The following information is provided by the University of Illinois at Champaign-Urbana. The University of Illinois at Champaign-Urbana has one of the largest accredited actuarial programs in the country. To view information on their actuarial program, please click here.
An actuary is a person who prices future risk. Risk is an unavoidable evil that we face every day, both as individuals and as a society. In situations where risk can have financial implications, actuaries are often called upon to put a dollar value on these risks. For example:
A life insurance company sells a policy to a new customer. How much premium should the company charge to offset the risk associated with insuring the customer? The U.S. government decides that it wants to balance the federal budget by 2002, assuming the economy will stay strong. How much in surplus taxes should the government collect to protect itself against the risk that the economy will not stay strong? An auto insurance company is considering giving a discount to customers with anti-lock brakes. How much of a discount should the company give to reflect the different risks of cars that have anti-lock brakes versus those that do not?
The E.P.A. is considering a new regulation on a refinery that will reduce harmful emissions but cost jobs. Is it worth the cost of the regulation to reduce the health risks of people in the community?
Actuaries are called upon to give answers to difficult questions like these on a daily basis. Actuaries are unique individuals, because we are educated in a wide variety of subjects. An experienced actuary is not only an expert in applied mathematics and statistics, but also has a deep understanding of finance, economics, business law, and accounting.