Actuaries are essential employees because they determine future risk, make price decisions, and formulate investment strategies. Some actuaries also design insurance, financial, and pension plans and ensure that these plans are maintained on a sound financial basis. Most actuaries specialize in life and health or property and casualty insurance; others work primarily in finance or employee benefits. Some use a broad knowledge of business and mathematics in investment, risk classification, or pension planning.
Regardless of specialty, actuaries assemble and analyze data to estimate probabilities of an event taking place, such as death, sickness, injury, disability, or property loss. They also address financial questions, including those involving the level of pension contributions required to produce a certain retirement income level or how a company should invest resources to maximize return on investment in light of potential risk.
Moreover, actuaries may help determine company policy and sometimes explain complex technical matters to company executives, government officials, shareholders, policyholders, or the public in general. They may testify before public agencies on proposed legislation affecting 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 with existing lines of business by forecasting demand in competitive settings.
Most actuaries are employed in the insurance industry, in which they estimate the amount a company will pay in claims. For example, property/casualty actuaries calculate the expected amount of claims resulting from automobile accidents, which varies depending on the insured person's age, sex, driving history, type of car, and other factors. 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 and yet competitive with other insurance companies.