The Actuarial Talent Conundrum

Posted by Richard Jacobson

Actuarial Talent The actuarial profession continues to face a period of drastic changes. From market evolutions— including the introduction of more stringent regulations—to talent transformations, including the increased popularity of science, technology, engineering and mathematics (STEM) degrees, these shifts are having a drastic impact on the supply and demand of actuarial professionals.

Explosive Growth in the Health Industry
Within the health arena, the changes to, and implementation of, the Affordable Care Act (ACA) have resulted in the health industry emerging as a growing area for career opportunities. In fact, the U.S. Bureau of Labor Statistics expects the overall healthcare sector to add nearly five million jobs through 2022, making it the fastest growing service sector nationwide. Within insurance, the projected addition of 20 to 25 million previously uninsured Americans and the increasingly aging population is boosting the demand for actuaries. In fact, healthcare actuaries are predicted to experience an annual growth rate of 4.5 percent—the highest across all insurance segments.

Life Industry Rebounds
On the life side, the actuarial practice area is also set for robust growth—driven by the aging population. Life expectancy in the United States has increased from 76 years in 2000 to 79 years in 2014, and is expected to remain at 79 years through 2018. Life insurers are turning to their actuarial staffs to assist in managing the policies of this aging population. After experiencing several years of slow or flat growth, life actuarial employment is predicted to grow at a rate of 3.7 percent annually.

Property and Casualty Sees Hiring Increase
Currently the largest employer of actuaries nationwide, property and casualty insurers anticipate an increase in actuarial employment through 2020. Having hovered at 3.7 percent in the early 2010s, actuarial growth is expected to average 4.0 percent annually in the coming years. The increased focus on predictive analytics and the embracing of disrupters—including usage-based insurance and telematics—is driving this increased focus on actuarial staffing.

Amid this growing demand for actuaries, insurers are facing a unique talent conundrum—an excess of entry-level talent and a drastic shortfall of mid-level actuarial professionals. What is driving this talent shift? What can insurers do to successfully manage the talent realities within the actuarial profession?

Emerging Actuarial TalentThe Entry-Level Excess
Today’s entry-level actuarial candidates face a highly competitive market, with many more individuals desiring to enter the profession than there are employment positions available. Despite competition from other potential career paths, the popularity of the actuarial profession has grown drastically in recent years, driven by its reputation for employability and job security. In fact, within the actuarial arena, the unemployment rate continues to hover between zero and one percent. Throughout the past several years, actuarial employment has grown steadily—averaging around 3 percent annually.  By 2022, the employment of actuaries is projected to grow 26 percent.

As a result of this positive employment outlook, students have been flocking to actuarial science programs in droves. In the past five years alone, the number of students participating in these programs has grown 11 percent. The number of first-time actuarial exam candidates is increasing 7 percent each year. As a result, nearly 70 percent of graduates seeking actuarial employment will struggle to find a job—with only the top 25 to 30 percent of graduates gaining actuarial employment upon completing their programs.

The Mid-Level Crunch
Unfortunately for insurers, there is a distinct tightness within the mid-career actuarial market. Insurance organizations struggle to find enough skilled and qualified candidates to fill their available roles. This is a growing concern as the narrowing in the mid-career market has the potential to flow on to create a problem filling senior actuarial positions.

The reasons behind this talent shortage are multi-pronged—an exodus of actuaries from the workforce, a shortage in the number of mid-career level professionals and a skillset mismatch. Analysis of workforce demographics highlight a significant drop-off in the number of actuaries in their mid-to late-30s. In addition, a number of actuarial professionals are being swayed by the vast array of highly quantitative—but non-actuarial—positions available outside of the industry. The rise of data-driven business operations has created a wide-range of functions across industries, providing actuaries with a number of new career opportunities. The result is an exodus of actuarial talent that is unlikely to be reversed. In addition, there is a skillset issue at the mid-career level. Employers are looking for actuaries with a balanced toolkit of leadership, managerial and communication skills. Unfortunately, it is continually difficult to find the right mix of these non-quantitative skills. 

In order to combat these growing talent challenges, insurers must focus on promoting engagement and retention at the mid-career level, as well as developing their current entry-level employees. Engagement should be focused on promoting career development opportunities in order to cut down on the number of actuaries that are leaving the industry for non-actuarial roles. Organizations should look into providing interesting project opportunities, mapped out promotion paths and cross-department development opportunities in order to retain mid-level actuarial talent. In addition, employers must develop their entry-level actuaries through additional training and rotational experiences that will give them the background and skills sets demanded of mid-level professionals. 

Unfortunately, not all organizations have the time to develop their actuarial talent from the recent graduate level. They have mid-level actuarial openings that must be staffed now. In order to address these immediate needs, many insurers are turning to contract subject matter experts. These individuals offer a unique solution to for organizations in need of experienced actuaries. Partnering with a staffing firm—specifically one with an insurance industry focus—will provide organizations with unique access to a bench of highly-skills professionals that can be called upon to provide a stop-gap while a permanent position is filled or offer hands-on expertise for special projects and assignments. Thanks to the growing interest in the flexibility provided through a contract career, these experienced professionals have the knowledge and hands-on work experience to quickly jump in and get started.

Is your organization facing a mid-level actuarial talent gap? What strategies are you implementing to combat this?