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The difference between actuaries and underwriters is often misunderstood by anyone not in the insurance industry. Actually, even some people in the insurance industry still get confused!

So, what’s the difference between an actuary and an underwriter?

The difference between actuaries and underwriters is that they perform different functions within an insurance company. Actuaries use data to determine the premium that should be charged for anyone that fits into a given bucket. Underwriters decide which bucket an insurance applicants fit into.

But that’s very general, so below I’ll be going into more detail about differences in their work, as well as differences in qualification requirements and salary.

Differences in Work

First off, it’s important to note that the work underwriters do is most similar to that of pricing actuaries. Pricing actuaries are the type of actuary that I’m going to be referring to in this post.

Pricing actuaries and valuation actuaries are the two most common types of actuaries. But the job that valuation actuaries are responsible for is completely unrelated to that of underwriters.

Work that Pricing Actuaries Do

You can think of actuarial work as being very general when compared to the work of underwriters.

Actuaries are responsible for determining the appropriate premium to charge depending on different individual characteristics, such as gender, age, income, and geographical location. These are called “rating factors” because they all impact an insurance applicant’s premium.

But actuaries don’t look at the specifics of each person and determine the correct premium to charge them. Instead, actuaries create rate tables for each rating factor.

The numbers in the rate tables are typically multiplicative factors that will be multiplied by a base premium in order to arrive at the applicant’s final premium.

A Rate Table Example

Let’s look at an example of actuarial work for whole life insurance.

Assume that the base premium is $700 annually. We will consider 3 different rating factors – gender, age, and annual income.
Here are the rate tables for each of the rating factors:

Age Rate
30 1.20
40 1.35
50 1.55


Gender Rate
M 1.30
F 1.50


Annual Income
Income Rate
30K 1.80
90K 1.65
140K 1.40

Work that Underwriters Do

An actuary would have worked to determine these rating tables and the base premium. They’d provide these tables to the underwriting area. Keep reading below to find out how the underwriter would use these tables in their work.

Underwriters, on the other hand, work with specific individuals.

They’ll be the ones to receive an applicant’s application for insurance. It’ll include everything that the underwriter needs to know in order to determine whether or not the applicant is insurable.

The application will include things like age, gender, annual income and geographical location, but it may also include more detail such as medical history (for life insurance) or driving history (for car insurance).

Then, based on certain criteria within the application, the underwriter will determine whether or not the applicant is insurable or not. If he/she is then they’ll figure out the appropriate base premium, and multiply it by the appropriate factors in the rate tables (that the actuaries create).

Simplified Underwriting Example

We’ll consider a FEMALE applicant, AGE 40, and an INCOME of 30K. Assume the base premium is $400 per month.

Since the rate (in the rate tables above) for FEMALE is 1.5, the rate for AGE 40 is 1.35, and the rate for INCOME of 30K is 1.8, the final premium based on the applicant’s application is
$400 x 1.5 x 1.35 x 1.8 = 1458.

Differences in Qualifications

Actuaries and underwriters have quite different qualifications. The biggest difference is that actuaries are required to pass 10 exams to become fully qualified, whereas underwriters need to pass several courses and exams in order to become credentialed.

Actuary Qualifications

A bachelor’s degree is required to start off as an actuary. Usually it’s in math, statistics, or actuarial science.

In addition, there are 10 professional examinations that need to be passed in order to become fully qualified. You can work as an actuary even before you’ve passed all the exams but usually a minimum of 2-3 exams are required to get a job.

If you’re interested in learning more about the actuarial exam process this would be a good place to start.

It’s very unlikely for an actuary to become fully qualified (by passing all 10 exams) without having any experience beforehand. Most insurance companies would be hesitant to hire someone in that situation due to the high pay they’d be expecting but the low experience.

Underwriter Qualifications

A bachelor’s degree is generally required to become an underwriter as well. Typically it’s a degree in finance, business, economics and/or math.

There are many optional courses/exams that underwriters can take in order to become better certified, but they aren’t required for all positions. Generally they are required to move up to senior-level positions though.

A credential as a Chartered Property Casualty Underwriter is highly respected. It requires the candidate to pass 8 courses and gain 3 years of experience.

Differences in Salary

The salary difference between underwriters and actuaries is quite substantial. Roughly speaking, actuaries make between 25% to 200% more, depending on experience and qualifications.

Actuary Salary

An actuary generally starts their career with a salary between $50K to $70K depending on location, company, and the number of exams passed. An excellent source for actuarial salary information is the DW Simpson Salary Survey.

Later in their career, it’s typical to earn $150K – $500K+ annually. In these years there is a very wide salary range because of the various different career decisions that can be made.

For example, an actuary may choose to stay in a non-management position even after they’ve become fully qualified. Other actuaries decide to move up to upper management positions, like Chief Finance Officer (CFO), Chief Executive Officer (CEO), or something similar.

The chart below shows a reasonable expectation of how an actuary’s salary may progress as more experience is gained and more exams are passed. All the assumptions used to create this chart can be found in my other actuary vs underwriter salary comparison here.

Yr 1 Yr 2-3 Yr 4-5 Yr 6-7 Yr 8-10 Yr 11-15 Yr 16-20 Yr 20+
Approx Salary 58K 78K 103K 135K 170K 200K 210K 215K

Underwriter Salary

An underwriter will typically start their career with a salary between $40K to $60K. There isn’t as much detail available about underwriter salaries as there are for actuary salaries. The best source I found was this.

Later in their career, between $60K to $80K would be a reasonable expectation. Like I mentioned above though, certification is typically required in order to be qualified for senior underwriting positions so without that the salary would be lower.

The chart below shows a reasonable expectation of how an underwriter’s salary may progress as more experience is gained. All the assumptions used to create this chart can be found in my other actuary vs underwriter salary comparison here.

Yr 1 Yr 2-3 Yr 4-5 Yr 6-7 Yr 8-10 Yr 11-15 Yr 16-20 Yr 20+
Approx Salary 45K 48K 51K 53K 55K 58K 64K 72K

Is underwriting good experience for an aspiring actuary?

If you’re considering becoming an actuary but are having trouble finding an actuarial internship, then an underwriting internship (or job) would be excellent experience to add to your resume.

An internship or job as an underwriter will teach you the fundamental concepts about insurance that you’ll need to know for an actuarial position. You may learn a bit about the pricing process too, and how the work of actuaries is used by other parts of the company.

Pricing actuaries, in particular, tend to work fairly closely with underwriters, so you may get the opportunity to connect and network too.

Can an underwriter become an actuary?

Yes, an underwriter can become an actuary. Experience in underwriting will be a valuable asset when you’re looking for an actuarial job. The first step in making this switch would be to pass an actuarial exam. Here is everything you need to know about the exams.

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