Anyone with a zest to apply Mathematics and Statistics to solve real-world problems can become an Actuary! But wait, there is more to it. Having an analytical bend of mind and the ability to work on different software/tools to play with numbers produce a good actuarial science professional! Not only that, there are actuarial science exams you need to clear in order to become an actuary!
What is Actuarial Science?
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions. It includes a variety of interrelated subjects like mathematics, finance, economics, computer programming and probability. It is used to get a comprehensive picture of the risks relating to contingent events and for the scientific valuation of financial products in the fields of insurance, investments, retirement etc.
An insurance actuary is a professional that analyzes financial risk using mathematics, statistics and financial theories. Most actuaries work in the insurance industry and help insurance companies determine good risks or those the companies are less likely to have to pay out claims to as the result of a loss.
In a nutshell, what it takes to be an Actuary is your ability to welcome new tasks at work every day and be productive while dealing with all those challenges.
The only requirement is Mathematics subject at 10+2 level to be able to start your professional Actuarial Journey!
When can you start your journey?
- Right after 12th, choosing an Actuarial Society and starting to give exams from there.
- Along with pursuing your graduation and giving Actuarial exams simultaneously.
- After Graduation; when you want to do a specialized professional course.
- Anytime during your professional life when you want to shift to this profession!
Actuarial Societies and Institutes: What are they?
You can start your actuarial journey with any of the following institutes :
- Institute and Faculty of Actuaries – UK
- Institute of Actuaries of India – India
- Casualty Actuarial Society. – US
(There are more institutes also, but we have listed the most common ones in India)
Each of these institutes has its own admission criteria. So it gives you the option to choose one that best serves your interests. You can choose to pursue IAI or IfoA courses. For IfoA, you need to score a higher grade compared to if you take IAI. The reason being that the marking of the IAI exams is lenient compared to IfOA. So a higher pass mark is required for IAI candidates
For instance, IAI ‘s entrance exam is called ACET which you need to clear before writing any other exams. While there are no such entrance exam criteria in IFoA and you can start giving actuarial exams right away!
What do Actuarial professionals do?
Actuarial professionals can make career in insurance companies in the following domains:
Tradition Fields for Actuaries
Traditionally, Actuaries work in insurance companies and consultancies to support crucial tasks in the following businesses:
Actuaries In Insurance sector
- Pricing new products that various companies launch,
- Reviewing the pricing strategy of existing products,
- Preparing premium charts for the company as per the level of risk that a policyholder carries,
- Reserving a set amount of money aside to pay for liabilities of the company as and when they arise.
- You can read more about it here.
Actuaries In Pensions Sector
- Preparing financial reports assessing the health of solvency of various products/pension funds by carrying out their valuations and reporting the same to companies, regulators.
- Communicating the results of their findings to the Stakeholders
- Explanation to the concerned authorities
- Executing a particular decision as recommended by the actuarial team.
- You can read more about the work of Actuaries in Pensions here
The actuarial teams are small in each company as there are specific tasks that these teams perform. So, a small team is capable of handling most of the work of the company due to their expertise.
But with Insurance sector penetration holding a large potential, there is a huge scope of Actuarial Science as a career in India and abroad! To understand how you can become an actuary and to learn about it more, along with the syllabus, follow here.
Non Tradition Fields for Actuaries
Nowadays, career prospects actuaries are moving to work in non-traditional areas. Future for actuaries hold dominance in the following domains:
- Risk analysis and consulting
- Investment Banking/ analysis
- Strategic planning
- Climate Change
- Banking: to analyze its investment portfolio
- Gaming industry
- Secondary data analytics
Actuaries have made a drift from their traditional Insurance specific work in the decade. While, a major component of core Insurance pricing and reserving work still remains under an Actuary’s area of specialization.
In many countries, the future for actuaries means employment in the finance ministry of the governments to assist them in Budget analysis, Demand forecasting, and revenue projections.
Cost of becoming an Actuary
Actuarial exams are a little costly depending on which institute you choose to pursue this profession from!
Also, there is a risk of not clearing the exam in its first attempt, so you have to be ready for multiple attempts. When we add annual membership renewal payments, cost of study materials for each exam, the costs involved can be very high.
In case you are looking for the costs associated to become an actuary from IAI or IFoA, please read this article here. This also provides you the comparative advantages of pursuing the course from these two institutes.
Actuarial Science Exam Pattern
To qualify as an Actuary, you have to pass exams or gain exemptions from them and earn work based skills.
