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Want to be an actuary? Odds are, you’ll fail the test

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Re: Want to be an actuary? Odds are, you’ll fail the test

#41

Post by throwawaygh »

lordnacho wrote: post #15

If it took a math professor over 3 years to do it, it sounds tough. What is the reward? I consistently see actuarial science as a top earning degree in certain papers, but there's not much color on whether it's worthwhile. How many openings are there for each person who passes, what are working conditions like?

> How many openings are there for each person who passes

Think of the SoA as a union, if that helps.

> what are working conditions like?

It's a boring office job.

The job is what it is. A safe and well-paid job that guarantees you'll never be a pauper or a prince. Not dissimilar from university teaching.

Re: Want to be an actuary? Odds are, you’ll fail the test

#42

Post by ffwacom »

not-my-account wrote: post #16

Is the answer to the question at the top 0.33? let pc = purchased_collision, pd = purchased_disability we have: 2 * P(pc) = P(pd) P(pc & pd) = 0.15 so P(pc) * P(pd) = 0.15 2 P(pc)^2 = 0.15 --> P(pc) = 0.274, P(pd) = 0.548 So the probability of neither pc nor pd is !P(pc | pd) = 1 - P(pc) - P(pd) + P(pc & pd) = 0.328 ~= 0.33? The addition of P(pc & pd) was to take account of the double counting of pc and pd. Please le…

I got the same. When do we start as actuaries?

Re: Want to be an actuary? Odds are, you’ll fail the test

#43

Post by pg_bot »

lordnacho wrote: post #15

If it took a math professor over 3 years to do it, it sounds tough. What is the reward? I consistently see actuarial science as a top earning degree in certain papers, but there's not much color on whether it's worthwhile. How many openings are there for each person who passes, what are working conditions like?

I considered becoming an actuary after college (passed first two exams on first try) but decided to become a software engineer instead. You should expect to make six figures with a near guarantee of employment for your entire career. The job conditions are fairly standard for a white collar worker, but you won't have crazy working hours like a lawyer or a banker.

If you could take the tests in parallel the process would be a lot quicker, but the tests are sequential (you typically need to take 7 to be fully certified) and are only offered every 3-6 months. I didn't think the first two exams were particularly difficult, but did prep for about a month for each beforehand. I would argue that time management was more important since you had only a few questions but were on a strict clock. So if you actually wanted to pass the test it was more important to find shortcut methods to get to the correct answer quickly.

Re: Want to be an actuary? Odds are, you’ll fail the test

#44

Post by Cogito »

riskneutral wrote: post #12
stbtrax wrote: post #3

From experience from a few close friends: Actuarial science is always in the lists of top jobs but it's a terrible career. It's quite limiting and doesn't pay particularly well. The companies are all old and stagnant and the amount of time put in to studying for exams is taxing. It'd be much better ROI to put that time into studying for sw-eng roles. That is, unless you're particularly interested in memorizing math f…

> unless you're particularly interested in memorizing math formulas for insurance calculations Note that the formulas in question are the opposite of interesting formulas. They're just made-up regulatory rules about how much capital an insurance company has to hold in order to sell insurance. Everyone agrees that some amount of capital needs to be held. Everyone, except maybe some of the "actuarial scientists" themse…

A small note, but actuaries do a lot more than capital reserving, and even then the regulatory aspect (while important) is not the only consideration.

I am not an actuary, but I have done a lot of actuarial work in a small insurance company, and the work included

- pricing (are we under of over charging for this product?)

- reinsurance (analysis so we can get a good price, as well as making sure what we sell remains within our reinsurance coverage)

- portfolio monitoring (performance/profitability/etc)

- risk aggregation (do we have too much exposure to a single risk or type of risk)

- loss forecasting (primarily for reserving, but also for a 'true' indication of performance, as claims experience is necessarily very laggy)

- product development (for example, what does a travel insurance product look like in a COVID world? What can we reasonably offer and how do we assess the pricing/reinsurance/risk appetite)

Moreover, none of these tasks required nor employed any memorised formulas. You either use a model someone else built, or build one yourself, and then analyse and test as much data as you can so that you can provide good advice. Importantly you have to be able to show exactly how you produced that advice, and be ready to justify every single choice you made while doing so. A large part of the actuarial training seems to be ways of working and thinking that enable this (at least this is my impression from the actuaries I work with).

There are actuaries who just calculate '"Solvency II" formulas for "quarter end"', but there are also actuaries developing advanced risk models for catastrophic weather events using large data sets and machine learning, or shutting down products because the market has shifted and it's no longer viable. In every insurance company I've worked at, actuaries are some of the most influential and respected people there, and do very interesting work (along with some really mind-numbing work!).

Re: Want to be an actuary? Odds are, you’ll fail the test

#45

Post by Spooky23 »

riskneutral wrote: post #29
smegsicle wrote: post #17

Earlier quoted context omitted.

> put that time into studying for sw-eng why not both? an environment of stagnant companies offering jobs involving difficult calculations sounds ripe for disruption- is it being strangled by regulation or something?

