The Complete Guide to Becoming An Actuary

Chapter 1: What Does a Actuary Actually Do?

Let's clear up the biggest misconception first: an actuary is not a mathematician sitting alone in a basement, solving abstract puzzles all day. You will use math constantly, but the math is a tool for a larger purpose. That purpose is predicting the financial cost of future events, and making sure the company you work for has enough money set aside to handle them. In plain terms, you are the person who puts a price tag on risk.

Core Responsibilities: The Two Sides of the Coin

Every actuary's job falls into one of two broad buckets: pricing or reserving. You will likely specialize in one, but you'll work with people on the other side constantly.

Pricing actuaries figure out how much to charge for a product. Let's say an insurance company wants to sell auto insurance to drivers in Texas. Your job as a pricing actuary is to estimate how many of those drivers will get into accidents, how severe those accidents will be, and what the repairs or medical bills will cost. You'll then recommend a premium - the amount each driver pays - that's high enough to cover all the claims plus expenses and profit, but low enough that customers actually buy it. It's a constant balancing act between competing in the market and not going bankrupt.

Reserving actuaries are the guardians of the money. Once policies are sold and claims start coming in, you need to calculate how much