions on assets, that is buying and selling financial securities; and/or
  • Analyzing a set of available investment opportunities to determine the one with more likelihood of being profitable.

As an actuary, you’re in a better position to offer valuable insight. This is because you’ll be well-versed in liability and asset concepts that are important in this area.

Banking

You can land a role in the banking sector either in an insurance company or via a bank.

Granted you won’t find as many of them, some insurance companies have their own banking wings where they’ve put actuaries to run the show in matters of risk and finances in general.

Banks, on the other hand, are increasingly hiring actuaries due to the long term forecasting that is the focus of the whole profession. And things can only get better as time goes by.

More banks will join the rush for grabbing the actuarial manpower as the banking and insurance sectors intersect – that’s through hedging by the insurance carriers.

Usually, they use banks for this. The banks that provide this hedge are more willing to enlist the services of an actuary.

Corporate Finance

The actuarial skills of predicting the future and risk assessment are essential here. Principally, your responsibilities will be along the lines of capital management and advising on financially viable projects to undertake. And this makes you fitting for both government and privately owned corporations. Aside from the above responsibilities, your input on mergers and acquisitions is also something you can offer in the corporate finance world.

Bottom Line

The bulk of actuaries are indeed in the insurance trade. But that doesn’t mean opportunities aren’t available outside of the policies and premiums framework.

An actuarial career is a largely flexible one – you can say it fits into any business around. The mentioned sectors here are just some that are starting to appreciate the significance of this profession.

So, aside from insurance, which one can you go for?

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