Definition of actuary
From Latin actuarius ("copyist, account-keeper"), from actus ("public business")
actuary (plural actuaries)
- (dated, 16th-19th century) registrar, clerk.
- A professional who calculates financial values associated with uncertain events subject to risk, such as insurance premiums or pension contributions.
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries have a deep understanding of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms (Trowbridge 1989, p. 7).
Actuaries evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events. Since many events, such as death, cannot be avoided, it is helpful to take measures to minimize their financial impact when they occur. These risks can affect both sides of the balance sheet, and require asset management, liability management, and valuation skills. Analytical skills, business knowledge and understanding of human behavior and the vagaries of information systems are required to design and manage programs that control risk (Be An Actuary 2005).
In 2002 and 2009, a Wall Street Journal survey on the best jobs in the United States listed actuary as the second best job, while in previous editions of the list, actuaries had been the top rated job (Lee 2002), (Needleman 2009). The survey used six key criteria to rank jobs: environment, income, employment outlook, physical demands, security and stress. A similar survey by U.S. News & World Report in 2006 included actuaries among the 25 Best Professions that it expects will be in great demand in the future (Nemko 2006).
Actuaries' insurance disciplines may be classified as life; health; pensions, annuities, and asset management; social welfare programs; property; casualty; general insurance; and reinsurance. Life, health, and pension actuaries deal with mortality risk, morbidity, and consumer choice regarding the ongoing utilization of drugs and medical services risk, and investment risk. Products prominent in their work include life insurance, annuities, pensions, mortgage and credit insurance, short and long term disability, and medical, dental, health savings accounts and long term care insurance. In addition to these risks, social insurance programs are greatly influenced by public opinion, politics, budget constraints, changing demographics and other factors such as medical technology, inflation and cost of living considerations (Bureau of Labor Statistics 2008).
Casualty actuaries, also known as non-life or general insurance actuaries, deal with catastrophic, unnatural risks that can occur to people or property. Products prominent in their work include auto insurance, homeowners insurance, commercial property insurance, workers' compensation, title insurance, malpractice insurance, products liability insurance, directors and officers liability insurance, environmental and marine insurance, terrorism insurance and other types of liability insurance. Reinsurance products have to accommodate all of the previously mentioned products, and in addition have to reflect properly the increasing long term risks associated with climate change, cultural litigiousness, acts of war, terrorism and politics (Bureau of Labor Statistics 2008).
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