CareerCast's ranking of the "Best and Worst Jobs for 2015" is out and guess what the best job is? Actuary. So, what's it like being an actuary? In this Q&A, actuary Thomas S. Terry says it involves everything from drivereless cars to the $6 million question: "How long am I going to live?" Also, a serious love of math.
What is an actuary?
An actuary is a professional who evaluates and helps manage risks faced by individuals, businesses and governments. For example, health-care actuaries work to assess the costs of a range of health-care risks from individual illnesses to pandemics. Property and casualty actuaries develop auto insurance premium rates. And government actuaries in Washington, D.C., evaluate the long-term costs of Social Security in light of the retirement of the Baby Boomer generation and their longer life expectancies.
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Do you think most people know what an actuary is?
Probably not, and I do frequently get asked about it. It's kind of an occupational hazard of being an actuary! But, everyone is affected by the work that actuaries do. Anyone who carries auto insurance, for example, pays a premium developed by actuaries who evaluate the effects of pooling the risks of accident or injury for a large group of policyholders. Knowing that, it should come as no surprise that actuaries are working hard to evaluate the risks to drivers, manufacturers, and technology companies of the emerging phenomenon of driverless cars!
Do you get asked that question all the time?
Of course! But that's okay. Inevitably the discussion gets around to the things we do that matter to people day-to-day. Life and health insurance, auto insurance, financial security — all these systems, which we tend to take for granted — they all WORK because of the efforts of actuaries.
What’s a typical day like for you?
I talk to businesses and help them identify and solve problems related to employee benefits – pensions and health care. I work with my team to develop models of pension programs, for example, so as to help forecast what a long-term pension program should cost in today's dollars.
What type of skill set do you need to be an actuary?
Most actuaries are schooled in mathematics, probability and statistics — and along the way, they pick up general business and finance skills. Actuaries study the business application of all these skills and then they will typically refine what they've learned with solid, on-the-job training in the insurance, pension, or health-care fields.
What types of companies hire actuaries?
Actuaries typically work with life, health, and property/casualty insurance companies, or in consulting firms advising businesses or state and local governments about insurance, risk management, or employee benefits. Actuaries also work in government helping manage our large social insurance programs such as Social Security and Medicare.
What made you decide to be an actuary?
I love math and I love working with people to help solve problems. The work of the actuary involves both. It's been the ideal career for me.
How does a person become an actuary?
In the United States, actuaries typically pass a series of rigorous exams given by one of the actuarial societies. This basic education is accompanied by serious on–the-job training and continuing education. The American Academy of Actuaries sets standards for what it means to be a qualified actuary.
What is the path that led you to this job – what was your degree in?
My degree was in mathematics and physics. I heard about the field late in my college years and went on to a business school to study actuarial science. I started taking the exams while I was in school, which gave me a leg up in landing my initial job with a pension consulting firm.
Why do you think actuaries are so in demand right now?
Businesses are more savvy about risk these days. Actuaries, being highly respected for their skills and insights into important risk-related business problems, are increasingly called upon. I can see the demand for actuaries continuing to increase going forward.
What is the craziest question people ask you?
"How long am I going to live?" Of course that's absurd, but I do get that question all the time! What's underlying that is that actuaries maintain statistics on mortality, and have done so for centuries. Life insurance works because of the ability to understand the mortality risks for a large group of individuals who hold policies with a particular company. So, while actuaries don't know about the life span of any one individual, they DO know something about the life expectancy — on average — of a large group of people.
Thomas Terry is the CEO of the Terry Group, an independent consulting firm of actuaries working in health care and pensions in Chicago. He is also the immediate past president of the American Academy of Actuaries.