Career Description – Understanding The Actuarial Science Profession

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Overview of Actuarial Science

  • A strong background in mathematics is essential; actuaries are subjected to a series of examinations to gain full professional status.
  • More of the qualified actuaries in Kenya are employed in the insurance industry.
  • The big four professional services firms have also become a lucrative employment ground for actuary graduates
  • Employment opportunities are expected to remain good for those who qualify, because the stringent qualifying examination system restricts the number of candidates.

Nature of work for Actuaries:

  • Through their knowledge of statistics, finance, and business, actuaries assess the risk of events occurring and help fashion policies that minimize risk and its financial impact on corporations and clients.
  • One of the main functions of actuaries is to help businesses assess the risk of certain events occurring and formulate policies that minimize the cost of that risk. For this reason, actuaries are essential to the insurance industry.
  • Actuaries assemble and analyze data to estimate the probability and likely cost of an event such as death, sickness, injury, disability, or loss of property.
  • Actuaries also address financial questions, including those involving the level of pension contributions required to produce a certain retirement income level and the way in which a company should invest resources to maximize return on investments in light of potential risk.
  • Using their broad knowledge of statistics, finance, and business, actuaries help design insurance policies, pension plans, and other financial strategies in a manner which will help ensure that the plans are maintained on a sound financial basis.
  • Most actuaries are employed in the insurance industry, specializing in either life and health insurance or property and casualty insurance.
  • They produce probability tables or use more sophisticated dynamic modelling techniques that determine the likelihood that a potential event will generate a claim.
  • From these tables, they estimate the amount a company can expect to pay in claims.
  • Actuaries ensure that the price, or premium, charged for such insurance will enable the company to cover claims and other expenses. This premium must be profitable, yet competitive with other insurance companies.
  • Within the life and health insurance fields, actuaries help to develop long-term-care insurance and annuity policies, the latter a growing investment tool for many individuals.
  • Actuaries in other financial service industries manage credit and help price corporate security offerings.
  • They also devise new investment tools to help their firms compete with other financial service companies.
  • Pension actuaries work under the provisions of the Employee Retirement Benefits Act (RBA) to evaluate pension plans covered by that Act and report on the plans and financial soundness.
  • Actuaries working for the government help manage social programs such as Social Security and Medicare.
  • Actuaries may help determine company policy and may need to explain complex technical matters to company executives, government officials, shareholders, policyholders, or the public in general.

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  • They may testify before public agencies on proposed legislation that affects their businesses or explain changes in contract provisions to customers.
  • They also may help companies develop plans to enter new lines of business or new geographic markets by forecasting demand in competitive settings.
  • Consulting actuaries provide advice to clients on a contract basis. The duties of most consulting actuaries are similar to those of other actuaries. For example, some may evaluate company pension plans by calculating the future value of employee and employer contributions and determining whether the amounts are sufficient to meet the future needs of retirees.
  • Others help companies reduce their insurance costs by lowering the level of risk the companies take on.
  • Consulting actuaries sometimes testify in court regarding the value of potential lifetime earnings of a person who is disabled or killed in an accident, the current value of future pension benefits (in divorce cases), or other values arrived at by complex calculations.
  • Some actuaries work in reinsurance, a field in which one insurance company arranges to share a large prospective liability policy with another insurance company in exchange for a percentage of the premium.

Specific tasks and duties for Actuaries:

  • Ascertain premium rates required and cash reserves and liabilities necessary to ensure payment of future benefits.
  • Analyze statistical information to estimate mortality, accident, sickness, disability, and retirement rates.
  • Design, review and help administer insurance, annuity and pension plans, determining financial soundness and calculating premiums.
  • Collaborate with programmers, underwriters, accounts, claims experts, and senior management to help companies develop plans for new lines of business or improving existing business.
  • Determine or help determine company policy, and explain complex technical matters to company executives, government officials, shareholders, policyholders, and/or the public.
  • Testify before public agencies on proposed legislation affecting businesses.
  • Provide advice to clients on a contract basis, working as a consultant.
  • Testify in court as expert witness or to provide legal evidence on matters such as the value of potential lifetime earnings of a person who is disabled or killed in an accident.
  • Construct probability tables for events such as fires, natural disasters, and unemployment, based on analysis of statistical data and other pertinent information.
  • Manage credit and help price corporate security offerings.
  • Provide expertise to help financial institutions manage risks and maximize returns associated with investment products or credit offerings.
  • Determine equitable basis for distributing surplus earnings under participating insurance and annuity contracts in mutual companies.
  • Explain changes in contract provisions to customers.

