HOW ACTUARIES SEE THE WORLD
Joint Math Meeting, January 5, 2012
Emily Kessler, FSA, EA, MAAA, FCA
Society of Actuaries
WHAT IS AN ACTUARY?
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PART SUPER-HERO. PART FORTUNE-TELLER.
PART TRUSTED ADVISOR.
ACTUARIES ARE EXPERTS IN:
• Evaluating the likelihood of future events—using
numbers, not crystal balls.
• Designing creative ways to reduce the likelihood of
undesirable events.
• Decreasing the impact of undesirable events that
do occur.
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WHAT DO ACTUARIES DO?
WE MANAGE RISK
• Actuaries use a combination of strong analytical
skills, business knowledge, and understanding of
human behavior to manage today's complex risks
facing our society.
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WHAT DOES RISK
HAVE TO DO WITH IT?
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THE FUTURE IS UNCERTAIN AND
FULL OF RISK.
WHAT IS RISK?
• Risk is the chance that an undesirable
event will occur, but risk is also opportunity.
That's where we come in.
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YOUR TURN!
It’s your turn to
be the actuary.
Try your hand at
forecasting the
future with these
sample problems.
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AUTO PRICING 101
BACKGROUND:
• ABC Insurance Company
insures 1,000 eighteen year
old drivers.
• Assume 300 of the 1,000
have accidents within a
year.
• Assume the average repair
cost for each accident is
$500.
QUESTION: WHAT IS THE
MINIMUM PREMIUM THAT
ABC SHOULD CHARGE AN
18-YEAR OLD FOR A 1YEAR CAR INSURANCE
POLICY?
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AUTO PRICING
101 101
AUTO
PRICING
SOLUTION:
• At a minimum, the total
premiums collected must
equal the total cost of the
accidents.
• Estimated cost of the
accidents:
300 × $500 = $150,000
• Minimum premium for each
driver:
$150,000 ÷ 1,000 = $150
CHALLENGE: SHOULD
ABC CHARGE MORE
THAN THIS PREMIUM? IF
SO, WHY?
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AUTO PRICING
101 101
AUTO
PRICING
BACKGROUND:
• Assume 400 of the drivers
are males and 600 are
females.
• Assume 200 out of 300 of
accidents will involve males,
and the remaining 100
accidents will involve
females.
QUESTION: WHAT
PREMIUM SHOULD BE
CHARGED FOR THE
MALES AND THE
FEMALES? SHOULD IT
BE THE SAME?
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AUTO PRICING 101
SOLUTION:
• Total males’ premium:
200 accidents × $500 per
accident = $100,000
• Each male’s premium:
$100,000 ÷ 400 males =
$250
• Total females’ premium:
100 accidents × $500 per
accident = $50,000
• Each female’s premium:
$50,000 ÷ 600 females =
$83.33
THE MALE’S PREMIUM
SHOULD BE THREE
TIMES THE FEMALE’S
PREMIUMS!
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WHY DID YOU
BECOME AN
ACTUARY?
WHAT’S GREAT
ABOUT THE
PROFESSION?
LIFE AS AN
ACTUARY…
WHAT IT’S LIKE …
WHERE DO
ACTUARIES
WORK?
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NOT JUST INSURANCE.
Although insurance companies can’t function without actuaries,
that’s not the only place you’ll find us.
•
•
•
•
•
•
•
•
•
•
•
Consulting
The Government
Private corporations
Colleges and universities
Banks and investment firms
Public accounting firms
Labor unions
Rating bureaus
Fraternal organizations
Energy/Utilities
Transportation
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WHAT’S GREAT ABOUT THE PROFESSION?
TOP-RANKED JOB
• No matter the source, actuary is consistently rated as one of the
best jobs. US News and World Report, the Jobs Rated Almanac,
CNN Money, and others all agree.
GREAT SALARY
• Actuaries are well compensated. Experienced fellows have the
potential to earn from $150,000 to $250,000 (USD) annually, and
many actuaries earn more than that.
• Actuaries earn while they learn. An entry level actuary with 1-2
exams passed will bring in a starting salary of $45-$65,000
(USD) depending on region.
