An actuary is a professional who specializes in calculating risks, using statistics, history, and a rubric of information. The insurance industry hires a large amount of actuaries to help analyze policies, look at individual insurance applications, and to help set company policies, and an actuary can often find employment at investment firms as well. The work is varied and interesting, and requires a strong grounding in mathematics, particularly statistics, as well as sociology and other humanities fields. In most regions of the world, an individual must also sit a board examination in order to become an actuary.
In the insurance industry, an actuary helps a company to decide whether or not issuing a policy is a good idea, and how much the client should be charged for the policy. For example, earthquake insurance in the state of Kansas is significantly less expensive that it is in California, because in California, the insurance company is at greater risk of having to pay out on the policy. In this instance, the actuary looks at geological statistics. For other types of insurance, such as health or life insurance, an actuary may look at the age and gender of the policy holder and health records. The actuary compares data for people of that age group to determine how the policy should be handled.
Because an actuary specializes in risk, the job is inherently risky. Serious hurricanes and other natural disasters can arrive whether or not an actuary has predicted them, and will sometimes represent a serious financial blow to an insurance company. This is why the job requires extensive education and a certain amount of natural intuition, because an actuary must be able to predict the unpredictable. In the financial industry, actuaries are very important, as they help to protect major investments by keeping a close eye on the market while making long term projections.
Since most insurance is held to protect the policy holder from financial risk, an actuary also works to reduce the amount of potential damage. For example, a car insurance policy will be cheaper if the car has more safety systems, such as passive restraint seat belts and air bags. An insurance agency may refuse to issue home insurance to a home which is deemed unsafe after inspection, and an actuary will provide a list of suggestions for the homeowner so that he or she can make the home insurable. Usually, an actuary picks a field to specialize in, such as home insurance, health insurance, investments, or life insurance.