Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Nov 12, 2020

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Actuaries play crucial roles in the insurance industry. However, few people understand what, exactly, an actuary does.

Actuaries are financial professionals who specialize in the fields of risk and uncertainty. In basic terms, they assess the risk factor of certain incidents and individuals, then inform the insurance company of that assessment.

Actuaries have unbeatable analytical skills. They help organizations plan for the future and protect themselves from loss. They solidify the financial security of the insurance company. They understand the nature of risk while playing a crucial role in the psychological, physical, and financial stability of the financial system and society as a whole.

Insurance companies price their products based on the actuary’s assessment. The goal is to price products competitively (compared to other insurance companies’ products) while still covering liabilities if any incidents take place.

What are the chances that a 26-year old male driver from North Carolina is going to make a claim in the next twelve months? Your insurance company needs to know the answer to that question, then price its policies accordingly. The actuary will work to answer that question based on all of the available contingencies. Where does the driver live? How far does the driver drive every day? What are the chances of a break-in or car theft in that neighborhood?

Actuaries do not analyze the risk of each individual policy. Instead, they work in broad strokes. They analyze the general risk factor of drivers under 30 in North Carolina, for example, compared to the risk factor of drivers over the age of 75.

The actuarial profession is considered prestigious. It’s a difficult profession to obtain and requires years of training. It also frequently appears on lists as one of the best jobs in the United States, both in terms of pay and work satisfaction.

Actuaries often see themselves as the backbones of financial security for insurance companies. They solve difficult problems, get paid well, and work in a low-stress, intellectually stimulating environment.

What Qualification and Training Do Actuaries Have?

Strict professional standards govern the actuarial profession.

Every actuary must be a member of either the Society of Actuaries or the Casualty Actuarial Society. To sign statements of opinion, the actuary must also be a member of the American Academy of Actuaries.

To qualify for these memberships, the actuary must pass over a dozen professional examinations. The actuary must also have three years of experience delivering actuarial work. As with other professional memberships, actuarial membership organizations require ongoing study, and an actuary’s education is never truly finished.

As a general rule, actuaries require 100 hours of studying for every hour of each exam. The P/1 exam, for example, is a three-hour exam, and it’s recommended you study for 300 hours to fully master the concepts tested on that exam.

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How Do Actuaries Affect Me?

As an average policyholder, you’re unlikely to ever interact with an actuary. Actuaries work behind the scenes for your insurance company.

The main way in which actuaries affect you is with your premiums. Depending on how an actuary perceives risk for drivers like you, you might pay higher or lower insurance premiums.