Are you interested in learning how to become an actuary? If yes, keep reading as we walk you through all you need to know about becoming an Actuary.
If you love playing with data and statistics, you should probably settle for being an Actuary.
Mathematics and knowledge of computer software can earn you a lucrative and stable job. A lot of companies could use your expertise.
In this article, we have carefully and strategically compiled all you need to know to become an actuary, including the average salary, the job opportunities available for an actuary, and lots more.
If you’re yet to choose a career path, this article can give you detailed exposure that will make you choose or refrain from being an actuary; either way, you will be duly informed.
Wondering Who an Actuary is? Let’s get started!!!
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Table of Contents
Who is an Actuary?
An actuary is an analyst for risk management, doing the math to figure out how risky something might be and determining how best to minimize it in the future. Actuaries have zero tolerance for errors and are highly effective in reducing possible harm in business.
It’s a career that may be heavily associated with insurance but can be more than that if channeled to other areas of risk management.
Actuaries are most often needed in the insurance industry, where there are a lot of financial risks involved in health insurance, life insurance, and home insurance. Here, actuaries use data and several factors to determine just how risky an insurance policy is to give to someone.
They don’t just determine the level of risk; they use their skill to determine possible ways to avert or minimize its effect on businesses. The importance of actuaries in organizations, government establishments, and financial institutions cannot be overemphasized.
I’m sure you like that sound; meanwhile, before you decide to become an actuary, let’s take a look at the steps to becoming an actuary.
How to Become an Actuary
Having Knowing who an actuary is, becoming an actuary can be achieved following these steps sequentially and completely; the steps include
Get a Bachelor’s Degree in Actuary or a Related Course
Being an actuary requires a Bachelor’s degree in actuarial science or related courses. A bachelor’s degree is a must if you’re looking to get hired as an actuary. Depending on your college, there may be an actuarial program to major in. If not, majoring in actuarial science can certainly help.
A major relating to mathematics, finance, or economics would be perfect because so much math is involved, and computer science courses are also crucial, considering how much of the actuary’s job involves working with software and spreadsheets. Communications classes can be helpful, as can liberal arts courses, to ensure you get a well-rounded education.
Develop Technical Computer Skills
Computer science courses in college will certainly give you a huge advantage, but if you want to become well-versed in the software you’ll be using, you’ll have to go outside of generic classes. They’re worth taking if you can find courses on specific programs like Excel or programming languages like SQL, whether at your school or outside of it.
And in your free time, it could help to tinker around with them. Most work done by an actuary is usually done using a computer system, so getting acquainted with the technological world would give you an edge.
Successfully Pass 2 Actuarial Exams Prior to Graduation.
To be a certified actuary, you will need to pass several exams; It’s recommended that you take at least two of these exams and pass them excellently by the time you graduate college.
The two exams that are taken as the first ones are the Probability Exam (aka Exam P) and the Financial Mathematics Exam (aka Exam FM).
Although each of these is, in a way, the beginner’s exam for actuaries, they are each three-hour courses that require hours upon hours of studying centered on calculus, probability, and risk management.
Land an Actuarial Internship
Before graduation, it’s advised that you have completed an internship or two, possibly in a different environment. How do you do that?
You can land an internship with an impressive resume of relevant courses and extracurriculars, and maybe even an exam passed; you can acquire a solid actuarial internship working on a team with established actuaries.
This helps you gain work experience and build connections, both of which are integral to your resume and help you develop a sense of the day-to-day role of an actuary.
Get Your First Entry-Level Actuarial Job
You’ve made it this far. You’ve graduated college, passed some exams, and completed internships. Now, it is time to make your way into the working world and find a job in your field.
Certainly, this is easier said than done, but if you’ve put in the work, studied hard for your exams, and paid close attention during your internships (and can expertly showcase all this in an interview), you may find your first entry-level position.
Register with the Appropriate Actuary Societies
Concurrently with finding a position, you’ll also determine what direction you want to go as an actuary.
The field you wish to work in as an actuary will determine what association you want to be a part of for your career: the Society of Actuaries (SOA) or the Casualty Actuarial Society (CAS).
The primary difference between the two organizations is the field in which these actuaries are employed in. The CAS is generally for property and casualty insurance, otherwise known as P&C.
The SOA is more geared toward health, retirement, and life insurance. Each organization also has different exams you will have to take after the first few general exams.
So before this phase, you should decide by observation, passion, and experience the part where you want to major; this will help you register with the right society.
Increase your Worth by taking VEE-Approved Courses
Whether during college or after (preferably during), you will need to take courses on Validation by Educational Experience (VEE) topics, regardless of association.
You must have VEE-approved economics, accounting, finance, and mathematical statistics courses. Courses specifically approved for this can be found online.
In addition, you will need to have at least two exams passed before putting in a request for VEE credit.
Continue Your Exams
After all the requirements, you still have exams to take and prepare for, even while you’re in the midst of a career. Luckily, many employers will sponsor your exams to help you officially become a member of your chosen association.
To become a member of the SOA or an Associate of the Society of Actuaries (ASA), you’ll need to take exams on both long- and short-term actuarial mathematics, statistics for risk modeling, and predictive analysis – all in addition to the initial exams and VEE requirements.
If you complete all these exams and some SOA e-learning courses/modules, you can become a Fellow of the Society of Actuaries (FSA).
