Most of the well known Life insurance companies nowadays use actuarial services to manage and monitor their business and performance. It has already been decades, since governments provide the certification opportunity to actuaries and authorize them to guarantee for the financial stability of the Life insurance sector.

The main life actuarial responsibilities include, but are not limited to estimation of the probability for negative events such as mortality, disability, morbidity, unemployment. Those are necessary for building mortality tables, which are then used as a basis for premiums and reserves calculations. Reserves and Solveny ratio are part of the key company indicators, that is why the are being monitored and reported on a regular basis.

Non-life insurance is a rapidly evolving area in which actuaries make conclusions by analyzing the potential outcomes of random events.

Fires, floods, hurricanes and earthquakes have serious financial consequences for people and the insurance industry. While insurers remain responsible for a very long period for events such as asbestos poisoning, smoking and environmental pollution, the business community often seeks insurance for the latest innovations such as new construction methods or life-saving medicines.

More and more insurers operating in different non-life insurance areas use actuarial skills to manage the risks typical for their business. To begin with, non-life actuaries apply statistical techniques to determine the reserves and cost of risks. They also often deal with dynamic management in a condition of uncertainty. Insurers are increasingly interested in understanding the volatility in their earnings and the confidence levels consistent with a stable balance sheet. The most recent technique proposed by the actuaries is a dynamic financial analysis in which the financial position of the insurer is projected into the future, given assumptions about specific risks and the overall uncertainty, so that appropriate management decisions can be made. This technique is used for asset allocation, reinsurance modeling, premium pricing, and more.

The rapid development of computing allows actuaries to develop complex models of catastrophic events, such as hurricanes and earthquakes in the United States and Japan, where these types of disasters have caused considerable damages in recent years. Insurers use models for decision-making, so that those events do not expose them too often to big losses. Regulatory and rating agencies also rely on actuarial approaches.

A large number of actuaries deal with pricing of property and casualty. For example, in the London market, the insurance premium for a house is linked to factors such as the number of rooms, geographic area and location. Insurance markets are more competitive than ever and insurers view actuaries as a competitive advantage.

Reserve calculations are also among actuaries’ key responsibilities. It requires an estimation of the probability of an event’s occurrence, which is done given a set of assumptions, based on market experience and statistics.

It seems that the benefit of actuaries will grow in the future with the increase in the number of areas where their knowledge is applicable.

Pension actuaries create and manage pension savings systems that are adaptable to changing economic conditions and trends.

In the countries of the European Union, the USA, Canada, Australia and others, the fund allocation by employees during their working life is a key concept in the pension provision. Pensions are the largest financial asset for many people. The pension system is an essential element of the economy. In the UK over £800 billion has been invested in professional and personal pensions. Actuaries are capable of assessing the long-term effects of pre-financing for pensions and the effects of choosing different pension options. Actuaries support governments, employers and individuals in their efforts to provide future generations with adequate and secure pensions.

The pension actuary has the following main objectives: to design pension schemes, secure tax revenues, re-evaluate pensions, protect the insured persons, and support the smooth scheme operation.

Pension schemes design
The occupational pension schemes are a powerful tool in the labor market, they support the recruitment and retention process, attracting skilled workers. Pension actuaries give advice on designing a scheme that meets the specific needs of the employer. Creating the appropriate scheme, taking into consideration the retirement costs and modeling of the future workforce, requires technical and communicative skills.

Tax revenues
Pension funds taxation is based on the principle of non-taxable contributions accumulation until the start of pension payments, after which they are subject to tax. Pension actuaries monitor the extent to which tax relief is respected, via providing regular assessments of the assets and liabilities of the Tax authorities. They certify that no overpayments have been made and accordingly the pension fund complies with the tax laws. This practice is typical of Actuaries in the UK.

Protection of the interests of insured persons
Pension legislation defines the role of actuary in funded pension schemes. Appointed actuariers periodically assess the level of liabilities and assets, reporting to the pension scheme management on their adequacy and the extent to which they meet the minimum statutory requirements. Actuaries advise trustees and employers on the necessary levels of contributions that employers and insured persons need to maintain in the future so the fund can meet the state’s legal requirements. Appointed actuaries of the pension scheme also report to the pension supervisors for any violations of the law they have noticed during their work.

Seamless funds operation
Pension Actuaries play an important role in the smooth and seamless operation of pension funds. They regularly provide professional advice to insured persons and their trustees, as well as to employers, about a wide range of issues, such as investment and annuities. They protect the interests of insured persons in cases of pension schemes mergers and acquisitions and support the pension rights transfer from one scheme to another, when employees change workplaces.

The growing need for better accountability in the private and public healthcare sector puts the actuary in a unique position as a trusted advisor in the decision-making process.

In the private sector actuaries work with the other health specialists to better apply models within the private medical insurance, income protection, protection in case of critical diseases, and in the long-term health insurance. In many countries, in the public sector, actuaries have been involved for years in the financial planning of the public health system. The actuarial importance will further increase, as governments strive to to restructure state social systems.

Qualitative data is crucial in all aspects of the actuarial work. This is particularly true for healthcare, where complex analyzes often are feeded data which is far from ideal. Actuaries in both the private and public sectors therefore work to clear and systemize data input. The actuarial approach to data and analysis is often more comprehensive than other areas of research. Actuarial training creates the ability of actuaries to assess the link between different health conditions and to understand the true risk factors causing these conditions. An alternative approache ould rely on general effects, which do not always provide the full picture.

Actuaries combine their analytical skills with the medical knowledge of doctors, nurses and other medical staff to improve the quality of healthcare. This activity is applicable in both the private and public sector and all aspects of healthcare:
• Rehabilitation and prevention;
• Disease control;
• Comparative analysis;
• Case-based medicine;
• Financial modeling (macro and micro level).

Investment actuaries manage assets, liabilities and risks.

The investment actuary, like other investment specialists, seeks to maximize the return of a portfolio of assets, while considering the risks associated with the selected investment strategy. Investment activity is usually related to institutional investment fund and is less often associated with managing an individual portfolio.

The actuary can be used to assess the liabilities the institutional investor has undertaken to finance the investment fund. This allows the actuary to determine the appropriate investment strategy and recommend measures for its valuation. In particular, the investment actuary deals with managing the coralation between the value of liabilities and assets in a changing economic environment.

Actuaries often use mathematical techniques in the investment process. As a result, they perform services such as:
• Portfolio management;
• Modeling of assets and liabilities (including stochastic modeling);
• Investment indices;
• Selection of investment managers;
• Quantitative investment techniques;
• Derivatives (derivative instruments);
• Risk Management Techniques for Fund Managers.

Like Actuaries specializing in other professional areas, investment actuaries apply the so-called Actuary Control Cycle philosophy:
• Observation of the overall economic and market environment;
• Defining objectives and assessing risks (and ways to overcome them);
• Development of appropriate solutions and models;
• Measuring experience versus assumptions.
The process is cyclical, as at later stages it may lead to a rethinking and strategy redesign.