I first started working with actuarial contractors in late 2006. At the time the main skill-set in short-supply was for actuarial modellers, as large projects such as Heritage (Aviva) and Reed (Legal and General) were in their infancy. Then Solvency II hit the market like a regulatory freight train resulting in the market almost tripling overnight, the like of which I had not seen since 2000 when the pensions review was at its height.
The actuarial contract market is facing a little uncertainty as we enter 2016. 2015 saw a number of interim managers return to permanent roles as the “go live” date for Solvency II edged closer and many believed that the contract market was at saturation point. With this in mind, I sat down with eight experienced contractors to see if the risk of switching from permanent to temporary was still one worth taking.
What Are The Benefits Of Interim Contracting As An Actuary?
The pros of contracting in general are the same as they always have been. As a contractor you are able to:
- At least double earnings
- Pay tax at a favourable rate
- Work with a variety of companies and teams
- Have a better work/life balance
One of the contractors I spoke to for this article is spending the winter in South Africa to avoid the misery of February in London… such is the envious flexibility that contracting can offer! Another contractor started working as an interim after they realised that they could increase their earning potential from £45,000 per annum to £700 a day. Of course the likelihood of working the same number of billable days in a calendar year as in a permanent job is reduced and holiday is not included, but £700 a day represents a substantial increase in earnings.
I also see a number of actuaries entering the contracting market as an alternative to progressing through their actuarial exams. One contractor I spoke to took a three month Prophet coding contract after being made redundant for not progressing fast enough through their actuarial exams joking that he’s “never looked back and hasn’t sat an exam since!”
The type of work that you are most interested in can dictate whether you should be considering interim contracting as an option. One of the contractors I spoke to could only find one permanent position for the area of actuarial systems that she was interested in so started contracting instead. It's now common practice for businesses to bring in interim contractors for project based work – much more so than a decade ago. With the rate of technological progression affecting all areas of business this has increased the number of opportunities for project based work within the actuarial space.
What Are The Risks Of Interim Contracting?
The other side of the coin is uncertainty and lack of security. As an interim actuary there are:
- No guarantees that a new contract role, in the right location, will be available at the right time.
- Mountains of paperwork created from running a Limited Company
- Constant changes in contracting legislation
- Benefits like company car or a pension scheme are self funded
For most actuaries, the main concern around contracting is stepping off a promotion and progression ladder which can then be a barrier to returning to the permanent market.
For others, the prospect of being away from their home and family during the week is too much. Contracting can offer you more flexibility but that in turn requires you to be more flexible. Roles can come up all over the UK or abroad, so being comfortable with following work wherever it appears is important.
The early days of contracting can also be nerve wracking, with no guarantee that you will be able to secure consecutive contracts without stints ‘on the bench’. That in itself can make contracting stressful. As a contractor you are an easily disposable asset to a business, which naturally puts you under more pressure to perform than permanent employees might feel. When you do get a break between jobs, there’s no certainty when the next job will come along so time off isn’t always as relaxing as it might first appear!
Can You Alternate Between Interim And Permanent Roles?
Doing a stint working as a contractor does not mean that you can’t then return to a permanent position at a later date. It’s not uncommon for actuaries to contract for a few years before taking a permanent position. Of the contractors I spoke to, around half said that they would consider returning to permanent employment with most of them citing personal reasons like having a young family or wanting to spend more time at home.
Contracting is definitely a lifestyle choice as much as anything, with one contractor saying that they wouldn’t consider reverting to a permanent roles as “the travel and financial rewards are too much in interim”. They also said that the opportunity to work across Europe and Asia has resulted in them making “far more contacts within the market than I ever would have done as a UK based consultant.”
There is also the added appeal of being able to pick and chose the projects that interest you the most and if you can build a track record of delivering then your personal brand will flourish as well – helping you to get future roles and enabling you to increase your day rate further.
What Is The Future Of Actuarial Contracting?
The market has quietened down which has meant that day rates have dipped, so I don’t anticipate it being as highly paid as in previous years. There will always be roles for established and well regarded actuarial contractors so if you are competitive with your day rate you will secure work as actuarial skills are always in short supply.
One contractor remarked that “there is still a huge amount of work to do around Solvency II!” and he still gets called about roles for firms playing catch-up. We also have the next phase of regulations coming through and there is still demand for contractors to undertake BAU reporting.
From the conversations I had, the actuarial contracting marketplace remains buoyant. With actuarial skills still in short demand, engaging an interim manager continues to be seen as a cost effective solution to bridge the gap on permanent vacancies as well as fill short term project needs. Actuarial contractors continue to enjoy flexible working and favourable earnings in addition to increased global mobility. Deciding whether to go down the interim contracting route is largely dependant on your personal situation and what areas you are willing to compromise on. Do you accept the increased risk and a frequently changing work environment in return for bigger pay packet, or does the extra security and stability of a permanent job appeal more?
One things for sure, if you do decide to make the switch there is plenty of demand for the right actuaries with the right skill sets.
Thinking of hiring for an interim or permanent position within the Insurance industry? Our Financial Services hiring checklist covers all the basis of recruiting for an interim or permanent position, increasing your chances of attracting and securing the right person for the role.