There are four parts of the Actuarial curriculum (after changes in 2019 to the curriculum, For IAI / IFoA) :
All the Actuarial science exams are divided into four stages as follows :
- Core Principles – 7 Exams
- Core Practices – 3 Exams
- Specialist Principles – 2 Exams
- Specialist Advanced – 1 Exam
You can qualify as an Associate or a Fellow Actuary by following:
|To qualify as an Associate , you will be required to clear or gain an exemption from:|
· All core principles
· All core practices
Minimum of one year personal and professional development
|To qualify as a Fellow, you will be required to clear or gain exemptions from:|
· All core principles
· All core practices
· Minimum of three year personal and professional development
· Two specialist principles
· One specialist advanced
- Actuarial Mathematics (Core Mathematics – CM Series)
- Actuarial Statistics (Core Statistics – CS Series)
- Business (Core Business – CB)
Actuarial statistics (CS Exams)
|Subject Code||Paper Based Exam||Software based Exam|
|CS1||Actuarial Statistics||R Programming|
|CS2||Risk Modelling and Survival Analysis||R Programming|
CM and CS Series exams has 100 marks written exam and 100 marks software based exam. Final result gives 70% weightage to written exam and 30% to software based exam. One is a three hour and fifteen minutes and the other is a one hour and forty-five minutes computer-based exam.
- CS1 – Actuarial Statistics
It will include 3 hours and 15 minutes exam and 1 hour 45 minutes which would be computer based using R programming. You can take this exam either at home or in office.
- CS2 – Risk Modelling And Survival Analysis
It will include 3 hours and 15 minutes paper based assessment and 1 hour 45 minutes problem based assessment using R programming which would be computer based.
Actuarial Mathematics (CM Series)
|Subject Code||Paper Based Exam||Software based Exam|
|CM2||Loss Reserving and Financial Engineering||Excel|
- CM1 – Actuarial Mathematics
It will include 3 hours and 15 minutes paper based assessment to be taken in the examination center and 1 hour 45 minutes problem based assessment using excel which would be computer based. You can take this exam either at home or in office.
- CM2 – Financial Engineering And Loss Reserving
It will include 3 hours and 15 minutes paper based assessment and 1 hour 45 minutes problem based assessment using excel
Business (CB Series)
|Subject Code||Subject Detail|
CB module in Actuarial Syllabus consists of three subjects. CB1 and CB2 are written examinations of three hours fifteen minutes each. CB3 is an online examination of 2 hours duration.
- Actuarial Practice CP1
A 3 hour and 15 minutes paper followed by a planning time of 45 minutes before a 2 hour and 30 minutes paper. The first examination will have short answer requiring questions.
After this, longer case study type questions are there in the second exam which you get the time of 45 minutes. A writing time of 2 hours and 30 minutes is there.
- Modelling Practice CP2
It includes two papers- one a 3 hours and 15 minutes and the second, another 3 hour and 15 minutes. The first paper covers contents of CP2 while the second one is an additional module based on data analytics.
- Communication Practices CP3
3 hours of paper using MS Word and Excel on computer.
** The IFoA has moved to a system of Online examination amidst Coronavirus Pandemic for all subjects in the September 2020 diet. The details can be found here.
Each module exam time is for 3 hours and 15 minutes:
- SP0 – Master’s Thesis Level
- SP1 – Health And Care
- SP2 – Life Insurance
- SP4 – Pensions
- SP5 – Investment And Finance
- SP6 – Financial Derivatives
- SP7 – General Insurance: Reserving
- SP8 – General Insurance: Pricing
- SP9 – Enterprise Risk Management
To qualify as an Actuary, you need to pass any of the following actuarial science exams:
- SA0 Research dissertation
- SA1 Health and care
- SA2 Life insurance
- SA3 General insurance
- SA4 Pensions
- SA7 Investment And Finance
Their work entails communicating and explaining their findings to stakeholders. They give reasons why they need to execute certain decisions. They also work in risk analysis, banking industry, strategic planning, and investment analysis.
In today’s ever-changing world, Actuaries are entering non-traditional areas such as energy, climate change, weather forecasting, gaming industry. So a geek who has a love for programming languages can also try his hand at the Actuaries to see if they innovate the profession in any way possible.
It depends completely on your understanding and whichever you want to go for. I believe you should go for what interests you. Mostly, if you see your dream to become a fellow Actuary with all your heart, go for Maths, Stats, and Eco degree. However, if there is even a doubt about continuing, go for what you love.
We have covered here many graduation courses available in Actuarial Science
I have seen people from Bio, CS, Mechanical, Commerce, and literally from anywhere pursuing Actuarial and have proper jobs.
An entry level actuarial candidate can expect to earn somewhere between 3-7 lakhs in India. The earnings increase with an increase in experience, a number of papers cleared. A newly qualified actuary in India earns no less than 20 lac annually.
The earnings vary because of the experience, your domain and whether you are into core insurance or consulting business.
There are few universities where specifically Actuarial Science is taught. You may have a look at them here.
On average, 8-10 years! But you can always pace up or pace down as per your own long term commitments to grow in this profession.