Work Environment for Actuaries in Kenya:

  • Actuaries have office desk jobs. They often work at least 40 hours a week.
  • Some actuaries—particularly consulting actuaries have to travel to meet with clients.
  • Consulting actuaries also may experience more erratic employment and be expected to work more than 40 hours per week.

Education and training for Actuaries in Kenya

  • Actuaries need a strong educational foundation in mathematics, statistics, and general business.
  • They must have a bachelor’s degree and are required to pass a series of professional exams in order to become certified.
  • A number of Kenyan universities offer the actuarial science program. Internships to gain experience in the profession prior to graduation is key.
  • Some companies hire applicants without specifying a major, provided that the applicant has a working knowledge of mathematics—including calculus, probability, and statistics—and has demonstrated this knowledge by passing one or two actuarial exams required for professional designation.
  • Beginning actuaries often rotate among different jobs in an organization, such as marketing, underwriting, financial reporting and product development, to learn various actuarial operations and phases of insurance work.
  • At first, they prepare data for actuarial projects or perform other simple tasks. As they gain experience, actuaries may supervise clerks, prepare correspondence, draft reports, and conduct research.
  • They may move from one company to another early in their careers as they advance to higher positions.
  • Knowledge of mathematics, computer skills are becoming increasingly important.
  • Actuaries should be able to develop and use spreadsheets and databases, as well as standard statistical analysis software.
  • Knowledge of computer programming languages, such as Visual Basic for Applications, SAS, or SQL, is also useful.
  • Many candidates find work as an actuary immediately after graduation and work through the certification process while gaining some experience in the field. In fact, many employers pay the examination fees and provide their employees time to study. As actuaries pass exams, they are often rewarded with a pay increase.
  • Despite the fact that employers are supportive during the exam process, home study is necessary and many actuaries study for months to prepare for each exam.

Society of Actuaries

  • Professional designations in the Society are earned by completing a rigorous system of examinations. It is common for actuarial students to work full time in the profession while studying for the exams.
  • The first five (“preliminary”) exams consist mostly of core mathematics related to actuarial science including probability, statistics, interest theory, life contingencies, and risk models.
  • A series of online learning modules, called the Fundamentals of Actuarial Practice (FAP), are intended to be taken after the preliminary exams. They cover real-world topics such as insurance and professionalism with readings, case studies and projects.
  • The preliminary exams and FAP modules comprise the majority of the education requirement for the ASA designation.
  • Upper-level exam topics for the FSA designation include plan design, risk classification, enterprise risk management, ratemaking and valuation.
  • Three fellowship exams are taken in one of six specialization tracks chosen by the candidate – Finance & Enterprise Risk Management, Investments, Individual Life Insurance & Annuities, Retirement Benefits, Group & Health Insurance, or General Insurance.
  • Candidates completing the Finance & Enterprise Risk Management track will also earn the CERA designation.
  • Candidates in any of the other five tracks have the option of replacing their track-specific Enterprise Risk Management exam with a more generalized ERM exam in order to obtain the CERA designation in addition to FSA.

Key skills needed for Actuaries:

  • Numerical skills – Using mathematics to solve problems.
  • Active Learning – Understanding the implications of new information for both current and future problem-solving and decision-making.
  • Complex Problem Solving – Identifying complex problems and reviewing related information to develop and evaluate options and implement solutions.
  • Critical Thinking – Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems.
  • Active Listening – Giving full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times.
  • Time Management – Managing one’s own time and the time of others.
  • Reading Comprehension – Understanding written sentences and paragraphs in work related documents.
  • Judgment and Decision Making – Considering the relative costs and benefits of potential actions to choose the most appropriate one.
  • Coordination – Adjusting actions in relation to others’ actions.
  • Speaking – Talking to others to convey information effectively.
  • Writing – Communicating effectively in writing as appropriate for the needs of the audience.
  • Learning Strategies – Selecting and using training/instructional methods and procedures appropriate for the situation when learning or teaching new things.
  • Instructing – Teaching others how to do something.
  • Operations Analysis – Analyzing needs and product requirements to create a design.
  • Monitoring – Monitoring/Assessing performance of yourself, other individuals, or organizations to make improvements or take corrective action.
  • Troubleshooting – Determining causes of operating errors and deciding what to do about it.
  • Quality Control Analysis – Conducting tests and inspections of products, services, or processes to evaluate quality or performance.
  • Programming – Writing computer programs for various purposes.
  • Persuasion – Persuading others to change their minds or behavior.
  • Management of Personnel Resources – Motivating, developing, and directing people as they work, identifying the best people for the job.