You can take one of six tracks to become an FSA: corporate finance and ERM, quantitative finance and investment, individual life and annuities, retirement benefits, group health, and general insurance. All of these have their own unique sets of exams and courses.
If you wish to become an associate of the CAS, other exams you’ll have to take involve modern actuarial statistics, rate-making and estimating claim liabilities, regulation, and financial reporting, financial risk, and more.
Before you can attain fellowship, you’ll have to pass all 10 of your exams. Fellowship means that you’re a fully qualified and certified actuary. Once you have a full-time job, you’ll eventually finish your exams. There are 3 more exams to pass to go from associateship to fellowship. It usually takes 2-4 years to pass those exams and meet the other (easier) requirements.
To attain a fellowship, there are a few other requirements you have to meet in addition to the 3 fellowship-level exams that I mentioned. The requirements depend on whether you go the SOA or the CAS route.
Once you’ve completed all the requirements, you’ll either be an FSA (Fellow of the Society of Actuaries) or an FCAS (Fellow of the Casualty Actuarial Society). In Canada, you’ll also apply for FCIA (Fellow of the Canadian Institute of Actuaries)
With these, you will successfully become an actuary in high demand by companies and financial institutions.
Who Can Become an Actuary?
To become an actuary, you must build your mathematical, financial, and statistical skills at school and university. Most actuarial employers will look for graduates with a maths-based degree at 2:1 or above in subjects including:
- Actuarial science
If you don’t have a maths-based degree but are passionate about maths and want to qualify as an actuary, we recommend taking our non-member exams before joining the IFoA as a Student.
Our non-member exams will prepare you for the rigorous and demanding IFoA qualification process and give you an insight into the skills and techniques required to progress in an actuarial career.
How Much Does an Actuary Earn?
Due to the work and stress involved in being an actuary, you might wonder if the pay is worth it. Here’s the fact, the bigger the stress, the more the pay. But hey!!! You don’t expect an entry-level actuary to earn the same as an actuary who has gotten to the qualification of a manager as an actuary.
Also, the pay might vary depending on the fellowship, your qualifications, and the organization you find yourself in.
A recent analogy states that actuaries in Nigeria earn around 468,000 NGN per month. Salaries range from 253,000 NGN (lowest) to 707,000 NGN (highest).
An actuary with less than two years of experience makes approximately 294,000 NGN monthly. While someone with an experience level between two and five years is expected to earn 371,000 NGN per month, 26% more than someone with less than two years of experience.
The average monthly salary includes housing, transportation, and other benefits. Actuary salaries vary drastically based on experience, skills, gender, or location. Below, you will find a detailed breakdown based on many different criteria.
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How Long Does it Take to Become an Actuary?
Depending on the region, the number of years might differ. For most people, it takes between 7 and 10 years to become a fully qualified actuary.
Aspiring actuaries in Canada and the U.S. typically spend between 3 and 5 years getting a bachelor’s degree and about 7-8 years passing all ten actuarial exams. Actuarial exams can be written before a bachelor’s degree is completed, so there’s usually some overlap between these two time frames.
Is Becoming an Actuary Worth It?
Sincerely, becoming an actuary is not worth it.
Studying for over 7 years with so many difficult examinations to pass just to become an actuary was not worth it for most people who became actuaries.
According to a survey performed by CareerExplorer, most actuaries rated their job happiness with 2.5 stars out of 5.
Unless you are super intelligent, smart, and can easily walk through difficult exams, you may find it difficult to become an actuary.
How Hard is it to Become an Actuary?
Becoming an actuary can be quite difficult. You will have to pass a series of tough examinations called Actuarial Exams successfully.
These exams are so difficult that the pass rate is between 30 to 40%.
The first exam consists of about 30 to 50 difficult multiple-choice questions.
This is not to discourage you from becoming an actuary but rather to prepare you.
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Is the Market for Actuaries Competitive?
Considering the number of difficult examinations actuaries have to sit for. One may think that only a few people end up becoming actuaries.
But, contrary to that, the number of people sitting for actuarial examinations keeps increasing yearly.
So, entry-level actuary jobs are quite competitive.
Are Actuaries Highly Needed?
Also, depending on the region, the need for actuaries differs. If you are in continental Europe, you are in the right place, thanks to Solvency II.
Actuaries are hired like crazy. However, actuaries in these countries are mathematicians and statisticians who are further trained in selected Universities in those countries. In practice, actuaries in Germany, Austria, Scandinavia, and other Northern European countries are de-facto data scientists in insurance mathematics.
If you are in the USA, I leave you with the words of Mike Lombardi, a past president of the Society of Actuaries, who mentioned an existential crisis in how actuaries are trained in the USA.
Insurance companies in the USA are hiring more data scientists than actuaries nowadays. Why? Those exams do not make a person data-savvy; above all, they are not on the front lines of research. Recently, the SOA, in a desperate move, tried to change the syllabus, but it was too little too late. Hence, don’t get into this path in the USA; it is a dead end.
Where Do Actuaries Work?
Actuaries can work in organizations with the following departments
- Health Insurance
- Property Insurance
- Auto Insurance
- Home Insurance
- Jobslife Insurance
- Risk Management Insurance
Conclusion: How to Become an Actuary
Actuaries are very important to society and the companies they work for.
Although many people fear that computers may replace the job of actuaries in the future, that is not likely to happen.
Although computers may make their work easier, they will not outrightly displace them.