What Actuaries Do
The actuarial profession emerged in the insurance industry; actuaries are professionals who evaluate the financial aspects of risk. Put simply, when you buy insurance, your premium was computed by an actuary. Similarly, larger organizations self-insure certain risks, and actuaries are involved in evaluating these risks and setting appropriate reserves for the organization to hold in relation to these risks.
Actuarial issues fall into two broad categories – those that involve human life, evaluated by “life” actuaries (for example, life insurance, health insurance, and pension plans), and other types of risk, evaluated by “casualty” actuaries (for example, property or homeowners insurance, auto insurance, and many others). There are five professional actuarial organizations in the United States, each issuing different credentials:
| Name | Credentials Issued |
|---|---|
|
American Academy of Actuaries |
Member, AAA (MAAA) |
|
American Society of Pension Professionals & Actuaries |
Associate or Fellow, ASPPA (ASPA, FSPA) |
|
Casualty Actuarial Society |
Associate or Fellow, CAS (ACAS, FCAS) |
|
Conference of Consulting Actuaries |
Associate or Fellow, CCA (ACA, FCA) |
|
Society of Actuaries |
Associate or Fellow, SOA (ASA, FSA) |
ASPA, CAS and SOA all conduct examinations to earn Associateship and then Fellowship credentials. CCA admits members of these 3 organizations that also meet certain experience requirements. AAA admits members of these 4 organizations. AAA has approximately 25,000 members. The organizations have various joint agreements concerning actuarial standards and counseling and discipline of members; the Actuarial Standards Board (ASB) and the Actuarial Board for Counseling and Discipline (ABCD) are housed at AAA.
Insurance companies are regulated by state governments, while employee benefit plans are regulated by the federal government under the Employee Retirement Income Security Act of 1974 (ERISA). The reserves held for these financial risks are typically disclosed in financial documents and subject to government review, and require certification by an actuary – typically a MAAA, although the federal government maintains a separate exam and certification process for pension plans, where the certification is called the Enrolled Actuary certification.