what is actuarial science 
actuarial science is a discipline that assesses financial risks in the insurance and finance fields using mathematical and statistical methods actuarial science applies the mathematics of probability and statistics to define analyze and solve the financial implications of uncertain future events traditional actuarial science largely revolves around the analysis of mortality and the production of life tables and the application of compound interest understanding actuarial scienceactuarial science attempts to quantify the risk of an event occurring using probability analysis so that its financial impact can be determined actuarial science is typically used in the insurance industry by actuaries actuaries analyze mathematical models to predict or forecast the reasonableness of an event occurring so that an insurance company can allocate funds to pay out any claims that might result from the event 2 for example studying the mortality rates of individuals of a certain age would help insurance companies understand the likelihood or timeframe of paying out a life insurance policy actuarial science became a formal mathematical discipline in the late 17th century with the increased demand for long term insurance coverage actuarial science spans several interrelated subjects including mathematics probability theory statistics finance economics and computer science 3 historically actuarial science used deterministic models in the construction of tables and premiums in the last 30 years science has undergone revolutionary changes due to the proliferation of high speed computers and the union of stochastic actuarial models with modern financial theory applications of actuarial sciencelife insurance and pension plans are the two main applications of actuarial science however actuarial science is also applied in the study of financial organizations to analyze their liabilities and improve financial decision making actuaries employ this specialty science to evaluate the financial economic and other business applications of future events in traditional life insurance actuarial science focuses on the analysis of mortality the production of life tables and the application of compound interest which is the accumulated interest from previous periods plus the interest on the principal investment as a result actuarial science can help develop policies for financial products such as annuities which are investments that pay a fixed income stream actuarial science is also used to determine the various financial outcomes for investable assets held by non profit corporations as a result of endowments in health insurance including employer provided plans and social insurance actuarial science includes analyzing rates offor example disability rates are determined for veterans that may have been wounded in the line of duty certain percentages are assigned to the extent of the disability to determine the payout from disability insurance actuarial science is also applied to property casualty liability and general insurance instances in which coverage is generally provided on a renewable period such as yearly coverage can be canceled at the end of the period by either party in the pension industry actuarial science compares the costs of alternative strategies with regard to the design funding accounting administration and maintenance or redesign of pension plans a pension plan is a defined benefit plan which is a type of retirement plan involving contributions from the employer to be set aside and paid out to the employees upon retirement short term and long term bond rates greatly influence pension plans and their investment strategies bonds are debt instruments issued by governments and corporations that typically pay a periodic interest rate for example in a low interest rate environment a pension plan might have difficulty earning income from the bonds that it has invested in which increases the probability that the pension plan could run out of money other factors impacting a pension plan s viability include benefit arrangements collective bargaining the employer s competitors and changing demographics of the workforce tax laws and the policies of the internal revenue service irs regarding the calculation of pension surpluses also impact the finances of a pension plan additionally economic conditions and trends in the financial markets can impact the probability of a pension plan remaining funded actuaries may also work in the public sector to assist with proposed changes to social security medicare or other programs universities and professional certificationsaccording to the bureau of labor statistics the number of actuaries employed is expected to grow 23 from 2022 to 2032 4 for this reason many universities offer educational degrees and courses on actuarial science in addition there are professional designations for those interested in pursuing the field the society of actuaries identifies and reports colleges that meet one of three levels of recognition as of december 2022 there are roughly 25 center of actuarial excellence schools across the united states canada australia singapore the united kingdom and china within the u s these schools include but are not limited to brigham young georgia state purdue connecticut and michigan 5according to the latest bls wage data the median annual wage for actuaries in 2021 was 113 990 1there are a number of different professional designations an actuary can pursue to further gain credibility and proficiency in their field the casualty actuarial society offers the associate acas and fellow fcas membership levels each of the two with escalating requirements for example the acas credential can be achieved after passing six exams while the fcas is earned after nine exams areas of focus for the fcas exam include 6the society of actuaries promotes several different actuarial exams to demonstrate competency in the field 7