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The Actuarial Analyst Career – Everything You Want to Know
If you’re looking for a professional career that involves solving problems, working with tons of numbers, and analysing data, well, the becoming an actuarial analyst may just be the job for you!
You may not already know me, but I have been in an actuarial analyst position for the past 4 years. So, I have tons of knowledge about the career, what an actuarial analyst does, and how you can become one yourself.
Exactly what you were looking for? If so, keep reading!
What is an actuarial analyst?
Before we talk about what an actuarial analyst is, it’s important that you first understand what an actuary is. Because, an actuarial analyst is just the job title of someone that is working in a role as an actuary, but isn’t yet a fully qualified actuary.
Actuary Job Details
An actuary is someone that quantifies risk. They use statistics, probabilities, and financial concepts in order put a financial dollar value on an event that may or may not occur in the future.
They typically work in insurance companies determining how much to charge for insurance policies, or figuring out how much money an insurance company needs to save in order to keep their commitments to policyholders.
I’ve written all about what an actuary is and how one would go about quantifying risk in my other posts, so I won’t go too far into that here. You should read that post after you’re done here in order to get a better understanding of the actuarial profession overall.
The key thing to understand here is that becoming a fully qualified actuary takes many years. Usually between 7-10 years actually (more about that here). But anyone that is in the process of becoming an actuary can still work in the actuarial field (as an actuarial analyst) before they’re fully qualified.
Why work as an analyst?
This allows them to gain valuable work experience and industry knowledge well before they’re fully qualified. That’s important because fully qualified actuaries have a huge amount of responsibility and their job requires lots of professional judgement that can only be attained through years of experience.
So, sometimes the job title of an actuary that isn’t yet fully qualified is “actuarial analyst”. But this is just a job title. Another common job title (which means the exact same thing) is “actuarial associate”.
In some cases, the job title may just be “actuary”, “pricing actuary”, “valuation actuary” or something else along those lines. The job titles often vary from company to company.
What does an actuarial analyst do?
It’s most common for an actuarial analyst to be heavily involved in either the calculation of insurance premiums or reserves. Reserves are the industry term for the amount of assets (bonds, stocks, mortgages, private placements, etc.) that an insurance company needs to own in order to ensure that they are financially stable.
Since insurance contracts can last 50+ years, it’s important that insurance companies properly manage their cash flows to ensure they have enough money to pay any insurance claims that are made in the future. That’s why reserves are so important.
If you want to learn more about what an reserving actuarial analyst (also known as a valuation actuarial analyst) does, then take some time to watch my day-in-the-life video here.
An actuarial analyst isn’t a fully qualified actuary and is still gaining knowledge and expertise in their industry. Because of this, they often do much of the technical work required in order for their immediate manager (usually a fully qualified actuary) and upper management to make informed decisions.
By doing much of the technical work, an actuarial analyst is able to dig deep into the details and fully understand how actuarial processes work, how reported values are calculated, and they’ll often investigate inconsistencies in data.
Having this in-depth insight into the business workings allows the actuarial analyst to develop in their career and become prepared for the requirements of a fully-qualified actuary.
How do I become an actuarial analyst?
There are two primary requirements that are necessary in order to be an actuarial analyst. First, you need to get a Bachelor’s degree, and second you need to pass at least 1 actuarial exam.
Due to the nature of an actuarial analyst position, you need to be well-versed in topics such as finance, business, statistics and economics.
As a result, the first thing you’d need to do in order to become one is get a Bachelor’s degree. It doesn’t have to be a degree in one of the fields listed above, but it would be helpful in your career if it was. Actually, a degree technically isn’t required, but nearly all good candidates have one and an actuarial employer would be unlikely to hire someone without one.
Another option is to get your Bachelor’s degree in “actuarial science”. These courses are only offered in certain colleges and universities. They teach math concepts that are very specific to the actuarial field.
In order to become a fully qualified actuary, there is a series of 10 professional exams that one needs to pass. These exams cover all the mathematics that an actuary will need, as well as in-depth background knowledge of how insurance works and all the regulatory requirements surrounding it.
These exams take most people between 7 and 10 years to complete, which is the second reason that aspiring actuaries work as actuarial analysts until their fully qualified. (The first reason being that they need to develop their knowledge and expertise in the industry before they’ll be ready for the responsibility of being a fully qualified actuary)
Technically someone may be able to get an actuarial analyst position without having passed any actuarial exams, but it’s unlikely. Before hiring, employers like to see that an actuarial analyst job candidate has taken some initiative towards the actuarial career, and that they’re able to understand the mathematical concepts tested on the exams.
So although it is possible to become an actuarial analyst without any exams, it’s more likely that you would need to pass 2 or 3 exams before being considered for a position.
I’ve gone into tons of detail about the actuarial exam process here.
If you want to know all 8 steps required to become a fully qualified actuary in Canada or the U.S., you’ll find this post helpful.
How much money does an actuarial analyst make?
As an actuarial analyst you can expect to make somewhere between $44,000 and $160,000 annually. It depends on several factors, such as how many years of experience you have, how many actuarial exams you’ve passed and your geographical location.
When you’re just starting in your first job and only have one or two exams passed, you should expect a salary closer to the lower end of that range. Fortunately, your salary can increase fairly quickly just by passing exams.
Many insurance companies will automatically increase your salary for every exam you pass. Earlier exams may result in a salary increase of $2,000 or $3,000 while later (more difficult) exams may result in raises of $4,000 to $6,000 per year.
