To become an actuary, one must possess at least some of the following abilities:
- Strong mathematical skills, such as calculus, statistics, and probability
- Problem-solving ability, strong analytical skills, and project management skills
- Good business knowledge, including finance, accounting, and economics
- Communication skills, both oral and written
- Computational skills, such as spreadsheets, statistical software, databases, and programming languages
An actuary is a professional with the following personal characteristics:
- Strong personal motivation
- Creativity
- Independence
- Ability to work collaboratively with others
- Strong ambition
The above personality traits are among the minimum qualities that prospective actuaries should have in order to become good actuaries. In addition, to become a highly capable actuary, a candidate should have a passion for solving complex problems, enjoy writing and communicating with others, be able to work effectively both independently and in teams, and have an interest in following developments in social and political dynamics, as well as being a self-motivated achiever.
The scope of actuarial services includes:
- preparing actuarial statements related to insurance products;
- determining liabilities in the form of reserves for insurance companies, pension funds, social security programs, and other companies that require the use of actuarial techniques;
- providing opinions on liability calculations that require the use of actuarial techniques; and
- other actuarial services in accordance with SPA and applicable laws and regulations.
Based on the scope of their work, actuaries may be classified into several types, although in practice their areas of work depend greatly on the organization or institution in which they are employed. In some places, the distinctions among the categories below may be more fluid, while in others the scope may be even broader.
Valuation Actuary
Reserves are one of the most important components of a company’s long-term financial stability. Because insurance companies operate in the presence of uncertainty, both in timing and in amount, they must set aside part of their assets so that, with the highest possible likelihood, these assets will be sufficient to cover future claim payments and expenses. The task of a valuation actuary is to determine accurately the amount of assets that must be reserved.
Pricing Actuary
A pricing actuary is responsible for determining the amount of money that a company is likely to collect for a particular product. Such products may include life insurance, which promises a specified payment upon death; annuities, which promise periodic payments over a certain period as long as the policyholder is alive; or health insurance products that reimburse medical expenses, among others. Pricing actuaries usually use the same assumptions as valuation actuaries when determining insurance premiums, in order to maintain consistency.
Consultant
Consulting actuaries are primarily engaged in providing professional actuarial consulting services. The types of services offered may include the valuation of insurance product reserves, determination of contribution amounts for pension benefits in funded pension programs, pension plan design, and determination of employee benefit obligations in accordance with PSAK 24 for financial reporting, among others.
Pension Actuary
Actuaries working in funded pension programs or pension fund companies are heavily involved in the pricing and valuation of pension products and old-age benefits. Their work includes, for example, calculating liabilities for future policy benefits, contribution projections, claim projections, funding adequacy projections, unfunded past service liabilities, pension benefit calculations, and so on.
Financial Actuary
With the rapid development of the financial sector and technology, some countries have begun to see demand for actuaries working in companies outside the insurance and pension industries. One example is fintech companies. The scope of work for actuaries in this field includes building, analyzing, and testing models for internet-based credit card systems in order to minimize risk and improve investment returns.