> why not both? an environment of stagnant companies offering jobs involving difficult calculations sounds ripe for disruption- is it being strangled by regulation or something? Those jobs only exist because of regulation. The regulation dictates that the insurance companies must do those calculations and that the calculations must be done by a specially ordained priesthood of actuaries who have passed a bunch of ran…

I’m not an actuary, but worked earlier in my career for a “chief innovation officer”. Being young and dumb I feel for it, and in truth we had an awesome team that did some really cool stuff with lasting value.

But once we had a few wins, the chief innovator guy got promoted away, and he was the guy with political power. The various fiefdoms goobled up the innovation budget like thanksgiving turkey. The IT idiots “innovated” by buying high capacity toner. The data center people bought new air conditioners.

Re: Want to be an actuary? Odds are, you’ll fail the test

#46

Post by tibbar »

I passed one of the actuary exams (P) after college after taking applied stats classes. I'm glad I did because it gave me a very good intuition for conditional and bayesian probabilities. I'm sure I wouldn't pass it if I took it right now, and I would never want to study for the other exams, but I think this one was a real win that taught transferable skills.

Re: Want to be an actuary? Odds are, you’ll fail the test

#47

Post by tfehring »

yukinon wrote: post #30
tfehring wrote: post #22

Earlier quoted context omitted.

I left the actuarial field for basically the reasons you describe, but the characterization still strikes me as somewhat unfair. Actuaries reliably make significantly above the median US income right out of undergrad, and reliably double that income within a decade, working 40 hours a week, without needing to go to a target school or get an advanced degree. That alone makes it a good career by most objective standard…

This could be outdated information that I have, but don't actuaries constantly need to study for their exams/certs? Does that fall outside of the 40 hour/week range, or is that done on work time?

The exam process probably takes something like 2000-3000 hours total, with roughly half done on company time. Exam season is really stressful and can go significantly above 40 hours/week between work and study time, but it doesn't add up to a ton of time when you amortize it over a whole career.

There's also a career-long continuing education requirement that typically boils down to 15 hours/year of seminars or webcasts, all done on company time.

Re: Want to be an actuary? Odds are, you’ll fail the test

#48

Post by tfehring »

Denvercoder9 wrote: post #14

If the sample question is actually representative of the exam, I'm surprised that people that actually study for this fail that often. I haven't had any statistics education since high school, and found it fairly straightforward to solve.

It's an actual exam question from the first exam, but it's one of the easier ones. IIRC the syllabus is something like 40% discrete probability and combinatorics, 40% univariate continuous probability, and 20% multivariate probability. But it's not like WSJ is going to expect its readers to do tabular integration in the margin.

In general that exam is pretty representative of the syllabus of my mid-level undergrad probability theory class. The failure rate is somewhat inflated because students will walk right out of their probability class into the exam thinking they can pass without further studying. It's still harder than a typical undergrad exam, but it's nowhere near the level of the Putnam or whatever.

Re: Want to be an actuary? Odds are, you’ll fail the test

#49

Post by [deleted] »

Cogito wrote: post #44
riskneutral wrote: post #12

Earlier quoted context omitted.

> unless you're particularly interested in memorizing math formulas for insurance calculations Note that the formulas in question are the opposite of interesting formulas. They're just made-up regulatory rules about how much capital an insurance company has to hold in order to sell insurance. Everyone agrees that some amount of capital needs to be held. Everyone, except maybe some of the "actuarial scientists" themse…

A small note, but actuaries do a lot more than capital reserving, and even then the regulatory aspect (while important) is not the only consideration. I am not an actuary, but I have done a lot of actuarial work in a small insurance company, and the work included - pricing (are we under of over charging for this product?) - reinsurance (analysis so we can get a good price, as well as making sure what we sell remains…

[deleted]

Re: Want to be an actuary? Odds are, you’ll fail the test

#50

Post by redis_mlc »

dhosek wrote: post #21
HWR_14 wrote: post #9

Earlier quoted context omitted.

Meanwhile, they often gate the requirements to even take the test. It would be chaos (and bad for the law schools) if someone were able to take the bar without a JD (some states have just as lengthy apprenticeship periods replace that) or otherwise prove professional ability acquired via non traditional means.

My grandfather got his architecture license without a college degree (in the 1920s). He often related riding down to Champagne, IL to take the exam in the rumble seat of a Model T Ford with a couple college grads to take the exam. He passed the exam and they both failed. I was somewhat surprised watching the Perry Mason series on HBO last year when Perry Mason was sworn to the bar without actually going to any sort o…

> was sworn to the bar without actually going to any sort of law school.

It can still be done today in most US states.

Also, note that even the self-represented can take on a government and win. See Jim Pattison's (Canadian billionaire) tax hearings vs. the Crown (Canada), which he won after a decade of litigation. Multiple prosecutors and judges retired during that time period.

Besides developing further tax filing methods for his empire, you can bet he wasn't sued again by the government - they hate taking a loss. (The US SEC infamously tries to undermine defendants today by going after their ability to pay lawyers before trials.)

https://en.wikipedia.org/wiki/Jim_Pattison

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