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Actuarial Science Ranked As Most Valuable College Major (bloomberg.com)
According to a new report from Bankrate, actuarial science, the formal term for the study of insurance, was ranked the most valuable college major.
"The actuarial science profession is interesting because students don't need advanced degrees to gain livable wages, but instead are certified through a series of exams overseen by the industry's professional organizations," said Bankrate.com analyst Adrian Garcia in an interview. "Students typically pass one to two of these exams while in school and then go on and complete others while working, earning raises and bonuses as they pass." Bloomberg reports: Actuarial science majors earn an average annual salary of $108,658 and have a better-than-average unemployment rate at 2.3 percent. And at a time when student debt is at a record high, these graduates are less likely to incur the added expense of additional schooling and delayed earning potential. Less than 1 in 4 graduates pursue advanced degrees. The study ranked 162 majors with labor forces of at least 15,000 people based on average annual income, employment status and whether those graduates went on to pursue a higher degree within 12 months. Income accounted for 70 percent of the weighted ranking, unemployment for 20 percent and 10 percent was awarded to career paths that did not demand additional education. The data was derived from the U.S. Census Bureau's 2016 American Community Survey.
"The actuarial science profession is interesting because students don't need advanced degrees to gain livable wages, but instead are certified through a series of exams overseen by the industry's professional organizations," said Bankrate.com analyst Adrian Garcia in an interview. "Students typically pass one to two of these exams while in school and then go on and complete others while working, earning raises and bonuses as they pass." Bloomberg reports: Actuarial science majors earn an average annual salary of $108,658 and have a better-than-average unemployment rate at 2.3 percent. And at a time when student debt is at a record high, these graduates are less likely to incur the added expense of additional schooling and delayed earning potential. Less than 1 in 4 graduates pursue advanced degrees. The study ranked 162 majors with labor forces of at least 15,000 people based on average annual income, employment status and whether those graduates went on to pursue a higher degree within 12 months. Income accounted for 70 percent of the weighted ranking, unemployment for 20 percent and 10 percent was awarded to career paths that did not demand additional education. The data was derived from the U.S. Census Bureau's 2016 American Community Survey.
He can't stand actuarial studies, he keeps saying "never tell me the odds".
I read that as "actual science ranked most valuable college majors". I was prepared to see a few gender studies majors throw a hissy fit.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
It does prevent harm. They sell a product which reduces the risk its purchaser is taking, the risk of ruin. Ruin causes harm.
At the high school I work at, there's at least 3 kids that are like "I want to be an actuary". I guess because it's an easily accessible field for math nerds.
I clearly remember my mom telling me this multiple times in the early 90s. I wonder if the Internet boom made this false for a while or if this "new" report is just stating that something that's been true for twenty-plus years is still true.
My mom had no connection with the insurance industry, it was just commonly known career advice that if you were good at math then passing the series of actuarial exams was a sure route to a good paying job.
Feel free to put together your own report ranking college degrees in order of "making the lives of humanity happier" but that's simply not the ranking order used by this report.
The vast majority of insurance is voluntary and that's a good thing. All insurance is fundamentally gambling but there are definitely cases where a high probability or certainty of a known cost is better than a low probability of a potentially much higher cost. This is mostly true when the higher cost is devastating or entirely out of reach.
Actuaries are simply gamblers who are smart enough to accurately calculate the odds. If you can find a sucker to bet against, by all means gamble with a sucker, but the actuary is more likely to stay in business long term.
And if you don't want to gamble at all, you'll still have to contend with the uncertainty of the universe, but nobody is forcing you to lay cash on the "child fell down a well" scenario. However if you are doing stuff with a potential to cause serious harm (operating heavy machinery, practicing medecine, etc) you can expect to be forced to carry enough insurance to pay for your mistakes even if you swear that you'll never make a mistake. The rest of the world simply isn't willing to take your word on your own assessment of your own perfection.
