The Actuary, a career job

Paradoxically and while its profile is currently among the most sought after by companies, the job of actuary still remains publicly unknown by and large.

According to Robert's Dictionary's definition, the term dates back to 1872 and stems from the Latin word actuaries, which means “the stenographer, scribe in charge of minutes, acta.” Currently, it stands for the “specialist in statistics and calculations of the probabilities applied to insurance problems, employee benefits and amortization”.

Originally, the actuary is basically responsible for the production of figures, that is, the achievement of mortality tables in life insurance. But the job has considerably evolved following the social and economic changes especially technological progress which made it possible to develop more and more complex risk-modelling tools.

Who makes recourse to actuary services?

The actuary's role has been extended to new tasks and its scope of action opened up to sectors of multiple activities:

  • Insurance companies
  • Retirement and employee benefit funds
  • Stock companies
  • Financial institutions
  • Services of economic surveys for banks and giant corporate firms

Functions specific to insurance

In insurance, the two main classes of business of the actuary's activity are life insurance and property insurance.

The actuary plays a major role in:

  • Assessing and sharing risks
  • Elaborating tariffs
  • Negotiating the various procedures attendant upon contract establishment
  • Calculating technical provisions
  • Defining reinsurance programs and their costs
  • Monitoring portfolios and analyzing their profitability
  • Supervising financial statement and finance management

To do so, it collects and processes data to assess:

  • The probability of risk occurrence
  • The level of the granted guarantees
  • The profitability of investments

actuary Within the company, the actuary acts as backup in various management tasks such as audit and consultancy.
But the current dominant trend is the exercise of the profession in independent firms of actuarial consultancy, an activity in full swing in the American continent. In Canada, for instance, 44% of actuaries operate in independent firms while in France the percentage is only 16%.

Actuary: A career in vogue

Nowadays, the actuary is master of all trades: a risk manager, an expert in prospective statistics, a top-level strategist and a negotiator.

The globalization of capitals, the growing needs in terms of risk command and the emergence of new clients account for the greater recourse to actuarial services. Companies are desperately seeking graduates, sometimes even before their graduation offering them key positions, high salaries and advantageous career promotion prospects.

The annual salary of a beginner actuary in France amounts to 40 000 USD, and is poised to rise to 89 000 USD in mid-career. In the United States, the grid of salaries ranges between 41 000 USD and 84 000 USD.

Actuary: An evolving career

The scope of competence of an actuary, which already covers a large sphere of functions, is steadily expanding. The emergence of new types of risks and the evolution of regulations require from actuaries to face more and more responsibilities. Such stakes compel the actuary to outline a comprehensive perspective over the whole set of insurance values.

The actuary is asked to integrate, in the more and more sophisticated mathematical models, parameters as unpredictable as those related to Man's subjectivity, to social trends and to nature's risks.

That is how, for example, in the face of the large-scale natural disasters and their costs, insurance companies had to rely on the profiles of geographers, hydrologist engineers, meteorologists and physicists to train and coach actuaries specialized in climatological risks.

The actuary's training

actuary training The actuary's training syllabus is particularly long and arduous. It requires solid scientific knowledge and background (mathematics, probability, statistics, and computer sciences) as well as a great working, processing and judgement skills.

The constant evolution of this craft and its working tools requires a permanent effort of adaptation.

In line with the continuous extension of actuaries' scope of competence and their qualifications, the International Actuarial Association and the World Bank are working on a joint project for a professional examination leading to an actuary degree in association with national institutions.

Training institutions to become actuary

Most of the European and American universities are offering subjects in actuarial sciences.

In France, for instance, there are no less than ten specialized establishments among which :

  • Financial Science and Insurance Institute, Lyon University
  • The Paris University Statistics Institute
  • The Brest University Actuarial Sciences Euro Institute
  • The Paris Conservatory of Arts and Crafts
In Switzerland
  • The Lausanne University Actuarial Sciences Institute
In Belgium
  • UCL-Louvain-la-Neuve Actuarial Sciences Institute
In Great Britain
  • The School of Mathematical and Computer Sciences, Edinburgh, Actuarial Mathematics and Statistics
  • The London School of Economics, London
In Canada
  • The Laval University Actuarial Sciences School

Actuaries in Africa and the Middle East

Training programs in actuarial sciences have been provided by universities in South Africa, Zimbabwe, Egypt, and in Jordan. Other channels have been opened in Algeria and Morocco.

The majority of actuaries operating in these regions come from European or American institutions. Yet, the craft of actuary remains still under-represented and is short of meeting corporate needs. Since the late 1990s, actions have been taken in order to promote the business and to set up institutions and training schemes.

With the exception of the Actuarial Society of South Africa operating since 1948, most of the Actuarial associations in Africa and the Middle East are recently-established and have not yet developed a structure for the craft.

Some associations have been put in place in the following countries:

  • Nigeria (1983)
  • Ghana (1996)
  • Zimbabwe (1997)
  • Mporocco (1998)
  • Egypt (1999)
  • Côte d'Ivoire (1999)

Legal status of the actuary

actuary legal status In Europe, we note some disparities in the legal statute of actuary according to each country. In the United Kingdom, Germany and the Nederlands, for instance, the actuary has an institutionalized role; it is entrusted with the task of account certification and is submitted to a manual of good practices and to a code of ethics.

In the southern countries, however, (France, Italy and Spain), this status is more restricted. Nonetheless, the progressive harmonization of legislation at the European level should, in due time, lead to a standardization of the functions and status of the actuarial profession.

Actuaries' organization

Actuaries are federated within national institutes or associations which are in their turn affiliated into the International Actuarial Association (IAA).

IAA was set up in 1895 and restructured in 1998. Its General Secretariat's headquarters is located in Ottawa (Canada).
Being member of UNO's Economic and Social Committee, IAA works in collaboration with the World Bank, the International Monetary Fund and the International Labour Office. It gathers more than 40 000 professionals scattered throughout 97 countries.

Over 80 actuary institutes or associations are listed around the world, the most ancient of which date back to 1948 and 1897.

As to the worldwide geographic distribution of actuaries, Western Europe and North America, alone, account for 94.5% of actuaries, Asia and Australia account for 5.2% while most of Africa is situated around 0.3%.

IAA publishes a bi-annual magazine of international renown, the ASTIN Bulletin (Actarial Studies in Non-Life Insurance), which stands as a scientific reference for the actuarial business.

The IAA Congresses

Every four years, IAA holds an international congress. Due to the theoretic, scientific and technical level of the debate it triggers, these congresses have been nicknamed the insurance Olympic Games.

  • The 27th Congress took place in Cancun, Mexico from March 17 to 22, 2002
  • The 28th Congress took place in Paris, France from May 28 to June 2, 2006
  • The 29th Congress will take place in Cape Town, South Africa from March 7 to 12, 2010
  • The 30th Congress will take place in Washington, the United States from March 30 to April 4, 2014
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