Insurance or consulting--which is the best fit?

By Megan Potter, SOA Associate Editor

Actuarial students are often exposed to a variety of job opportunities. By far, the two most popular career paths chosen by SOA members are insurance and consulting. Each career choice has its share of stereotypes, but whether or not these prove true depends more on the company than on the industry. Insurance companies and consulting firms can provide different degrees and types of student support, training/experience, lifestyle, and future opportunities, sometimes based on the size of the company. Students will need to carefully evaluate these criteria before deciding which career is the best fit for them.

Insurance companies have a reputation for providing superior exam support for students taking SOA/CAS exams, but consulting companies may not lag far behind. Vinaya Sharma, an Associate Actuary with Allstate Insurance, has worked in both consulting and insurance. As an intern, he worked for Coopers and Lybrand, a professional services firm, where he worked on projects that varied from week to week. After graduation from Drake University with a degree in actuarial science, Sharma chose to work for Principal Financial Group in Des Moines. Why switch to an insurance company? "History would probably tend to show that a student is best off, for exam purposes, working for an insurance company," Sharma explained. "They tend to give more study time and time off to take the exams."

Joe Rafson also has experience in both industries. He is currently an Actuary and Director with Allstate Insurance and has spent time as a consultant with KPMG, a consulting firm which offers a wide range of assurance, tax, consulting, and legal services. "In terms of exam support, it varies between consulting firms and insurance companies. There is a generally held belief that insurance companies offer better support for the exam-taking process," he noted. "While consulting firms try to fully support student activities, the nature of their business means that they are somewhat at their clients’ mercy."

Joanne Fontana has worked for CIGNA for about seven years. CIGNA Corporation’s subsidiaries are one of the leading providers of employee benefits in the United States. Fontana graduated in 1994 from Cornell University with a degree in math and economics. She was an intern at CIGNA the summer between her junior and senior years of college, which helped her decide where to work after graduation. "The insurance versus consulting dichotomy was a little less important to me than what company I was going to work for," she explained. "Every company is different. It came down to the culture of the company, the people, as well as what I thought the future opportunities would be." Given her liberal arts background, Fontana was especially appreciative of the supportive environment for students afforded by CIGNA. "The exam support here is phenomenal," she stated.

Pritesh Modi, a recent A.S.A., works for Tillinghast-Towers Perrin as a consulting actuary. He also attended Drake University and majored in actuarial science and finance. Modi has no complaints about lack of study time, but does stress flexibility as a requirement for a student in a consulting firm. "Most of the people you work with have either gone through the exams or are in the process of taking them. Thus, they understand the level of commitment required and will take this into account when staffing the project. However, having said this, there might be occasions where your study schedule will have to be adjusted to accommodate any unexpected client work."

Consulting traditionally offers its actuaries more variety, but larger insurance companies such as Allstate and CIGNA often provide their actuaries with rotational job duties that expose them to many different businesses. "Allstate compensates for its specialization of roles by offering a rotation program that provides a greater breadth of experience for its students," Rafson said.

CIGNA also offers a rotational system. "CIGNA is a multi-line company. We sell a lot of different products, everything from health, to life, to disability benefits. We also sell products internationally," Fontana noted. "With our rotational job program, you can rotate through different business lines as well as different functional areas. You could price a product; you could do the financial reporting for a product or line of business. You may be involved in underwriting or in product development." But not all companies can offer such a variety of experience. Sharma cautions that, depending on the size of the insurance company, "Rotational opportunities may either be great or limited."

Modi believes that consulting is an excellent opportunity for a student to get a general overview of different practice areas. "In consulting, you can be the Jack-of-All-Trades and the master of one. I am gaining tremendous exposure to all different kinds of projects. This way, after spending a few years gaining a general business sense, you can focus on a certain area to have expertise in." Sharma also notes the breadth of exposure afforded by consulting work. "You get to work on a variety of projects. For example, in my consulting positions, I’ve been able to work on both health care and mergers and acquisitions. It’s not the same job day to day."

Consulting companies usually offer a great deal of variety, but not all provide the type of training that each individual may need. Modi noted that the type of training received in a consulting position varies greatly depending on the size of your company. "In larger consulting companies, training tends to be a bit more structured, which may even involve classroom training. In a smaller company, the training is more of the on-the-job variety."

Often a consulting position will have longer hours and involve more travel than an insurance job. Rafson observes that "if an individual likes the travel, he or she may move towards consulting. In general, the pace and demands of the job are higher as a consultant than as an actuary in an insurance company. Since the end product of a consulting firm is billable hours, this tends to require that more hours be worked."

The amount of travel also may depend on how much work is available in the local office. Modi explains: "In my first year, I probably traveled about six months, but after that my local office was very busy, so I’ve probably only traveled about one month in the past year." His travel has taken him around the East Coast and also to the Midwest.

While insurance jobs tend to require less travel than consulting positions, they are not travel free. Fontana has spent time traveling during her tenure at CIGNA. "The amount of travel I do depends on what rotation I’m currently on," she explained.

Fontana believes that the future holds a lot of challenge for actuaries working in multi-line insurance companies. "The insurance industry is rapidly changing and each of CIGNA’s product lines is impacted by a number of variables. The recent changes in financial markets has an effect on our Retirement business, and new legislation effects our HealthCare business." Fontana stated. "It’s definitely an interesting time to be an actuary in an insurance company where you are selling a lot of different products."

Sharma also looks to the future as a time of challenge. "A couple of years ago, I would’ve thought there would be more consolidation by now. It has not happened as quickly as I thought it would."

Fontana has observed an increased demand for the skills of actuaries within her own company. "I’ve noticed an increase in the types of roles that actuaries are playing. Actuaries are getting involved in all aspects of the business, being product managers, doing underwriting, and working in our corporate audit area on business process improvements. The financial skill set is valued very highly. Even in areas that are not financially based, bringing someone in with a financial background can help them succeed. As the Actuarial Program Director, I’m starting to see an increase in requests from across the company for people with an actuarial background."

Rafson has also noticed a decreasing role for "purely technical back-room actuaries. Actuaries find themselves in a broader array of roles that require more varied business skills." This is a trend that extends to the consulting profession: "Previously, consultants were used more for traditional work. Lately, I’ve seen a shift in focus to more special projects," stated Modi.

When confronted with the choice of consulting or insurance, a student should decide which career track to pursue after a careful appraisal of lifestyle preferences. The amount and flexibility of exam support afforded, the degree and mode of training furnished, and the variety of work provided are all additional variables to be examined. Sharma has the following advice for students torn between pursuing a career in consulting or insurance: "First, you need to ask yourself, what is going to be most important in the relatively short term (less than 5 years into your career), and make your decision from there."

From The Future Actuary, Vol. 10, No. 3,  December 2001
Copyright 2001 Society of Actuaries
and Casualty Actuarial Society