Actuarial Science : Introduction
You must have seen, heard and read about companies which provide insurance cover to policy holders in case of any eventuality like accidents, hospitalization, household hazards, thefts or death and still others who look after investment schemes, employee benefits, retirement benefits and pension schemes. The policy holders are required to pay a fixed amount as installments at regular intervals and they get this money back in the event of any untoward incident or upon the maturity of the policy. Have you ever wondered who decides as to what amount of money a policy holder should pay as premium or what sum should be given as pension amount or returns by the company?.
Well, this exactly is what an actuary does. They calculate insurance risks and premiums. Technically speaking the job of an actuary is to assess the financial impact of an uncertain future event. Roughly speaking they look at the financial aspect of disasters, sarcastically speaking they are financial astrologers.
An actuary has to combine the skills of a statistician, economist and financier and employ techniques of probability, compound interest, law, marketing, management etc to predict the outcome of future contingencies and design solutions to lessen the financial severity of such events.
Actuarial profession was formally established in 1848, with the formation of Institute of Actuaries, London. In Pakistan, traditionally actuaries were found only in the life-insurance sector but now with the opening up of the economy they are wanted by non-life insurance companies, banks, stock exchanges, private and government agencies and this is one field where demand exceeds supply.
The work of an actuary involves a lot of number crunching and the nature of work is quite tedious, nevertheless it offers rewards in terms of intellectual challenge, status, job satisfaction and earnings. As their judgment is the basis of decision making for many business activities, their career paths often lead to upper management and executive positions.
Job Prospects & Career Options
Traditionally actuaries have been associated with insurance sector but in present scenario with the economy opening up actuaries are needed in sectors like non-life insurance, employee benefits, health insurance, asset-management, reinsurance, insurance broking houses and consulting companies.
The job of an actuary involves formulating policies and calculating the premium to be charged. For this they assemble and analyse data to estimate the probability of such eventualities as death, sickness, injury, disability and property loss and formulate a sum which is advantageous to the customer as well as the company. In areas where employee benefits and retirement/ pension schemes are dealt, the actuaries have to calculate the amount of money to be paid as contribution to pension fund in order to generate a certain income level post-retirement. Actuaries in administrative positions have to explain technical matters to executives, government officials, shareholders, policyholders. Actuaries working in tandem with government/ government agencies are responsible for designing social security and Medicare plans. Many of these professionals work as independent consultants providing actuarial advice to clients for a fee. Some also provide investment advice. Actuaries have scope for career growth not only in Pakistan but also in countries like USA, UK, Canada and Australia where they already have the necessary infrastructure and support system available.