Some companies also offer first attempt bonuses for those that pass an exam on the first try. (I should note that the actuarial exam process is quite tough and often results in many failed exams along the way – persistence is important).
Salary After Several Years of Experience
Since there are 10 exams in total which can be passed at a rate of 1 or 2 per year, you can probably see how the salary can increase quite quickly if you put a lot of effort into passing exams.
Someone that has passed about 7 exams and has 5 or 6 years of experience will likely earn somewhere around $110,000 per year. This is quite variable though and depends on many different factors.
Actually, switching jobs every 3-5 years can also increase your salary fairly quickly due to raises that often occur at each transition.
Other Salary Considerations
As a full-time actuarial analyst, you’ll likely also get other employee benefits such as life insurance, health and dental insurance, disability insurance, paid study materials, paid study time, and 3-5 weeks of paid vacation time. The work itself isn’t very stressful as an analyst, and the work hours are typically very reasonable.
Actuarial Analyst vs Actuary. What’s the difference?
An actuarial analyst is often the job title of someone that is hasn’t yet passed all the actuarial exams and other requirements needed in order to be a fully qualified actuary. The job titles can be misleading though because an “actuary” job title doesn’t necessarily mean that you’re fully qualified either.
Job Responsibilities are the Main Difference
Aside from those requirements and the salary, there is a big difference in the job responsibilities of an actuarial analyst and a fully qualified actuary.
A fully-qualified actuary will often be using their knowledge and expertise in order to make critical business decisions. They’ll rely extensively on their past experiences in the industry, as well as concepts learned by studying for the later actuarial exams.
They’ll often use data summaries, industry reports, and company objectives in order to make decisions that are best for the company overall. To do this, an actuary will regularly collaborate with other actuaries in the company in order to get different perspectives, discover potential drawbacks and ideas.
Combining expertise in this way can be very powerful and reduces the possibility of overlooking potential issues that may arise in the future.
The Actuarial Analyst
On the other hand, an actuarial analyst often isn’t involved in as many of these high-level, decision-making collaborations. Instead, the analyst is typically responsible for collecting, analysing and summarizing all the data that is needed for the fully-qualified actuaries to make their decisions.
The actuaries need to take into consideration many different factors when making decisions, and quite often it requires large amounts of data to be summarized into numbers that can easily be interpreted. This is where the analyst comes in.
The analyst will put everything together for the actuaries that they report to. This gives the actuaries more time for higher-level thinking and decision making rather than being caught up in the weeds of all the data.
Analysts are often also responsible for the monthly, quarterly, and annual reporting processes that need to be completed by the actuarial departments. These are often fairly manual processes that require the analyst to fully understand the data, calculations and results.
Although analysts may not attend all the collaboration meetings, their inputs and perspectives are still very valuable. Oftentimes the actuary that they’re providing data to doesn’t know all the nuances of the data, calculations and results that are produced.
So, an analyst can make them aware of any potential problems that may arise in the actual implementation of business changes and decisions.
As may be expected, the job responsibilities of an actuarial analyst are much more technical than those of an actuary. But both are needed in order to allow the insurance company to function.
Actuarial Analyst vs Actuarial Assistant. Are they the same?
An actuarial analyst and an actuarial assistant are not the same job. An actuarial analyst does most of the technical work involving gathering, analysing, and interpreting data whereas an actuarial assistant often works alongside a team of actuarial analysts. The assistant will help do the tasks that need to be done but don’t require the expertise and skill set of the analysts.
In order to do their job, and actuarial analyst often needs to know how to write code to automate tasks. They also spend time formatting reports, cleaning data, and entering data into the computer.
But, these tasks aren’t really utilizing the specialized knowledge and analytical abilities of the analyst. So, it makes sense to have someone else do these tasks rather than the analyst. The analyst can then spend more time on understanding and interpreting results.
Having an actuarial assistant also makes sense from a financial standpoint because they don’t need to be paid as high of a salary as an actuarial analyst would.
Having actuarial assistants is a company choice. Some companies have them, and others don’t. But for someone looking to get into an actuarial analyst position, an actuarial assistant job can be very beneficial in making connections and learning about actuarial work.
Is the actuarial analyst career right for you?
Most people don’t go into the actuarial profession without the intention to become a fully qualified actuary. The actuarial analyst job is a stepping stone on that journey. So, really, you have to think about whether a career as an actuary is right for you.
If you decide to stop pursuing a career as an actuary and stay as an actuarial analyst, you’ll be limited in your career growth opportunities and it may be difficult to switch companies (to another actuarial analyst position). Your exam process and work ethic will play a big part in whether this is possible.
I’ve already written a post about it here but there are some specific personality traits and career goals that would be necessary in order to make this a viable career.
You need to be goal oriented and persistent.
Getting through all the actuarial exams can be quite a long and difficult process. You need to be able to persevere through failures, and enjoy the challenge that each exam brings.
If you’re goal oriented, you’ll strive to complete the exams quickly, and the reward of a raise will motivate you.
Love problem solving.
Actuarial work regularly involves figuring out solutions to problems and a lot of judgement. Typically there’s no right or wrong answer in this field so it’s an analyst’s job to determine creative solutions and assess the advantages and disadvantages of each.
Enjoy math and working with numbers (a lot).
Actuaries work with numbers every single day. Most of them love to dig into the details and figure out why trends are occurring. Actuaries use numbers and mathematical concepts in order to make business decisions that are in the best interest of the company and its policyholders.
If you’re not good at math or don’t enjoy it, a career as an actuary likely won’t interest you for very long.
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