What Is an Actuary? And Why Do Businesses Need Them?

Actuaries are a foundational role for insurance companies, without which they simply would not be able to operate. They’re the people who run the numbers to calculate how high prices should be based on statistical modelling, allowing companies to make their decisions in the light of reliable predictions.

In this article we’ll be taking a closer look at the companies that hire actuaries, what actuaries do, and how you can become one.

What Is An Actuary?

Companies that hire actuaries are reliant on accurate statistical risk analysis. This generally means insurance companies although you’ll also find actuaries in pension/retirement funds, investment and asset management, or any other business that relies on accurate prediction of risk.

While there’s a lot of crossover with other finance roles, being an actuary is pretty firmly rooted in the practical application of statistical models. The job of an actuary is not to decide which risks a company should or shouldn’t take but to use the best possible methods to provide realistic outcomes.

For example, an actuary may discover that the majority of car accidents happen in urban areas. Further analysis may reveal that, despite this, more money is spent on rural accidents because – due to higher speed limits and lower population density – rural accidents tend to cause more damage.

These are facts – nuanced facts but still facts, and an actuary’s job is to present them as such. The insurance company can then decide whether they want to act on this information.

Of course, this is a relatively simple example and in practice far more variables have to be considered.

How To Become an Actuary

By now, you should have a pretty good understanding of why actuaries are important, but how can you become one?

If you have a strong understanding of statistics and mathematical modelling, then becoming an actuary can be a very lucrative career path. It’s a unique and highly skilled job leading to high demand and low supply. That said, you can’t just walk into the job. First you’ll need to be qualified and however you approach it, that will take several years.

The most common path is university. You’ll need a maths heavy degree like engineering, economics, or of course just maths. If you’re really set on becoming an actuary from the start you could do a degree in actuarial science.

You can also become an actuary via an apprenticeship. That will take 2-3 years to complete but you will be able to earn money as you learn.

If you have experience in a related field you may also be able to apply directly to an actuary position however your employer will almost certainly want you to do some training to become a fully qualified actuary.

Is Being an Actuary a Good Career?

Given the highly specialised nature of the job and the high bar for qualification, finding work as an actuary is never that hard once your CV is up to scratch. That provides a lot of job security.

As for the money, you’re looking at a decent salary, moving to an excellent one with some experience. Entry level roles start at around £32,000 while experienced actuaries can earn up to £70,000.

But what about the daily life? Is it a satisfying job? How is the work/life balance?

People working in the field often report that it’s a fairly easy-going job if you’re the type of person who enjoys working in spreadsheets. You’re unlikely to be placed in high pressure environments or have to take part in complex negotiations and, for the most part, you’ll be able to keep to a regular 9-5.

All told, while it may not be the most rewarding work in terms of meaningful impact, being an actuary is a fairly relaxed job for those with the right skillset. It’s a lot of work up front but those who stick it out often find it to be a pleasant and low-stress job.