What problems does it solve?
Actuarial Science is a part of applied mathematics that originated at least 200 years ago. Two of the earliest developments involved mortality or life tables and compound calculations. These were combined in the eighteenth and nineteenth centuries to provide the scientific basis for individual life insurance and life annuity contracts. In this century, applications of actuarial mathematics have become more numerous and more complicated. Individual insurance contracts have been refined greatly, and there has been a tremendous growth in group plans providing life, health, disability and pension benefits, together with the parallel development of Social Security. Another part of actuarial science is concerned with the evaluation of non-life insurance risks such as those covered by automobile or fire insurance. The extent and complexity of these varied insurance plans, and the maturing of pension and Social Security systems, have created strong demand for competent actuaries.
In insurance companies, where most actuaries work, the actuary is responsible for seeing that the risk is properly defined and evaluated, that a fair price is charged for assuming the risk, and proper provision is made to pay all claims and expenses as they occur. Insurance company actuaries engage in a variety of other important activities ranging from research to management functions. For example, an actuary may study the claims experience, in particular, the mortality and survival experience of insured persons. Or they may apply mathematical models or techniques of operations research to insurance company problems and may engage in corporate planning.
Consulting actuaries, who now include more than one third of all active actuaries in America, offer professional advice to corporations, insurance companies, federal, state, and local governments, labor unions, joint labor-management trustees, and attorneys. The need for actuaries in government work is steadily increasing because of governmental involvement in old age, survivors, disability, and medical benefits provided by Social Security, and in the supervision of insurance and pension funds.
What should one study in college?
Professional certification as an actuary comes from the Society of Actuaries for those working in life or health insurance and from the Casualty Actuarial Society for those who work in property and liability insurance. Certification requires passing a sequence of examinations. After passing the first few examinations, one becomes an Associate of the Society. After completing all examinations, one is eligible to become a Fellow of the Society. The material for many of these exams is given in courses offered by the Mathematics Department (e.g., calculus, probability, statistics, operations research). Information about the examinations (typically given in November and May) required to become an Associate or Fellow of the Society of Actuaries can be found on their web site at www.soa.org. Study materials for the exams can be purchased from Mad River Books (A Division of ACTEX Publications) at www.actexmadriver.com.
Typically, a student should aim to pass at least two of the Associateship examinations before leaving college. The other actuarial examinations are typically taken after the student is employed in actuarial mathematics. Courses in calculus, linear algebra, probability, statistics, numerical analysis, operations research, and computer science are particularly important in preparing for the first four examinations, and courses in accounting, economics, finance, and marketing can also prepare students for later examinations. [MI]
Actuaries Make a Difference , by the Casualty Actuarial Society and Society of Actuaries, weblink: http://www.BeAnActuary.org/