Analytical skills refer to the ability to collect, analyze, and interpret data or information in order to make informed decisions. These skills are highly valued in various industries, including business, finance, scientific research, and even daily life. To become risk analytics, actuarial exam, or risk management professionals, individuals need to possess strong analytical skills.
Some examples of analytical skills include critical thinking, problem-solving, data analysis and interpretation, attention to detail, and logical reasoning. These skills allow individuals to break down complex problems into smaller components and identify patterns or trends that can help them understand the bigger picture.
What Are Actuarial Exams?
Actuarial exams are a series of rigorous tests that individuals must pass in order to become certified actuarial professionals. These exams cover various topics such as mathematics, statistics, finance, economics, and risk management. They require a high level of mathematical proficiency and analytical skills.
While the exact number of exams may vary depending on the country or organization, it typically takes several years for an individual to complete all the required examinations. The difficulty level of these exams is also known to be quite high, with only a small percentage of candidates passing on their first attempt.
To give aspiring actuaries a better understanding of what it takes to become an actuary, let’s take a closer look at the different stages and requirements of the actuarial exams.
Actuarial Exams: Stages and Requirements
There are several stages of actuarial exams that an individual must pass in order to become a fully qualified actuary. These include:
- Preliminary exams
- Associateship exams
- Fellowship exams
Preliminary Exams:
The preliminary exams are the first set of actuarial exams that an individual must pass. These are broadly categorized into two categories: Probability and Financial Mathematics. The purpose of these exams is to test the candidate’s understanding of fundamental mathematical concepts and their ability to apply them in real-world scenarios. The preliminary exams include:
- Exam P: Probability
- Exam FM: Financial Mathematics
To be eligible to appear for these preliminary exams, a candidate typically needs a strong foundation in calculus, probability, and statistics. Most candidates take these exams while pursuing their undergraduate degree.
Associateship Exams:
Once a candidate has passed all preliminary exams, they can move on to the associateship exams. These exams are more specialized and cover specific topics related to actuarial science. The associateship exams include:
- Exam IFM: Investment and Financial Markets
- Exam LTAM: Long-Term Actuarial Mathematics
- Exam STAM: Short-Term Actuarial Mathematics
- Exam SRM: Statistics for Risk Modeling (replaces previous exam C)
In addition to these four exams, candidates also have the option to take an exam in their area of specialization, such as pension or life insurance. It is important for candidates to carefully choose which associateship exam(s) they want to take based on their career goals and interests.
Are Actuarial Exams Hard?
As you know the financial services industry is one of the most competitive and challenging fields to work in, and becoming an actuary is no exception. This exam is undertaken by thousands of aspiring actuaries every year, making it a highly sought-after profession. The actuarial exams are known for their difficulty and rigor, requiring extensive knowledge in various areas such as mathematics, statistics, economics, finance and more.
We have analyzed the 35 exams data offered by the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS), and here are some key findings about their difficulty:
- The passing rate for these exams ranges from 40% to 55%, with an average of only around 40%. This means that more than half of the candidates do not pass the exam on their first attempt.
- The time commitment required to prepare for these exams can be anywhere from 200-400 hours per exam, depending on your background knowledge and understanding of the material.
- Many candidates find it challenging to balance studying for multiple exams while working full-time or taking courses in college. It is not uncommon for individuals to take up to 2-3 years to complete all four exams.
Are Actuarial Exams Worth It?
The difficulty itself make makes one wonder, are actuarial exams really worth the time and effort? The answer to this question is subjective and ultimately depends on your personal goals and aspirations. However, there are several reasons why pursuing an actuarial career through these rigorous exams can be highly rewarding.
High Demand:
One of the main reasons why actuarial exams are worth it is due to the high demand for actuaries in various industries. Actuaries play a crucial role in managing risk for insurance companies, pension plans, government agencies and other organizations. With the increasing complexity of financial markets and data-driven decision making, the demand for skilled actuaries continues to grow.
Lucrative Salary:
Along with high demand, another major reason why actuaries choose to pursue these exams is the potential for a lucrative salary. According to the Bureau of Labor Statistics, the median annual wage for actuaries in 2024 was $111,030, with top earners making over $200,000 per year. This makes actuarial careers one of the highest paying jobs across all industries.
Career Flexibility:
Actuaries have opportunities to work in various industries such as insurance, consulting firms, government agencies and more. They can also specialize in areas such as health insurance, life insurance, pension plans or risk management. This allows for a diverse and fulfilling career path, as actuaries can choose to work in areas that align with their interests and skills.
Job Security:
Every new business venture or project involves some degree of risk, and companies rely on actuaries to assess these risks and provide recommendations for managing them effectively. As long as there is risk involved in businesses, there will always be a demand for actuaries. This makes actuarial careers one of the most stable and secure job options.
Continuous Learning:
The actuarial field is constantly evolving, with new data and techniques emerging all the time. This means that actuaries are always learning and adapting to stay up-to-date in their profession. They must also continually seek education and training to maintain their certification as an actuary. This provides a stimulating and intellectually challenging environment for those who enjoy continuous learning.
Recap:
The benefits of being an actuary are numerous and varied. From a fulfilling and high-paying career to opportunities for growth and continuous learning, it offers a unique combination of stability and excitement. If you possess strong analytical skills, enjoy solving complex problems, and have an interest in finance and risk management, becoming an actuary may be the perfect fit for you.
Timothy Brennan is an accomplished actuarial analyst based in Austin, Texas, with 8+ years of experience optimizing risk assessment frameworks at Accident Fund Insurance Company of America. Specializing in workers’ compensation and accident insurance, he designs predictive models that enhance claim forecasting accuracy and drive data-informed policy decisions. His expertise spans statistical analysis, regulatory compliance, and financial risk mitigation, supported by a Bachelor’s in Actuarial Science and credentials as an Associate of the Society of Actuaries (ASA).
A trusted voice in the industry, Timothy has contributed to developing standardized risk evaluation protocols adopted by regional insurers and presented his insights at forums like the National Insurance Symposium. His initiatives at Accident Fund improved reserve estimation precision by 18%, directly supporting the company’s reputation for reliability in complex claims management.