What is an Actuary?

The majority of the time, when I tell people that I am studying Applied Mathematics and Statistics, they (after giving me a look of disgust) ask what career I hope to get into with a degree in Statistics. I tell them that I want to go into the actuarial field, and most of the time they (after giving me a confused look) say they have no idea what that is. Therefore, I figured I would write a post that gives an overview of the actuarial field and explains what an actuary does.

Definition

One dictionary definition of an actuary is “a statistician of an insurance company who calculates risks and premiums.” Another definition is “a person qualified to calculate commercial risks and probabilities involving uncertain future events, especially in such contexts as life assurance.” In my own words, an actuary is someone who uses statistics and probabilities in order to analyze risks associated with insurance, and makes recommendations based off their findings in order to make sure insurance companies are charging the proper amount for their premiums.

Education

Although I am majoring in Applied Statistics, which is more flexible with class selection, Bryant offers a specific major called Actuarial Mathematics. Other schools may call this field Actuarial Science. Actuarial math requires a base knowledge of calculus, a thorough understanding of statistics and probability, and a basic knowledge of how insurance works (for example: knowing what a deductible is, calculating a premium, etc.). It is also common to have a minor in Finance, since Finance uses statistics very frequently on the business side.

The Exams

One of the requirements for becoming a full time actuary and ultimately becoming an Fellow of the Society of Actuaries (FSA) is to pass a challenging and rigorous set of exams. There are ten base exams, and then you can choose to go down a certain track, such as life insurance or health insurance. Exams P/1 and FM/2 are typically the first exams taken. Exam P/1 is a probability exam that consists of 30 multiple choice questions. The pass rate is between 30 and 40 percent, and the amount of questions correctly answered usually is around 20. I have already attempted this exam once and was completely overwhelmed. I am currently studying to take it again in March.

My Internship

This summer I will be working in Boston as an actuarial intern for Blue Cross Blue Shield of Massachusetts. It is a full time, paid internship that will last between ten and twelve weeks from June through August. I look forward to the opportunity to gain some real world experience in the career that I am interested in. I will have the opportunity to live in Boston, work with other actuaries, participate in social events, and even do some community service. I would say that’s definitely an upgrade from my part time Dunkin Donuts job.

I hope this post was helpful in explaining the career that I hope to go into. Please like the post if you enjoyed reading, comment if you have feedback, and share/follow my blog.

Thanks,

Jeff