If you would like to know what actuaries are, what they do and how to become one, have a look at the following information. If you still have questions about the qualification, go to the Actuarial Society of South Africa’s webpage.
What is an actuary?
An actuary is a business person who uses mathematical and statistical techniques in the solution of long-term financial problems. A typical example of such a problem is determining the premium of a life insurance policy. The insurer must provide guarantees and illustrations of policy benefits for decades to come.
Most actuaries are employed in the financial services sector, where their skills are utilised in financial decision-making. By analysing past events and assessing present risks, actuaries can estimate the effect of long term financial decisions. This allows companies and individuals to safeguard their future, confidently and at a fair price, in an ever-changing world. The application of actuarial science in various social and financial problems has resulted in actuaries sometimes being referred to as financial architects or social mathematicians.
What does an actuary do?
There are many other fields where the training of an actuary equips him or her in a unique way to handle financial problems, such as:
- Designing the benefits of medical schemes, the determination of contributions and financial management on a sound long-term basis;
- The calculation of the extent of compensation, e.g., to dependants where the breadwinner cannot continue to earn an income due to a motor vehicle accident;
- The evaluation of investments in shares, property and other transactions;
- The design and analysis of financial derivative instruments, e.g. options and futures;
- The determination of the reserves for outstanding claims of short term insurers as well as the development of statistical rating models;
- The development of computer models to simulate the financial performance of financial institutions such as insurers, banks and medical schemes;
- Long-term capital projects (e.g. the development and financing of a power station);
- The development of credit-risk rating models for banks for both corporate and retail credit risk;
- Modelling the financial impact of epidemics e.g. the HIV/AIDS epidemic in South Africa.
Many actuaries have careers in the more traditional fields of life insurance and retirement funds. However more and more actuaries are used in other fields due to the recognition they are earning for their unique analytical skills.
What are my opportunities for advancement?
Because of their unique skills, many actuaries are appointed to senior management positions after their initial role in solving problems with mathematical and statistical calculations and models. In these positions, they delegate the routine work to younger actuaries or actuarial students. It is also true that many of the bigger issues in the business world cannot be solved with mere clinical calculations. In these cases, actuaries’ wide experience, thorough training and own inherent skills have proven to make a unique contribution in solving these bigger issues.
In these top positions actuaries are also responsible for maintaining strict actuarial discipline, as well as managing aspects such as marketing, human resources, administration, investments and computer systems. The chief executive officers of most of the large life insurers are actuaries.
How many actuaries are there?
South Africa has approximately 1100 practising actuaries and 2000 actuarial students who have already completed their undergraduate studies.
How do I become an actuary?
To become an actuary you have to write, or be exempted from, a series of examinations through the Actuarial Society of South Africa or another professional actuarial body. Several Universities in South Africa, including UP, offer courses that give students the opportunity to gain exemption from some of these examinations.
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