Actuary vs Underwriter: Difference and Comparison

 Business organizations always take risks for the expansion and growth of their business.

Every person who is working in the organization might not be able to assume and calculate the rate of risk in the contract that takes place between the company and the contractor.

Thus, they are two well-known professions that assume and evaluate the rate of risks in any contract or business model.

Key Takeaways

  1. Actuaries use statistical analysis and mathematical models to predict and evaluate financial risks, while underwriters assess the risk of insuring individuals or assets and determine policy terms.
  2. Actuaries work with large data sets and long-term projections, whereas underwriters focus on individual cases and shorter-term assessments.
  3. Both professions play essential roles in the insurance industry, with actuaries providing the data-driven foundation for underwriters’ decisions.

Actuary vs Underwriter

The difference between an actuary and an underwriter is that actuaries utilize the data and information for determining classifications that should be levied for any person or company that is suitable for a provided glass. On the other hand, the underwriters’ job is to determine in which glass the contractor fits into.

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Quiche vs Souffle 2023 07 15T180646.754

 An actuary can be defined as a business professional who masters or specializes in the field of problem-solving and management of unreliability and risks. The name of field in which an actuary specializes is known as Actuarial science.

The risks and the uncertainties that take place affect both the side of the balance sheet and other financial statements of the company.

 An underwriter can be understood as a group that analyzes, evaluates, and assumes the risk of another group without any charges.

As an underwriter provides their services without any charges but they do charge some commission, premium, or interest on the services provided by them.

Comparison Table

Parameters of ComparisonActuaryUnderwriter
Qualification To become an actuary, you must pass ten exams.For becoming an underwriter, you must need to pass numerous exams and courses.
TypesLife Actuary, Health Actuary, General Actuary, Pension Actuary, Finance Actuary, Bank Actuary, etc.Insurance underwriter, mortgage underwriter, loan underwriter, etc.
ToolsActuaries utilize advanced technological, mathematical, statistical, and financial theories.Underwriters make the use of analyzing and researching tools with numerous screening tools as well.
GrowthA 16 percent job growth is estimated in the field of actuary between 2014 and 2024. While a -11 percent job growth is estimated in the field of underwriting which has been falling in the same period as actuaries.
DesiredThe actuary is a more desirable career option than an underwriter. The underwriter is a less desirable career option as compared to an actuary.

 What is an Actuary?

 An actuary is a skilled professional and business organizations and governments majorly rely on the skills of these professionals for their planning for upcoming models and the future.

An actuary possesses various skills such as effective communication, management, mathematics, and analytical skills.

They have a creative, adaptable, and fast learning mindset which helps them to grow and evolve in this technical age. They apply their skills and mindset to analyzing various aspects and environments of the business.

Businesses like banking, investing, e-commerce, marketing, product development, and so on majorly hire actuaries as such business requires higher skills of researching, analyzing, and risk management.

Actuaries make the use of their math and statistics skills to analyze the financial consequences of the risks and uncertainty that takes place.

Actuaries would elaborate their task or work as challenging, however, enjoyable at the same time. Actuaries should also have a piece of great business knowledge.

The profession of an actuary is among the top professions and the most wanted ones.

Since 2010, the profession of actuarial science has been either top of the list or follows number one in the top professions, as per the studies of the experts.

executive assistant

What is an Underwriter?

Underwriters generally perform their roles in the companies or the organizations whose functions deals are to deal with insurance policies, equities, debts, and mortgage loans.

An underwriter shall process all the knowledge that is required in the specific industry they tend to work in.

Their main function is assuming and evaluating the risks in any business decisions and transactions. Based on their knowledge and study, an underwriter either accept the risk or denies it.

Accepting the risk or denying it, whichever benefits the organization, an underwriter follows it. They suggest the businesses which contracts are worth taking the risk.

An underwriter is one of the most crucial professions in the world of financing. Underwriters are generally found in stock markets, banks, and insurance companies.

An underwriter helps in providing honest and fair rates on loans granted.

They suggest to companies whether providing loans would work for the company or not. In the profession of underwriting, many forms of underwriter fall.

A lead underwriter can also be referred to as Book Runner. The rate at which the contract is finalized between the contractor and the company, the underwriter tends to charge a rate of their commission.

underwriter

Main Differences Between Actuary and Underwriter

  1. Actuaries are majorly employed in reinsurance and insurance companies, while, underwriters are majorly employed in insurance companies.
  2. Actuaries frame the classifications which are used by the companies to decide the prices of their policies, while, underwriters use these drafted classifications for dividing the potential customers.
  3. To pursue your career as an actuary you must study in the field of Commerce in Mathematics or Statistics. While, to pursue your career as an underwriter you must have a strong knowledge of financing, economics, law. etc.
  4. An actuary cannot pursue their career as an underwriter but an underwriter may pursue his or her career as an actuary.
  5.  Actuaries work upon the unknown risks while underwriters work on the known risks.
Difference Between Actuary and Underwriter
References
  1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1539-6924.1989.tb00997.x
  2. https://kar.kent.ac.uk/29799
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