Abilities required for Actuaries:

  • Mathematical Reasoning – The ability to choose the right mathematical methods or formulas to solve a problem.
  • Inductive Reasoning – The ability to combine pieces of information to form general rules or conclusions (includes finding a relationship among seemingly unrelated events).
  • Deductive Reasoning – The ability to apply general rules to specific problems to produce answers that make sense.
  • Oral Expression – The ability to communicate information and ideas in speaking so others will understand.
  • Information Ordering – The ability to arrange things or actions in a certain order or pattern according to a specific rule or set of rules (e.g., patterns of numbers, letters, words, pictures, mathematical operations).
  • Written Expression – The ability to communicate information and ideas in writing so others will understand.
  • Oral Comprehension – The ability to listen to and understand information and ideas presented through spoken words and sentences.
  • Written Comprehension – The ability to read and understand information and ideas presented in writing.
  • Problem Sensitivity – The ability to tell when something is wrong or is likely to go wrong. It does not involve solving the problem, only recognizing there is a problem.
  • Category Flexibility – The ability to generate or use different sets of rules for combining or grouping things in different ways.
  • Near Vision – The ability to see details at close range (within a few feet of the observer).
  • Speech Clarity – The ability to speak clearly so others can understand you.
  • Number Facility – The ability to add, subtract, multiply, or divide quickly and correctly
  • Speech Recognition – The ability to identify and understand the speech of another person.
  • Fluency of Ideas – The ability to come up with a number of ideas about a topic (the number of ideas is important, not their quality, correctness, or creativity).
  • Originality – The ability to come up with unusual or clever ideas about a given topic or situation, or to develop creative ways to solve a problem.

Knowledge required for Actuaries:

  • Mathematics – Knowledge of arithmetic, algebra, geometry, calculus, statistics, and their applications.
  • English Language – Knowledge of the structure and content of the English language including the meaning and spelling of words, rules of composition, and grammar.
  • Economics and Accounting – Knowledge of economic and accounting principles and practices, the financial markets, banking and the analysis and reporting of financial data.
  • Computers and Electronics – Knowledge of circuit boards, processors, chips, electronic equipment, and computer hardware and software, including applications and programming.
  • Administration and Management – Knowledge of business and management principles involved in strategic planning, resource allocation, human resources modeling, leadership technique, production methods, and coordination of people and resources.

Employment

  • The companies that employ qualified actuaries include Insurance Regulatory Authority, Retirement Benefits Authority, Britam Insurance, CIC Insurance, Jubilee Insurance, Alexander Forbes and CFC Insurance.
  • Over half of all actuaries in Kenya are employed by insurance firms with a small portion working for professional, scientific and technical consulting services.
  • Others work for insurance agents and brokers and in the management of companies and enterprises industry.
  • A relatively small number of actuaries are employed by government agencies.

To perform their duties effectively, actuaries must keep up with current economic and social trends and legislation, as well as with developments in health, business, and finance that could affect insurance or investment practices. Good communication and interpersonal skills also are important, particularly for prospective consulting actuaries.

  • Job Forecast/Prospects:
    Employment of actuaries is expected to grow rapidly in the years to come. Job opportunities should remain good for those who qualify, because the stringent qualifying examination system restricts the number of candidates.
  • Employment growth in the regional insurance industry—the largest employer of actuaries in Kenya—is expected to continue at a stable pace, while more significant job growth is likely in other industries, such as health care and consulting firms.
  • Actuaries will continue to be needed to develop, price, and evaluate a variety of insurance products and calculate the costs of new risks.
  • The demand for actuaries in life insurance has been growing rapidly as a result of the rise in popularity of annuities, a financial product offered primarily by life insurance companies.
  • In addition, the risk of terrorism and natural disasters has created a large demand for actuaries in property insurance.
  • Companies that may not find it cost effective to employ their own actuaries are increasingly hiring consulting actuaries to analyze various risks.
  • Other areas with notable growth prospects are information services and accounting services. Also, because actuarial skills are increasingly seen as useful to other industries that deal with risk, such as the airline and the banking industries in Kenya, additional job openings may be created in these industries.
  • Employment opportunities for actuaries in Kenya should be good, particularly for those who have passed at least one or two of the initial exams. In addition, a small number of jobs will open up each year to replace actuaries who transfer to new jobs.
  • Candidates with additional knowledge or experience, such as computer programming skills, will be particularly attractive to employers.
  • Most jobs in this occupation are located in urban areas, but opportunities vary by clients’ geographic distribution.

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