What Is an Actuary?
An actuary uses math and statistics to estimate the financial impact of uncertainty and help clients minimize risk. With a median salary of over $111,000, the profession has a strong employment outlook and projected job growth, according to the U.S. Bureau of Labor Statistics. We take a look at the typical workday of three actuaries who work for different types of companies and who are at different stages in their careers.
- Actuaries use math to help clients minimize financial risks.
- An actuary's work varies, depending on different projects ranging from analysts to administrative duties and consulting.
- The median pay of actuaries is $111,030 as of 2020, according to the Bureau of Labor Statistics.
Lauren Ford, Actuarial Assistant, Allstate Insurance
Lauren Ford, 25, is an actuarial assistant with Encompass, an Allstate Insurance subsidiary in Northbrook, Illinois, that sells several insurance products for a single premium to consumers. She holds a bachelor’s degree in actuarial science and accounting and has worked at Allstate for two years.
Before joining the company full time, she worked as an intern for Allstate for two summers. She is currently a pricing actuary for property and casualty insurance.
“Pricing actuaries estimate future losses and expenses so that we can charge an adequate price for insurance,” says Ford. Actuaries tend to work for a specific area within the company, such as personal lines (auto and homeowners), specialty lines (boat, motorcycle, etc.), or business insurance. Ford works on personal lines.
Multi-Tasking is Key
Her work varies considerably from day to day depending on the projects she’s tackling. She usually works on two or three projects at a time while also attending meetings, sitting in on training sessions, and occasionally traveling to field offices. She spends three to four hours performing analyses such as loss and premium trends, estimating catastrophe exposure, and assessing the rates for different classes or groups of risk.
“These analyses are constantly changing due to items such as technology advances and the evolving nature of the insurance industry and marketplace,” she says. Some analyses take a day, while others take weeks.
Another two to three hours a day go toward communicating the implications and results of these analyses to sales leaders, agents, and product managers, both in written form and in meetings, with a visit in person at least once a year. She also communicates with state insurance regulators.
Reviewing Insurance Premiums
Allstate reviews its premiums quarterly. It updates other analyses semiannually, such as comparing losses and assessing rates for different classes of risk within a state or region. The company reviews standards for credibility, develops expense provisions used in rate-making (such as provisions for acquisition expenses or for licenses and fees), and calculates reinsurance costs based on annual reinsurance contracts either annually or every couple of years.
Ford says she spends an hour or two per day on administrative tasks such as scheduling meetings and responding to inquiries. As an actuarial student, she spends part of her day preparing for her actuarial exams, which she is halfway through.
She also dedicates time every year to recruiting and interviewing on campus at her alma mater, Drake University in Des Moines, Iowa, and giving tours of the home office, hosting lunches, and providing job-shadowing opportunities to job candidates.
Typical Work Week
Actuaries typically work 40 to 50 hours per week, says Ford. But that can change depending on the circumstances.
“Sometimes we work additional hours to meet a project’s deadline, but our schedules are fairly flexible,” she says.
As a pricing actuary, Ford says she is able to maintain a work-life balance and does not have one season with intense deadlines, so she is able to schedule vacations easily.
“It is a career that requires hard work, but it also comes with high rewards.” Ford considers the rewards of her career to be a flexible work schedule, a career that allows for work-life balance, excellent opportunities for on-the-job training, a strong employment outlook, and the vast exposure to actuarial work as a recent graduate.
Alex M. Tava, Managing Actuary, Cirdan
Alex Tava AGE is a managing actuary for Cirdan Health Systems and Consulting, based in Saint Paul, Minnesota, which provides consulting, strategic planning, and data management services, tools, and software to organizations such as health insurers, hospitals, clinics, government agencies, employers, and unions.
He has been working with individual, group, and government health insurance programs for 20 years and is an expert in many areas, including Medicare, Medicaid, and consumer-directed health products. He is a fellow of the Society of Actuaries and a member of the American Academy of Actuaries.
Tava typically gets to the office around 8:30 am. If he doesn’t have a meeting, he spends 30 to 60 minutes reviewing and responding to client and staff emails and planning his day. Around 9:30, he checks in with his staff to get progress reports on any outstanding projects or reports. He also makes sure they are neither overloaded nor idle in terms of their workload. Tava describes his office environment as “very collegial” and fairly casual—unless a client is visiting.