Uh huh. The funny thing is that all these jobs are STILL HERE, even though "AI" is here. I mean, just buy a Watson license from IBM and you can get rid of those pesky employees. Yeah right. It is almost like AI is complete BS or something.
But the insurance industry does improve safety and prevent harm. It encourages programs, standards and good practice in those it insures in exchange for lower insurance rates. So hurricane resistant building designs will get lower premiums in hurricane prone areas. And they do this by accessing risk based on statistical evidence. It pushes best practice before bad things happen.
I think much of the issues with say flood insurance propping up otherwise too risky flood prone communities, is that the insurance is government subsidised in flood prone areas. Which distorts the market pressure from increased insurance costs on flood prone areas, and instead encourage further building.
Probably the clearest example I can think of is the setting up of the "underwriters laboratory" for what was originally fire safety standards and approval for fire safety in buildings and electrical safety, setup by the National Board of Fire Underwriters, now the American Insurance Association trade association. UL standards are everywhere, and ensure product safety over a wide range of products.
Obviously their function is not to prevent hurricanes. Nobody has made this ridiculous claim. If you don't know what "risk of ruin" means then google it and perhaps you'll better understand the point of that industry. Not all businesses are large enough to cover all their risks with their own capital and it is not in their interests or the interests of society to see them disappear due to some disaster they cannot prevent.
Already happened for about 10 years. But
1. Not all lemmings could handle the math
2. Not all schools want to admit all the lemmings
3. Like accountants, lawyers and doctors, the field is well-protected through the certifying organizations.
The vast majority of insurance is voluntary and that's a good thing.
Not when it comes to health insurance. Voluntary insurance should be for things that are voluntary. Everyone is going to need health care at some point and the best way to ensure the best care for the most people is to require everyone to pay into the pot and spread the cost. If you are a bit better off then congrats but you get to pay a bit more to help those who lack the means so we can minimize cost overall.
Actuaries are simply gamblers who are smart enough to accurately calculate the odds.
Actuaries aren't really analogous to gamblers since none of their own money is at stake typically. They are simply the ones calculating the odds for the insurance companies who are analogous to gamblers or more properly to bookmakers. However all these analogies are really somewhat flawed.
The Affordable Care Act gave a very powerful industry - the for-profit insurance industry - even more power by making us all their obligate consumers.
As opposed to letting people suffer and die without insurance? We ALL are going to need health care and that means we all need insurance in some fashing. Only in the US are we too stupid and/or too uncaring to realize that we all have to share the financial burden. If you don't like for profit insurance companies reaping the benefits then you are de-facto arguing for single payer government health care. (unless you are an an asshole who thinks poor people don't deserve health care)
You are an "obligate consumer" of health care whether you want to be or not. The sooner we get out of denial about this fact and share the cost the better off we all will be.
Yeah, it pays well and if you are good at math, it is easy, but actuarial science is in some sense the dullest, most boring and saddest field in applied math, since you usually do the additional certifications while you are already employed in an insurance company (similar to certifications for system administrators), which in turn means, that you probably hold a degree in math or physics. Here in Germany that usually means at least a MSc, but usually a PhD. And then you go back to undergraduate level statistics, which again is pretty much high school mathematics.
But it pays well, has almost 100% job guarantee and usually means very manageable work conditions with many benefits, which is everything you wish for after working in academia.
AIs are great if you have this degree. AIs are based heavily on mathematics and statistics. Acturial science is all about mathematics and statistics. Someone has to build these things, and the skills are transferable.
I paid $240,000 for my house. I owe $200,000 on it.
Without insurance, if/when something happens to my house - hurricane, fire, etc, I'd have no place to live AND owe $200,000 paying for a house I no longer have. That would be catastrophic for my family.
It's insured for $400,000. If it's destroyed by a hurricane (or more likelly in my area, tornado or fire), I'll pay off the $200,000 I owe and then use the other $200,000 to buy another house with cash.
