Expanding Actuarial Horizons

Does the label “nontraditional” apply to actuaries anymore?

Hetal Patel August 2021

Photo: iStock.com/Violka08

Whenever I explain my career path to others, I tend to refer to myself as a nontraditional actuary. However, I’m not sure I agree with the “nontraditional” label for actuaries who work outside of the realm of common industries, like insurance and consulting, because I don’t think there is a common industry for actuaries anymore. The label also implies a narrow scope of what an actuary can truly do.

An actuary is someone who has proven—through a rigorous qualification process—that they have a certain level of technical, financial and business expertise. Certainly, that expertise is utilized in insurance and consulting, but there are so many other areas where the actuarial skill set is in demand. There has been a sharp growth in demand for actuaries in a variety of industries from financial services, transportation, energy and environmental sciences and more.

Adding Value Through Collaboration

Even within insurance and consulting companies, there are a variety of ways and teams where actuaries can add value and provide support. Since achieving my associateship from the Society of Actuaries (SOA), I have spent a decade working on unique projects with nonactuarial teams. I have applied the skills I learned as an actuary while being a part of operations, data science and health economic teams. The actuarial skills I learned are transferable to many situations and groups. By exploring a wide range of options, I gained expertise in many areas as well as a greater appreciation for the actuarial career path.

While most of my actuarial friends work in the typical insurance or consulting setting, I have found success and passion at AbleTo, a behavioral health telehealth company. I lead a team that comprises statisticians, individuals who have their master’s in public health (MPH) and a doctor (M.D.), and together we have the expertise needed to meet the daily challenges we face. The work my team does focuses largely on evaluating financial return on investment (ROI), forecasting engagement and modeling, as well as understanding the populations that AbleTo treats. I am grateful for my actuarial background, as it has armed me with the expertise I need to lead a successful team and support the analytic needs of a rapidly growing company.

The Value of the Actuarial Skill Set

I can confidently say from experience that the combination of statistical knowledge, technical skills and understanding of the insurance and consulting businesses I gained while working as an actuarial student has been invaluable. It is also a combination that almost all actuaries have due to the rigorous exam and training process. The consistency of the skill set and the variety of skills within the set is what makes actuaries unique and valuable in almost any setting. There have been many times when simply mentioning my actuarial background and expertise is enough to sway the tone of a conversation with clients—a level of trust is immediately built with that introduction.

The early actuarial exams were the most valuable in shaping my career. These exams helped me develop the core knowledge of probability and statistics that I need to do my job well. Having a thorough command of these subjects meant I was able to develop complicated models as an analyst when the situation called for it. The other benefit of these exams was in understanding when to apply which method. A common problem I see in companies that are trying to be data-driven is that they want a predictive model for every problem when a less complicated analysis can be sufficient to answer the business question and find a solution.

The most satisfying part of working on teams and for companies with few or no actuaries is that I can be creative and apply my actuarial skills in different ways. Most recently, my team developed actuarial age and gender factors to adjust costs and utilization to compare multiple populations and improve our propensity matching method. We use credibility theory principles when working with effect size calculations and statistical studies. Feature engineering is another instance when it’s handy to have an actuarial background. We have many transferable skills that are highly valuable in executive and nonexecutive roles at many organizations.

Challenges of Working in Unique Roles

While there are many benefits in forging new paths and applying common actuarial methods to uncommon problems, there are challenges as well. The greatest challenge when working in an industry, company or team without other actuaries is the lack of colleagues who have a similar background. Having another actuary with whom you can bounce ideas around or review analytic plans is something I miss. I struggle with second-guessing solutions or approaches, but it encourages me to reach out to external resources for advice. The onus is on me to find and connect with actuarial mentors outside of my organization and maintain those professional relationships.

A second major challenge is that there usually isn’t exam support or a formal study program for new actuarial students. This makes it difficult for students to complete their training and gain the skills necessary to succeed in different areas. In my personal experience, I have always found financial support (if I asked for it) to complete the exams—even in companies without actuaries—but study days or study groups were not an option. However, as more budding actuaries start their careers in a variety of industries, I believe companies will be more likely to support actuarial education with financial and nonfinancial assistance.

Part of the problem is that students who study actuarial science at colleges and universities do not always get exposure to actuaries with unique career paths. Thus, new graduates may not always know they can work outside of insurance and consulting, nor would they be keen on working for a company that may not provide exam support. Until actuaries begin saturating other industries and other companies provide better support for students, working in unique roles will remain a viable option only for trained actuaries.

Conclusion

The growth in the number of actuaries working outside of the insurance and consulting industries implies that a “traditional” label is impractical for a group of individuals who can be experts in so many different areas. Wherever a need for deep analytics and management of risk exists, there is an opportunity for actuaries to excel and innovate in that field. By adjusting the label from “nontraditional actuary” to simply an “actuary,” future students and current professionals can take the steps necessary to learn more about the various opportunities available.

Changing the label does not solve all of the challenges of working outside of insurance or consulting, but the shift in language does shift our thinking. As professionals known for managing change and risk, it makes sense for actuaries to be open-minded about where we can add value. By changing labels and hopefully the tone of the conversation, we can gain the footing necessary to deliver a more immersive and responsive educational opportunity for new and existing actuarial students. Each year brings new challenges for actuaries to test the range of their skill sets, and I can only hope that the actuarial students of today and tomorrow have an open mind as to where they can work and find success.

Hetal Patel, ASA, CPHQ, is senior director of Advanced Analytics at AbleTo.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.