Actuarial Contract Work 101

Often in my conversations with clients and candidates, I get questions about actuarial contract work. Most actuaries are aware of contracting as a career path, but many still have questions about how to get started, the pros and cons, and what a typical engagement might look like. I thought I would share some insights from my experience in talking to and placing actuarial contractors in the insurance industry.

How to Get Started:

• Build a Strong Foundation: Obtain relevant actuarial credentials and gain experience in different fields of actuarial work. Prioritize hands-on, technical skills in modeling and programming. Typical contract roles require a minimum of 5 years of recent and relevant experience in a given actuarial discipline, product, and/or software.
• Network: Connect with fellow actuaries and recruiters virtually or in-person at conferences to learn about contracting opportunities. Some actuaries are able to keep themselves busy by finding opportunities through their direct network. Others choose to spend their free time developing new skills and partner with recruiters to find engagements.
• Develop Soft Skills: As a contractor, you will have to interview more frequently than someone in a permanent role. Practice clear and succinct communication. You should be able to speak directly to relevant projects and problems you’ve solved.
• Keep an Open Mind: You won’t always be able to wait around for that perfect opportunity. Never pass up an opportunity to have a conversation, test the waters in a new area, or explore a new discipline altogether. However, be careful not to oversell your capabilities or make promises you can’t deliver on.

Pros of Actuarial Contracting:

• Variety of Work: Contract roles often allow actuaries to work on diverse projects across different companies, which can help avoid burnout and monotony in your work life.
• Higher Earning Potential: Hourly rates for actuarial contractors typically result in a higher annual cash compensation level when compared to traditional roles, especially for individual contributors.
• Skill Development: Contracting exposes actuaries to a wide range of projects, products, regulatory framework, and systems. This facilitates the development of new skills and experience which is crucial in a rapidly evolving industry.
• Networking Opportunities: Working on different engagements with new companies and teams allows actuaries to build a robust professional network which can open doors to future opportunities.
• Work-Life Balance: Contractors are rarely required to work over 40 hours/week, and when they are, they are often eligible for overtime pay. You also have the flexibility to take extended time off between engagements to travel, spend time with family, or pursue opportunities for continuing education.

Cons of Actuarial Contracting:

• Uncertainty: Contract positions can lack job security, as they are typically project-based and temporary in nature. In times of economic uncertainty, contractors and consultants are typically the first to be cut. This will require diligent financial planning and readiness for unexpected and extended gaps between contracts.
• Benefits: Unlike permanent positions, contractors may not always be able to attain robust benefits packages, retirement plans, or paid time off. Research alternative options through direct markets and factor this in when you are thinking about your hourly pay rate.
• Exam Support: Actuarial contractors do not typically have access to paid study time or other exam support, so you may want to stay with a traditional employer offering that support until you attain your desired qualifications.

Common Types of Engagements (ranked in order from most to least common):

• Modeling: The most often resource need will involve some form of hands-on technical modeling or model validation/audit in software such as AXIS, ALFA, Prophet, PolySystems, and Slope.
• Valuation & Financial Reporting: Given the ever-changing regulatory environment, in-depth knowledge of GAAP, Statutory, Tax, IFRS, or BMA reporting is typically a requirement.
• Product Management & Pricing: Some companies leverage contractors to support with new or ongoing product management and pricing initiatives such as new product development, updated mortality tables, illustrations, and rate filings.
• Interim Management & Strategy: When a senior leader leaves unexpectedly or is unable to work for an extended period of time, some companies will bring in an interim manager until a longer-term solution is identified.

Why Do Companies Need Contractors?

• Special Projects: A main driver of contract work is special projects including regulatory changes and modernization efforts such as system conversions and upgrades.
• Peak Periods: To avoid having permanent staff burn out by working long hours, many companies will bring on contract support during times of increased workload such as quarter and year-end financial reporting.
• Attrition: With the standard US notice period being 2 weeks, and the average time to fill a permanent actuarial position taking 2-3 months, companies will choose to onboard an interim resource to fill the role on a temporary basis while they take the time to find the right full-time candidate.
• Alternative to Traditional Consulting: With traditional consulting firms’ hourly rates on the rise, many companies choose to engage an independent consultant or contractor with the relevant skills as a cost-effective, flexible alternative to the larger consulting firms.

Let's continue the conversation! What are your experiences or questions about actuarial contract work? Share in the comments section.