If a fire or tornado destroys my house, I'll still have an house and won't have a mortgage payment. I'm HOPING for a tornado. Insurance means it would be a windfall (haha) instead of a catastrophe.
> No risk is reduced by that "product".
Have you ever heard of Underwriters Laboratories (UL Listed, UL registered)? Or fire codes? Underwriters means insurers. The primary product safety organization was founded by insurance companies.
How about the National Fire Protection Association, which writes the fire codes? That's insurance companies again.
Ever heard car commercials bragging about their IIHS safety rating? IIHS is the Insurance Institute for Highway Safety. Again, the primary safety organization is insurance companies.
Switched from a B.S. in computer science to actuarial science in the business school. Worst decision i probably every made except it did wonders for my gpa and I learned a lot of practicle knowledge about finance and insurance. After losing a year of science coursework i ended up with a BBA and 10 years of exams to pass. My first exam covered Calc I, II, III, linear algebra, differential equations, and sequence and series all of which I took as a CS major. That's been a long time and things have probably changed. Passing score was totally controlled by society of actuaries to limit the number of people in the field and how far you progess. After making it through that entry exam i had about 8 more to go from probability and statistics to numerical analysis to to specific insurance exams if you are doing the CAS track. After working for a property and casualty company and going to an actuarial convention in Chicago i decided doing loss ratio triangles and filing rate increases was just too dry for me. Went back to graduate school to get a master's in computing and doubled my salary after graduation. There is definitely a career available to those who want to go into the actuarial field but working for insurance companies might not be terrible exciting for many. One perk of being an actuary is potentially how close you work with the CFO and other executives. Most of the math you master isn't used in the job. If you make it to a fellow you can make multiple 6 figures but it takes a long time and is a pyramid in structure since the exam pass rate is a controlled thing. Some of the more interesting work i think is in the reinsurance and maritime insurance sectors. https://www.casact.org/admissions/process/
It's rare to have a business style degree based on calculus (mixing in linear algebra and operations research, OR was awesome!).
Calculus based statistics was hard (sophomore year). Life contingencies was much more difficult (senior year).
I moved into IT right after graduation. Not much calculus after that, but I always enjoyed it (until sin/cos came into the equation).
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I pointed out that insuring your home and its contents removed the risk of financial ruin due to a fire, tornado, etc. That's the proper use of insurance - preventing financial ruin by making a predictable small payment so you don't have to worry about losing $200,000.
The other insurance I carry is because I have a young child and I am the essentially the sole bread winner for our family. It only costs a couple hundred dollars per year for me to have a $250,000 life insurance policy to take care of my family if I die before I'm retired. Again, losing me without having insurance would be a financial catastrophe for my family. Insurance largely fixes that. (Wife has a plan to complete her degree while paying the bills with the first half of the insurance money).
A corollary is that you should NOT buy insurance on your $60 DVD player and other consumer items. A broken DVD player is not a catastrophe. It won't ruin you. Therefore rather than paying an extra $25-$50 every time you shop the electronics section, it is wiser to put that money in the bank. Then when the DVD player breaks you just buy a new one. It costs 75% that way, and you don't have to deal with filing a claim.
Twenty years ago you could be medical insurance in the US. It covered you for major medical expenses that would be catastrophic. A $35 doctor visit for strep throat isn't a major catastrophe, so insurance isn't relevant and wasn't involved. Medical insurance was fairly reasonably priced. In the last 20 years, people in the US, and our lawmakers, seem to have totally forgotten what insurance is. Insurance isn't for $35 items, that's what twenty dollar bills are for. But now we have insurance companies inserted into the process even for a $10 vaccine, so the doctor gets to pay a full-time claims person to handle paperwork and they wait a month or more to get their $10 for the vaccine. The insurance company has thousands of employees handling these tiny claims. All of those people and all of that process costs money. So now the insurance costs over twice as much and you STILL pay the doctor the $30, now they call it a co-pay. Now you ALSO get too pay the insurance company hundreds of dollars per month more and mostly you're paying for everyone's paperwork.
