Being a Technical Actuary vs. Non-Technical Actuary: Paths, Pros, and Cons

November 05, 2024

Estimated Reading Time: 5 minutes

The actuarial profession is known for its heavy reliance on technical skills, such as risk modeling, data analysis, and financial forecasting. However, as actuaries progress in their careers, they often face the decision to remain in technical roles or pivot toward non-technical, leadership roles. Both paths have their unique advantages and challenges, but they differ significantly in terms of responsibilities, career trajectory, and compensation.

Describing path of a technical actuary

A technical actuary focuses primarily on the core analytical and mathematical aspects of the job. These professionals spend their time working with data, developing complex models, analyzing risk, and producing reports used by businesses to make informed decisions. Technical actuaries work in areas such as life insurance, health insurance, pensions, and property and casualty insurance.

Key Responsibilities include:

  • Risk modeling and financial forecasting

  • Actuarial valuations and pricing

  • Data analysis and predictive modeling

  • Working with specialized software (e.g., R, Python, SQL, and actuarial modeling software)

  • Producing technical reports and documentation for decision-makers

There are various pros and cons of being a technical actuary. The tradeoffs are complex and might not be apparent immediately. Ultimately, its all about choosing what tradeoffs we can live with. And that is a decision that depends on each individual uniquely on case-to-case basis.

  • Pros of Being a Technical Actuary:

    • Mastery of Analytical Skills: Technical actuaries often become experts in their field, building deep expertise in areas like risk modeling and financial analysis.

    • Steady Demand: Companies will always need technical actuaries to handle complex actuarial tasks, so job stability in these roles is generally high.

    • Autonomy and Focus: Technical roles are often project-based, allowing actuaries to focus on specialized areas without as much need for broad business or leadership involvement.

    • Deep Technical Expertise: Technical actuaries typically stay at the cutting edge of new methodologies, algorithms, and statistical techniques.

  • Cons of Being a Technical Actuary:

    • Limited Career Growth: Many technical roles have a ceiling. While technical skills are crucial, promotions to senior management or leadership roles often require broader business acumen.

    • Lower Compensation: While technical actuaries can be well-compensated, their pay generally plateaus at a certain level compared to non-technical, leadership roles.

    • Narrow Focus: Technical roles can sometimes feel repetitive, focusing on a specific area of actuarial science without much exposure to broader business or leadership challenges.

    • Less Influence on Business Decisions: Technical actuaries often provide input but may not be involved in high-level strategy or decision-making

Describing path of a non-technical actuary

A non-technical actuary, also referred to as an actuarial leader or business-facing actuary, moves beyond the core mathematical and technical duties to focus on leadership, management, and strategy. They work closely with other departments, such as finance, marketing, and product development, helping align actuarial insights with broader company goals. In consulting they have business-facing responsibilities to interact with clients, develop business and new prospects and help to explain the actuarial results produces by their team to the clients.

Key Responsibilities of a non-technical actuary are:

  • Overseeing teams of actuaries and analysts

  • Collaborating with executives on strategy, business development, and risk management

  • Presenting actuarial findings to non-technical stakeholders, such as senior management, regulators, or clients

  • Involvement in product development, pricing strategy, and mergers & acquisitions

  • Leading risk management or enterprise-wide financial strategy

The various pros and cons of being a non-technical actuary are:

  • Pros of Being a Non-Technical Actuary:

    • Higher Compensation: Leadership roles typically come with significantly higher pay, reflecting broader responsibility and influence on business outcomes.

    • Career Growth and Advancement: Non-technical roles provide a clear path to senior management and executive positions, such as Chief Risk Officer (CRO) or Chief Actuary.

    • Broader Business Impact: Non-technical actuaries influence company-wide decisions, have a seat at the executive table, and help steer the company’s direction.

    • Leadership Opportunities: Actuarial leaders have the chance to manage teams, build organizational structures, and influence culture and business practices.

  • Cons of Being a Non-Technical Actuary:

    • Less Technical Focus: Actuaries in leadership roles may miss the deep, technical work that initially drew them to the field.

    • Greater Responsibility: Leadership roles come with high pressure to deliver results, manage teams, and navigate business challenges beyond actuarial work.

