This article was written by our summer interns; Adam, Andrew and Susanna.
If you wanted to join the actuarial profession 50 years ago, the primary criteria that you would have been required to meet would have been strong analytical and mathematical skills. These are the skills that we felt were our strengths when we applied for internships with Barnett Waddingham, and we thought that the softer skills such as communication and teamwork were of secondary importance to the profession as a whole.
This seems to be the common outsider perception, with actuaries being renowned for their analytical and mathematical skills, and it is a deserved reputation, as everyone that we have met so far at Barnett Waddingham has both of these skills in spades. However, worries of drab, analytical drudgery were quickly dispelled by the incredible variety of work that we have each been assigned during our placement, and the crucial importance of communication and teamwork in an actuarial consultancy quickly became clear. The actuarial profession is much more than just number-crunching, and will continue to develop as the needs of companies progress.
"The number of actuaries working in pensions is plateauing whilst in general insurance there has been a steep increase."
The SIAS (Staple Inn Actuarial Society) talk ‘The Future Roles of Actuaries’ is what inspired us to write this article; an interesting discussion of future practice areas, and additional skills that will help future actuaries to keep up with the developing market. Skills such as communication of complex ideas to non-specialists and business acumen are two skills that are often overlooked when one thinks of an ‘Actuary’, but are crucial in the profession.
The talk highlighted how the current practice areas are changing, introduced the exciting new practice areas which are developing and why these future roles are particularly interesting to an intern. They commented on the shift in recent years from actuaries in pensions to both life and general insurance due to, for example, the closure of DB pension schemes and evolving regulation. The number of actuaries working in pensions is plateauing whilst in general insurance there has been a steep increase. Furthermore, the general insurance specialist modules for the actuarial qualification have recently overtaken pensions and life insurance as the most commonly chosen specialism.
One of the new, growing opportunities for actuaries to become involved in is enterprise risk management (ERM). The practice covers all risks and can be useful for a wide range of organisations including banks and insurers, but also other firms such as energy companies and transport providers. Although there are worries that non-actuaries may be able to fulfil risk management roles for a lower salary, the skillset actuaries can bring to the sector is unique and adds value. The main quality expressed at the SIAS talk necessary in ERM roles was ‘tenacity and willingness to question and challenge others’. Although this is not often expressed as one of the most important attributes of an actuary, when combined with the strong numerical skills common to all actuaries, these skills can set members of the profession apart from others. It is these skills that actuaries of the future need to be working on to maintain their and their presence in the market.
Another area in which actuaries would make a significant contribution is data science. Actuaries already have the statistical knowledge to apply their expertise to the new, fast growing area of ‘Big Data’, and insurance companies have already shown interest in the practice. A good example of this is telematics, which uses telecommunications and informatics to track driver information such as location, speed, acceleration, cornering, harshness of breaking and fuel efficiency. The volume of data that this can produce is clearly huge, hence the handle ‘Big Data’, and this data can increase the accuracy of the assessment of driver risk presently performed by insurance companies. For this reason, it is becoming increasingly popular, with consumers as they look for cheaper car insurance, and with insurers as they seek to improve the risk profiles of their customers. Actuaries already hold a number of the transferable attributes required to succeed in the data science industry; however there is an emphasis on developing programming ability as well as the ability to think algorithmically.
So whether you’re thinking of applying for actuarial internships in the future, or you’re like us and have had a taste of the profession already, it is worth thinking about the direction in which the profession is moving, and the types of skills that employers will be looking for in their ‘Actuaries of the Future’.