If you are interested in becoming an actuary, you need to understand the process of attaining professional certification. Becoming a fully certified actuary can take up to a decade. Progress toward full professional certification is measured by how many exams you have passed. Actuary certification exams are very difficult, and as a required part of the career path, doing well on them is very important.
Professional Certification for Actuaries
There are two different professional societies that offer certification for actuaries. Which society you should seek certification through depends on your field of interest. Actuaries work primarily in the finance and insurance industry, which employs 70 percent of the occupation, the United States Bureau of Labor Statistics (BLS) reported. However, within this industry there are different areas of specialization. Specialization within the insurance and finance industry and the corresponding theoretical approach to analysis are the two biggest differences between actuarial certifying societies.
Certification through the Society of Actuaries (SOA) is for actuaries working in life insurance, health insurance and pension and retirement benefits planning. Generally, in these types of insurance, the “loss” outcome is inevitable. This loss can refer to the death of the policyholder in the case of life insurance, the need for medical services in the case of health insurance or retirement (and length of retirement) in the case of pensions. Actuaries working in life and health insurance don’t need to determine if the loss will happen so much as they try to calculate when it will happen and how much money in premiums the company should charge to cover this eventual cost.
Actuaries working in property and casualty insurance, which includes auto insurance, homeowners insurance, renters insurance and liability insurance, instead seek certification through the Casualty Actuarial Society (CAS). A fundamental difference between property and casualty insurance and health and life insurance is that the accidents, property damage and other incidents leading to a claim are not inevitable. In these fields of insurance, it is part of an actuary’s job to determine the likelihood of a loss happening.
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No matter which field of insurance you choose and which professional society you seek certification from, passing your exams will be the crux of your efforts at attaining certification. The SOA and the CAS have a lot of requirements in common, including mandatory seminars in professionalism, continuing education requirements and college coursework in finance, mathematical statistics and economics. Both societies require actuaries to earn passing scores on seven exams to reach the associate level of certification but also offer a more advanced fellowship level of certification. All in all, actuarial science students should expect to spend four to seven years working toward their associate certification and two to three additional years to achieve fellowship certification, the BLS reported.
One difference between the SOA and the CAS is that the CAS offers only one type of fellowship certification, while the SOA offers specialized fellowship certification tracks in group and health benefits, life and annuities, retirement benefits, finance/enterprise risk management and investments, according to the BLS.
Actuary Exams During College
You don’t have to wait to start the process of taking your actuarial exams until you graduate college. Students are typically encouraged to begin taking exams as early as their freshman or sophomore year of college.
What is the rush? Having at least one exam passed gives students a huge advantage when they begin looking for actuary internships and, later, their first actuary job out of college. Employers invest a good deal of time and resources training interns and new graduates on the job. Internships often lead to full-time permanent job offers upon graduating. They don’t want to waste their resources training students who are not seriously committed to the actuary career path as interns or hiring them in entry-level actuarial roles. Having successfully completed at least one exam as an undergraduate proves that you are up to the challenge of the difficult actuarial certification process. As you apply for internships, your history of passing exams will place you in higher demand than many of your classmates who have not yet taken the exams.
The first two actuary exams, the Probability Exam and the Financial Mathematics Exam, are the same for both societies. You don’t have to know prior to beginning the exam process which type of insurance or finance you want to work in, since most students figure this out through their internship experiences and the more specialized coursework they complete later in their actuarial science curriculum.
Another benefit to taking the exams early is that many actuarial science degree programs include an emphasis on preparation for the first exams. Students who choose not to take their exams while this material is fresh in their minds might struggle more to pass the tests.
Exams Over an Actuary’s Career
Actuaries must be certified. Even once you have completed your bachelor’s degree in actuarial science, passed your first exams and landed a job, you may not count as a full-fledged actuary yet. In fact, entry-level jobs in this occupation often have the title of actuarial analyst.
Continuing to move forward with certification is necessary to advance your actuary career. A combination of work experience, expanding job duties and passing scores on exams allow actuarial analysts to move from an entry-level salary in the $45,000 to $65,000 range to associate actuary roles with salaries closer to the $101,560 median wage. At the fellowship level, actuaries can earn as much as $150,000 to $250,000 per year.
Many employers pay for their actuaries’ certification exams. By the time you factor in the costs of the tests, study materials and time off from work to study, this benefit can easily add up to thousands of dollars per year that your employer is investing in your future.