    • Skill Diversification Required: Leadership roles demand strong soft skills (communication, leadership, negotiation) and knowledge of business areas like finance, marketing, and operations, which may require additional effort to develop.

    • Less Job Stability: Senior roles, especially in leadership, often involve higher risks, including navigating company performance metrics and shareholder expectations.

Transforming Insurance Industry with Actuarial Automation

Embark on a journey with Visionet to transform your strategies and embrace the limitless possibilities of Actuarial Automation. Dive into our white paper and discover how you can embrace efficiency, innovation and ensure adherence to regulatory standards. Download white paper: The Rise of Actuarial Automation Whitepaper - Visionet

The higher compensation of non-technical actuaries, particularly in leadership roles, is driven by several factors:

  1. Broader Responsibility: Leadership roles typically encompass broader organizational responsibilities, including managing teams, overseeing business units, and making high-level strategic decisions that impact the company’s bottom line.

  2. Business Impact: Actuarial leaders are involved in high-stakes decisions such as pricing strategy, mergers and acquisitions, product development, and enterprise risk management. These decisions can have significant financial consequences for the company, and leaders are compensated accordingly for their influence.

  3. Rare Skill Set: While there are many skilled technical actuaries, fewer actuaries develop both the technical and business acumen required for leadership roles. This rarity makes those who can successfully transition into non-technical leadership roles highly valuable.

  4. Leadership Demand: Companies place a premium on strong leadership, particularly in industries like insurance and finance where strategic decisions directly affect profitability and growth. Actuarial leaders who can align technical insights with business goals are in high demand.

  5. Risk and Accountability: Leadership positions involve greater risk and accountability, which are often rewarded with higher pay. Senior actuaries are expected to manage not just technical risk but also business risk, regulatory risk, and even reputational risk, making their roles more complex

This doesn’t mean we should treat the technical aspects of actuarial work as tasks meant only for junior analysts. Our field is inherently technical, and staying hands-on is essential because these outputs are what drive our value. It’s time we move beyond labeling technical experts as "misfits" and recognize that true success comes from mastering both technical and client-facing skills. Despite the rapid adoption of modeling in actuarial work, many organizations haven't evolved accordingly. Actuaries often perform various non-actuarial tasks like data handling, model setup, and result compilation manually. Key aspects like model design, validation, and development are frequently assigned to junior staff, impacting quality. Talented modelers often leave due to a lack of clear career advancement paths. In essence, while modeling is central to actuarial work, roles remain poorly defined and undervalued, leading to inefficiencies and missed opportunities to leverage actuarial talent fully1.

The practical aspect of modeling, overseeing the complete modeling workflow, must be acknowledged as equally vital as the business side, which sets assumptions, interprets outcomes, and makes decisions. This collaboration can transform the actuarial unit into a more strategic, model-driven force, boosting efficiency and optimizing model development. Organizations will be better positioned to leverage emerging technologies like advanced analytics. Establishing a Chief Modeling Officer role would signal the importance of modeling operations, ensuring these skills are valued and forming connections with IT and other departments, thereby elevating actuarial modeling practices2.

The modeling operations team gains prominence when centralized, as their productivity and contributions become clear. This approach gives modeling a defined place within the organization, offering a structured career path for actuaries with modeling skills. It enables mentorship and skill development, transforming modeling into a recognized actuarial specialty rather than a temporary task for entry-level staff. Modeling thus emerges as an essential and respected actuarial function, fostering expertise and growth within a dedicated team.

Conclusion

Both technical and non-technical actuarial roles offer rewarding career paths, but they appeal to different skill sets and career goals. Technical actuaries are experts in analysis and modeling, thriving in roles that prioritize in-depth technical work. In contrast, non-technical actuaries lead teams, drive business strategy, and navigate complex corporate challenges.

Choosing between these paths depends on your career ambitions, whether you prefer technical mastery or aspire to influence company strategy at a high level. Both roles are critical to the success of the actuarial profession, and finding the right path is key to long-term career satisfaction and success.

Both technical and non-technical actuarial career paths offer rewarding opportunities. The choice between them depends on individual strengths, interests, and long-term career goals. While technical roles provide deep analytical satisfaction, non-technical roles offer broader business impact and often higher financial rewards. Regardless of the chosen path, a strong foundation in actuarial principles and continuous learning are key to success in this dynamic field.