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The Actuary The magazine of the Institute & Faculty of Actuaries

General insurance salary survey

The 1999 survey of remuneration levels of actuaries working in the general insurance field was published in 1999 by GAAPS. Although each succeeding survey has built on the experience gained in compiling its predecessors, all have one thing in common: they are based on information provided directly by fully and part-qualified actuaries currently working in the general insurance field.

Remuneration packages
What are the main findings of the 1999 survey? The remuneration packages of fully qualified actuaries continue to increase at a rate much higher than inflation by 6.7% over the preceding year to around £95,000. However, basic salary levels for part-qualifieds with more than four years’ experience actually fell by 16% to £37,000. Post-qualification experience is the factor which has the greatest impact on earnings, with remuneration tending to rise progressively as each year passes.
Among part-qualifieds, the average number of professional examinations completed at each duration actually fell over the 12 months since the previous survey. Earnings differentials in this group depend mainly on experience and the number of examinations passed.
The perceived standard of education seems to have no significant bearing on ultimate total remuneration. For example, actuaries who achieve a 1st or 2.1 on average earn no more than those with a lower degree, and graduates of Oxford or Cambridge tend to fare no better than those graduating from the redbrick universities. However, the nature of one’s educational grounding does affect the time it takes to achieve actuarial qualification. But there is no evidence that non-actuarial forms of training such as project management or interpersonal skills have any real impact on earnings. While 8% of UK general insurance actuaries are reasonably fluent in French or German, this does not affect their remuneration or promotion prospects, even though employers claim to place a premium on such skills. Somewhat surprisingly, there is little difference between the packages offered by consultancies and those available from other types of employer.

The value of an MBA
The 1999 survey includes what is effectively a cost/benefit analysis of studying for an MBA. We found that taking a two-year MBA course has no effect on overall earnings. Although the mean salary of some £50,000 earned by a typical graduate of a leading business school is higher than the average part-qualified receives after two years of employment, the difference is not enough to make up for the cost of full-time study and lost earnings.
Where do general insurance actuaries work? It is not surprising that nearly 70% of those fully qualified are based in London and the south east. When it comes to types of employer, 51%of recruits are with insurance companies, 18% with consulting firms, 17% with reinsurers and 6% at Lloyd’s. As many as 4% work for investment banking firms, perhaps developing products which offer risk protection other than of the traditional insurance-based kind.

Work and play
The 1999 survey also aims to build up an overall picture of working conditions and lifestyle patterns. On average, actuaries work around 45 hours each week. While nearly half of them live a short distance from the office, some 8% spend four or more hours commuting each day. Four out of five spend over two hours each week on their hobbies, and one in three dedicates as much as 19 hours a week to leisure pursuits. While most actuaries are keen on sport and fitness taking advantage of the facilities laid on by their employers few are computer nerds. One in five does not use the Internet at all, and half never surf the net at home.
There are some who claim that remuneration surveys of this kind are inflationary, in that they interfere with normal market forces and boost earnings artificially. However, the evidence disputes this. Salary levels for part-qualifieds actually fell between 1998 and 1999 and a few fully qualified actuaries chose to emigrate from the general insurance field to work on the pension review!
The dissemination of salary information brings benefits to employees and employers alike. Employees can use the data to check on the market rate for a particular combination of job description, qualification and experience, while employers can apply it to find out what they need to pay to retain high-calibre professional staff. Following a number of requests from employers, we will be sending out questionnaires for the 2000 survey some time after April, when a large proportion of companies will be holding their annual salary review. The survey results will be available in time for the general insurance conference of the Institute and Faculty of Actuaries in October. GAAPS welcomes feedback and suggestions from all sources; if you have any ideas for improvements, please let us know.