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WHAT’S GREAT ABOUT THE PROFESSION?
JOB SECURITY:
• Actuaries enjoy certainty in uncertain times. We're always in
demand as the world confronts risk.
LIFE IN BALANCE:
• More than a fulfilling career, being an actuary allows you to
maintain a low-stress, highly sought-after work/life balance.
MAKE AN IMPACT:
• Actuaries manage today's complex risks facing our society.
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WHERE WILL I LIVE?
GEOGRAPHIC
REGION
GEOGRAPHIC
REGION
CAS
MEMBERSHIP (%)
SOA
MEMBERSHIP (%)
Eastern U.S.
41.2
Eastern U.S.
26.5
Central U.S.
23.5
Central U.S.
21.7
Southern U.S.
Southern U.S.
WHAT
IS AN ACTUARY
11.2
Western U.S.
10.1
Canada
7.8
International
members
5.9
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16.2
Western U.S.
9.2
Canadian and
International
members
26.4
WHY DID YOU BECOME AN ACTUARY?
• How I found out about the profession
• Why I became an actuary
• What I like best about being an actuary
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LET’S COVER SOME
BASICS…
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HOW DO I GET STARTED?
If you want to be an actuary, start preparing now!
•
Follow a college preparatory curriculum of high school classes.
•
Take math classes every year.
•
Take advantage of Advanced Placement (AP) and advanced
courses such as statistics and calculus.
•
Enroll in computer science courses to develop your computer skills.
•
Explore colleges and universities that offer actuarial science
curriculum.
•
Look into scholarship opportunities.
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WHAT ABOUT COLLEGE?
• Among the college majors you might choose: actuarial science,
math, statistics, economics, business and finance.
• Your equation for success should include the following courses:
finance
microeconomics and macroeconomics
calculus
linear algebra
calculus-based probability and statistics
actuarial science courses, as available
computer science courses
business courses, such as marketing
communication courses, such as speech, business writing and
technical writing
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HOW DO I STAND OUT?
While you’re hitting the books, don’t forget to
• Apply for scholarships. There are a number of scholarships open
exclusively to actuarial students.
• Look for internship opportunities. An internship will give you a head
start on an actuarial career with relevant work experience.
• Get involved with your actuarial or math club, if your school has one.
• Talk to an actuary.
• Start taking exams!
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BECOMING AN
ACTUARY…
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BECOMING AN ACTUARY
Actuaries earn credentials to be able to practice
• Life/Health/Pension (Society of Actuaries)
• Associate of the Society of Actuaries (ASA)
• Fellow of the Society of Actuaries (FSA)
• Chartered Enterprise Risk Analyst (CERA)
• Property/Casualty (Casualty Actuarial Society)
• Associate of the Casualty Actuarial Society (ACAS)
• Fellow of the Casualty Actuarial Society (FCAS)
• Coming soon: CERA
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BECOMING AN ASSOCIATE (SOA)
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BECOMING A CERA (SOA)
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*(effective July 2012)
BECOMING A FELLOW (SOA)
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BECOMING AN ASSOCIATE (CAS)
Exam 1/P*
Exam 5
Exam 2/FM*
Exam 6
Exam 3F/MFE*
Online Course 1
Exam 3L
Online Course 2
CAS Course on
Professionalism
Exam 4/C*
VEE* (Economics, Corporate Finance, Applied Statistics)
*Shared with SOA
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BECOMING A FELLOW (CAS)
Exam 7
ACAS +
Exam 8
Exam 9
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FIND OUT MORE…
beanactuary.org
Like us on Facebook
riskisopportunity.net
Follow us:
DIVERSITY
PROGRAMS…
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TO DO THIS, WE ACTIVELY SUPPORT:
• Summer actuarial programs for high school students so students
can get comfortable with the profession.
• Reimbursements for qualified minority students who pass either
of their first two exams.
• Mentoring opportunities for those who want more guidance on
what it takes to be a professional in today’s economy.
• Scholarship opportunities are available from the Actuarial
Foundation and other organizations.
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QUESTIONS?
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