I wish I could still buy medical insurance, instead of a health plan. Medical insurance isn't that expensive and the claims hassle isn't that big of a deal for something you only deal with once or twice in your life. I've got $35 in the bank, so I can pay for a a strep test without also paying an insurance company an extra $35 to process the payment.
Even worse, now not only does the insurance company bureacracy have to get involved in every little medical thing, I'm also required to pay for crap that's rather questionable as to whether it's medical or not. The UK association of chiropractors, when organization which licenses chiropractors in the UK, says that the entire idea of "sublaxation" is bull, total snake oil, and that's what chiropractic is bases on in the US - snake oil. Yet I'm forced to pay for this snake oil, because lawmakers require insurance companies to include it. As I recall, one bill even listed aromatherapy (smelly candles) as something insurance companies (and therefore their customers) would be forced to pay for.
You want to fix medical costs in the US? That will require several different changes, but bringing back *medical insurance* as an alternative to *health plans* would certainly help.
I've long held the view that IT and SW development need to figure out a way to form a professional organization like the one physicians have. A "lite" example of this is the Society of Actuaries, and it looks like they're doing their job. Actuaries have had a very stable career for a very long time. It's not as sexy as slinging ads at Google or Facebook or working at a hip web startup, but it does pay well.
I don't have the math skills to even consider getting into this profession, but it's a very good example of an industry needing very talented people and paying accordingly for them, Insurance companies can go bankrupt if they make bad actuarial decisions...too conservative and they don't make enough money, too risky and they can go broke paying out more claims than they expected.
What I think they do right is similar to what I think the medical profession got right:
Not knowing the industry, however, I do wonder how insurance companies don't just go around the whole thing and hire 25000 Indian number crunchers the same way IT outsourcers "replace" experienced developers and systems engineers. Either the skillset is so esoteric that only the super-intelligent math geniuses among us can do it, or the SOA has the ability to force companies to do what it wants the same way the AMA does in the US.
Sometimes it does prevent harm.
In a lot of cases the insurance agent will give you advice how to reduce your premium by applying simple safety tips that will reduce your risk - and their risk to pay your claims.
In rare cases the insurance agency will take it upon themselves to fund certain safety features in public space, just to reduce the value of claims they must pay due to lack of these features. And lobby the lawmakers to mandate safety features that will reduce their costs.
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Only if the loss they hit in case of problem is higher than the cost of investing in prevention. If the loss is lower, then they don't care a iota on preventing harm.
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You probably wont get the payout you are expecting. Insurance operates on a "Made Whole" premise. That means you will be as well off as you were before.
Unless the market value of your house has increased to 400k, you will not get 400k. You will get the value of that house. In the case of your house, you can expect the combined value of the debt and equity; but not more. The reason is to make you whole, or in the same financial place as you were before the loss.
That being said, there are some exceptions. If the value of the house has risen, or in the case of extremely low priced homes. As a example close to my home, You may have heard about the fires in Northern California this year. My father is in the habit of, makes a hobby of, house restoration and flipping. There was a house that he had paid 30K for (cash price in an unusual situation). It burnt in that fire. Because there is no possibility of another house being purchased at 30K he received about 75k, the value of a similar house in a similar market. That is close to what he expected from a sale, so it was the amount needed to "make whole."
So, while there are a few odd exceptions, in general you will not profit significantly from an insurance payout. Unless you have a lot of equity, you will not get enough to pay off a large current loan, and make a cash purchase of a similar house.
> If you lose your home, the insurance company will only pay for replacement
Yes, the insurance, both the cost and the coverage, is based on building a new 3,500 square foot home to replace the 25 year old peice of junk I live in. At least that's how it is in Texas. Other states may vary.