What Math Do Actuaries Use?

Perhaps a job assessing risk for insurance companies or banks sounds appealing, but you're not sure if your math skills are adequate. Below, you'll learn about the kind of math classes an actuary takes in college and what kind of mathematics he or she will use on a regular basis at work.

Identification

An actuary is a risk management professional. Actuaries may help design insurance plans, including recommending premium rates and making sure companies are designating enough funds to pay out on claims. They do this by creating tables or other models that assess how likely a given action or behavior is to result in a claim. Actuaries may also manage credit and help create new investment tools for financial institutions. Actuaries in many fields may help set company policy to minimize risk for both the employer and employees.

Types

The main type of math an actuary uses in day-to-day work is applied statistics. This involves arithmetic, basic algebra and practical applications, such as using numbers and math to generate tables and graphs. Actuaries also have a knowledge of business, economics and corporate finance, all of which have mathematical components.

Function

In daily life, an actuary uses statistics and mathematics to calculate the risks of certain actions and create tables and computer models that provide information about risk management. For instance, an actuary in the finance industry may use statistics and math to decide whether a pension or retirement plan is sound. An actuary in the insurance industry may assign risk values to behaviors of policy-holders--such as riding a motorcycle or sky-diving. Those values are related to how likely that policy-holder is to make a claim on a life or health insurance policy.

Education

Most actuaries have at least a 4-year degree in mathematics, business, economics or statistics. Some colleges offer a specific degree in actuarial science. Someone going to school with plans to become an actuary will likely take classes in business, economics, corporate finance and statistics. As computer modeling takes over for traditional graphs and tables, computer skills are becoming more important as well. This may range from using spreadsheets and databases to basic computer programming. After graduation, many actuaries seek to become licensed. In order to be certified, an actuary must pass a series of exams sponsored by either the Society of Actuaries or the Casualty Actuarial Society.

Geography

According to the U.S. Bureau of Labor Statistics, about 6 out of 10 actuaries work in the insurance industry, while many others work with banks or related financial institutions. About 1 in 5 actuaries works for a technical or scientific consulting firm. Actuaries may work for many different kinds of corporations or for state and federal governments. However, the percentage employed by the government is low compared to those in other sectors.

Resources

• U.S. Bureau of Labor Statistics fact sheet on actuary jobs