Actuary Career Information
What an Actuary does
An actuary is a professional who, using probability theory and mathematical, statistical and financial techniques, analyses the financial consequences of risk to enable businesses to make better-informed decisions. As an actuary, you will assess the financial impact of uncertain future events by methodically analyzing the past, modeling the future, and quantifying the likely range of financial outcomes from different future events. Confused? Read this.
Say a person buys a car. The insurance for this car needs to be determined. The actuary does this calculation. Your skills in finance and risk management will be used in areas such as insurance, pensions and investment. Other applications include census studies, forecasting, banking and finance
The actuary will analyze statistical data, such as mortality, accident, sickness, disability, and retirement rates and construct probability tables to forecast risk and liability for payment of future benefits. Using these statistics you will ascertain premium rates and cash reserves necessary to ensure payment of future benefits.
As an actuary, you will apply mathematical models to problems of insurance and finance, thus improving upon the financial decision making process.
As an actuary, you may also be called upon to perform the following tasks:
• Advise companies on the distribution of profits to policy-holders and assist with investment policy
• Manage long-term financial projects both in the public and private sectors
• Measure and analyze the investment performance of financial institutions
• Design, manage or supervise government financial policies in areas like social insurance and pension schemes in some ways an actuary is a financial crystal ball gazer!
As an actuary you will be in great demand. Challenging careers exist in a growing number of fields, including the insurance industry, consulting firms, government, banks and investment firms and large corporations. The largest growing segment for actuaries is actuarial consulting. The trend for companies, even large insurance corporations, is to outsource actuarial services. Actuarial consultants have also started to become more involved with decisions regarding health plans, advising on mergers and acquisitions, demutualization, new product development and asset management, financial analysis, alternative distribution systems, regulatory compliance and market conduct issues.
The big brother of the Insurance industry in India is LIC (Life Insurance Corporation), which employs over 100,000 people. You could join as an Assistant Administrative Officer through the all-India examination. The examination is objective in nature and consists of logical reasoning, general knowledge and quantitative reasoning. The written exam is followed by an interview. On being selected candidates are sent for a six-month training programme.
If you consider the fact that India is home to 1 billon people and only a quarter is insured you can imagine the potential for expansion in your career as an actuary.
Projections suggest that for a wide spectrum of functions - marketing, sales, human resources, finance, operations, actuarial function, at least 20,000 strong work forces is needed, plus 1.5 lakh agents.
Abilities & Traits Required
An actuary needs to have:
• Ability to express conclusions clearly and concisely
• Good mathematical and analytical skills
• Ability to think clearly and logically
• Keen, analytical, project management and problem solving skills
• Good business sense
• Knowledge of finance, accounting, economics
• Good communication skills
• Strong computer skills including statistical analysis, database manipulation, etc.
• Ability to work with others
Remember, this is one career in which you need to be good at mathematics. This is a number game and as an actuary you should be able to master it. If you are poor at geometry or trigonometry, then it's all right but you must be able to find out 0.7 per cent of 29,675 in a jiffy. You need to have sound analytical and logical skills.
You will be spending long hours at your table pouring over sheets and sheets of data. Patience and perseverance is therefore essential if you are planning to be an actuary.
However you must realise that at the end of all the numbers lie people. You need to have a friendly, outgoing personality with good communication skills. Only then will you be able to build up trust with your clients, which is so important in this business.
A degree in math, statistics, economics, business or finance is a good starting point for a career in actuarial science. You could even do your BA in actuarial science or a postgraduate certificate /diploma in insurance. Actuarial Science is mainly offered as a three year degree course by some universities or as part of a degree programme. The Insurance Institute of India, Mumbai, also grooms insurance personnel for a career in the Life Insurance Corporation (LIC) of India.
To become an actuary you need to take the entrance exam – Associate and later Fellowship of the society- conducted by the Actuarial Society of India. It is recognized in India as well as in Southeast Asia and Africa. To become an insurance surveyor you need to be a degree or diploma holder in engineering/architecture or hold a Fellowship/Associateship of the Institute of Chartered Accountants. You can also obtain the Fellowship or Associateship of The Institute of Insurance Surveyors and Adjusters (IISA) by giving their exam and thereby become a licensed insurance surveyor.
In the UK, professional groups such as the Institute of Actuaries (London) and Faculty of Actuaries (Edinburgh) conduct the examinations leading to an international recognized professional Qualification. In the USA, the Society of Actuaries (Schaumburg, IL) and the Casualty Actuarial Society (Arlington, VA) provide the qualification. Internationally, City University (London) offers one of the best university courses in Actuarial Sciences.
Earnings as an Actuary: In the government sector, starting salaries fall in the range of Rs 20000 - 25000 which can work up to Rs 30000 – 4500 in the private sector. A Zonal Manager gets Rs 30000 a month. This is just the basic salary, additional allowances include Dearness Allowance, Travel Allowance, City Compensatory allowance, etc which works to almost 150-200 per cent of your basic salary!
Management graduates can get Rs 15000 - 25000 per month. Salaries in multinational are very good indeed. At the entry level you will be paid around Rs 400000 and after five years of experience it can reach Rs 1000000 p.a.