Areas of Practice
HEALTH INSURANCE
The healthcare industry poses many opportunities for actuaries and actuarial students. Actuaries traditionally work in the Pricing, Financial Reporting, Reserving, and Planning Units. Actuaries can also work in non-traditional areas such as Underwriting, Mergers and Acquisitions, Product Development and Marketing. Common products managed by healthcare actuaries included Health Maintenance Organization (HMO), Point Of Service (POS), Preferred Provider Organization (PPO), Indemnity, Pharmacy, Dental, Mental Health, Substance Abuse, and Stop Loss. Actuaries are primarily located in company headquarters, though a few designated actuaries find finance positions in field locations. Actuaries’ main job in the healthcare industry is to ensure that health risk and cost are appropriately accounted for (priced) and understood throughout the organization by both financial and non-financial employees. Actuaries are also charged with evaluating business decisions, which have an impact on the financial outlook of the organization. The main tools of actuaries are analytical thinking, computerized spreadsheets, and customized pricing and financial reporting programs and software.
For questions about Actuaries in the Healthcare Industry feel free to send an email to IABA at iaba@blackactuaries.org
LIFE INSURANCE
The financial services industry holds tremendous promise for actuaries. Actuaries are trained in the identification and evaluation of risks. In addition, a good actuary has excellent communications and a deep understanding of business/economic issues. Generally, the skills an actuary brings to the table are useful in virtually all areas of a financial services organization, including the following:
- Product Development
- Distribution Strategy
- Risk Management
- Asset/Liability Management
- Capital Allocation Issues
- Financial Reporting
Actuaries working in financial services are employed by insurance companies, banks, investment firms, consulting firms and government agencies. Actuaries are the Chief Executive Officers of several large insurance companies. Actuaries work at prestigious Wall Street firms like Morgan Stanley, and for large government organizations like the Federal Reserve Bank.
For questions about Actuaries in the Life Insurance Industry feel free to send an email to IABA at iaba@blackactuaries.org
PROPERTY/CASUALTY INSURANCE
Actuaries apply their analytical expertise to a variety of products and services
within the Property/Casualty insurance market where coverages are as diverse
as physical damage insurance for personal automobiles and liability insurance
for medical professionals. The types of insured losses that can occur under
many Property/Casualty coverages can vary significantly and can be affected
by many factors including economic inflation, state tort laws, our society’s
propensity to sue and even technological advances. This requires actuaries
to be familiar with a wide range of factors that affect insurance cost. Property/Casualty
actuaries may specialize in particular market segments such as Personal Insurance,
i.e., insurance sold to individual consumers or Commercial Insurance, i.e.,
insurance sold to businesses. Specialization may also differentiate between
insurance covering Property, such as personal goods or buildings, and insurance
covering Liability, where someone’s actions cause damage to a third party.
Other actuaries may be more involved in financial analysis. Regardless of the
area of specialization, the common denominator across actuarial jobs is the
application of analytical thinking to making sound business decisions.
For questions about Actuaries in the Property/Casualty Insurance Industry feel free to send an email to IABA at iaba@blackactuaries.org
PENSION
The pension area of practice is one of the longest standing practice areas
within the actuarial profession. Pension actuaries are primarily located in
the consulting industry and work for corporations who sponsor pension plans.
The main tasks of pension actuaries are ensuring that their clients are in
compliance with the law, calculating the employer’s liability for the pension
plan and determining contributions to be made to the plan. Pension actuaries
consult on a variety of human resource issues such as employee retention and
overall benefit packages. They also provide calculations of monthly pension
amounts to be paid to retirees. Pension actuaries perform annual valuations
to determine the employer’s liability for the pension plan. The valuation includes
two main concepts: funding and expense. For funding, the valuation projects
an employee’s liabilities and calculates the amount to set aside to meet future
obligations. For expense, pension valuations determine the cost of the pension
plan on a yearly basis. The cost/income is reported on the employer’s financial
statements. In addition, pension actuaries also consult on mergers and acquisitions
(M&A) and asset liability management (ALM). Overall, pension actuaries
must be very knowledgeable about pension laws, employee benefit issues and
the economy. An entry-level pension actuary can expect to be involved in calculating
monthly benefits for retirees, preparing data for annual valuations and filing
government forms on behalf of the plan sponsor. More experienced pension actuaries
communicate the results from the annual valuation to their clients and help
them align their benefit programs with the company’s goal.
For questions about Actuaries in the Pension Industry feel free to send an email to IABA at iaba@blackactuaries.org