By 10:00 or 10:30 a.m., he focuses on his own work, such as an analysis for a client or to support a project another actuary or consultant is preparing. Because the health care claims data is complex, much work requires the use of Excel and/or SQL to review data.
“It is very beneficial to have at least a modest level of programming knowledge in order to be able to review larger data sets,” Tava says.
Meetings and Analyses
Tava takes an hour for lunch around 11:45. In the afternoon, he may have several meetings, which may be conducted in person, by phone, or online. These meetings tend to be internal staff discussions concerning long-term projects, product development, or client meetings to discuss a specific issue or analysis.
Other meetings deal with Medicare and Medicaid issues such as rate development, financial reporting, or encounter data. Between meetings, he checks his email and checks in with staff.
Around 4:00, he returns to the analysis he was working on in the morning. He also responds to emails and updates principals on project status. He receives a high volume of regulatory communications via email, which he needs to stay current on so he can offer feedback or support to clients.
He typically leaves the office between 6:00 and 7:00 unless a client or regulatory deadline requires him to work later. He says his typical work week is just under 50 hours, but it can range from 40 to 60 hours. He has the flexibility to shift his time around to attend his three young children’s events.
Financial Reporting and Preparation
A significant portion of his work involves supporting his clients’ periodic financial reporting and their state and federal regulatory reporting requirements. He prepares Medicare Part C and Part D bids, NAIC quarterly and annual statement reports, detailed annual revenue reports, and claims projections to support client budgets.
He also works on many client projects to respond to data requests from the state agencies responsible for Medicaid rate development.
An actuary's typical day varies according to projects, the company they work for, and the stage in their career.
James A. van Iwaarden, Consulting Actuary, Van Iwaarden Associates
James A. van Iwaarden is an emeritus consulting actuary and the founder of Van Iwaarden Associates in Minneapolis. He has more than 30 years of experience in employee benefits consulting and is a fellow of the Society of Actuaries and a fellow of the Conference of Consulting Actuaries.
“It's more verbal and less mathematical than many actuarial practice areas, and the longer you're in it, the more verbal it gets,” he says. “A consultant's time is driven by external client needs, rather than internal project plans,” van Iwaarden says. “Consulting actuaries tend to work longer hours than those who work in insurance companies, but with more flexibility and travel.”
Van Iwaarden says his firm is unusually flexible in that everyone is paid by the hour and can work when and where they want.
“The ‘where’ is usually in the office, because we're so much more productive face to face,” he says, but they’re not in the office on the weekends. “We take all our planned vacations, but we might keep up on email while we're out or do some work on a plane,” he adds.
Emails, Meetings, and Pensions
Staff at his consulting business typically begin their day at 8:00 am checking email newsletters for retirement-industry news and responding to short client questions. At 9:00 am, the consultant might spend an hour meeting with a staff analyst on a retiree medical valuation to clarify how the client's benefits work and what assumptions the company should use to value the liabilities.
For the next hour and a half, the consultant might discuss his company’s interpretation of an IRS pension regulation with other consultants and write a memo to document it so they are consistent whenever it applies in the future.
Then from 11:30 to 12:00, they might perform work for a client company by reviewing a pension benefit calculation for one of the company’s retiring employees and emailing it to the company’s human resources director.
Annual Government Filings and Retirement Plans
After an hour lunch break, an actuarial consultant might review the annual government filings an internal analyst has prepared for a pension client, finalize it and forward it to the client to sign and submit.
At 2:00, the consultant might prepare a profit-sharing and cash-balance plan design illustration for a prospective client, such as a law firm, to show them how they can maximize their deductible retirement plan contributions.
Then, at 3:00, the consultant might contact the attorney of another client to discuss recommended retirement plan changes, such as a new profit-sharing formula to reward successful stores and divisions.
The last hour of the workday might be spent peer-reviewing a colleague's draft presentation for a client board meeting and discussing recommended changes to make the presentation clearer. A typical day ends at 5 p.m.
Other work the consultants at Van Iwaarden Associates do that doesn't happen every day includes writing proposals for new clients and projects, preparing monthly client bills, attending staff meetings once or twice a month to talk through workflow and technical issues, and composing blog posts and speeches on new developments in the field.
The Bottom Line
“The actuarial career is great for anyone that enjoys analytical problem solving and developing creative business solutions,” says Ford. “It is consistently rated as a top profession, and it provides a variety of interesting work, great job security, and competitive compensation.”