Introduction

This is Hanover’s fourth annual salary survey for non life actuaries. I am grateful, as always, to all respondents as well as the dozen or so reviewers who have provided excellent feedback over the years. The project grew out of a desire to have a more granular handle on pay for actuaries in the UK non-life market and as in previous years, we have only surveyed UK GI Fellows (“FIAs”). By “Fellows” we mean strictly current Fellows of the UK Institute and Faculty of Actuaries (IFoA). We have not included IFoA Associates or Fellows of European-based actuarial systems unless they are also an FIA. We have included Fellows of major, exam based actuarial system such as the US (FCAS) or Australia (FIAA) if they are also a UK Fellow.

The set of questions has been updated to take into account feedback received over the last few years; in fact, the 2021 questionnaire actually contains one fewer question (on expected guaranteed earnings to induce a job switch) as I was finding people were taking very inconsistent interpretations. Perhaps I will return to the matter of expectations in future editions.

Whilst total pay is important, it is by no means the only factors that affects recruitment and retention; work/life balance, company culture, team and departmental dynamics, relationship with supervisors etc all impact on whether someone joins or leaves. The covid-19 crisis has also completely changed work-life dynamics; working from home has rendered “distance” meaningless and what is unique about this survey is that the entirety of the pay period in question was against a backdrop of near-universal home working.

Uses

I always find there are three types of “user” for my salary surveys:

• As an individual contributor, you can benchmark your own salary against the market, either to ensure you are “on track” or perhaps when evaluating a job offer you have received
• As a leader of actuaries, you can benchmark your staff against the wider market, or perhaps use it when evaluating the level of money you’d like to offer to people you are interviewing
• As a HR/compensation professional, you can use this survey to benchmark all your actuarial staff and also when it comes to putting together job offers

This guide should NOT be used to benchmark pay for non-Fellows, ie actuarial students, nearly qualified actuaries, Associates or those “qualified by experience”. I have seen another firm’s salary survey and noticed they freely mixed figures for both students and Fellows, a questionable practice at best (feel free to contact me if you disagree with my suggestion as I like to hear dissenting views).

I will usually provide both average pay (usually referred to as mean) although I prefer to use median pay. Every compensation study I have completed has included a small number of outliers that unduly influence average pay. Median pay, on the other hand, is much more robust against outliers. The compensation study is meant as as a reference guide, meaning you do not need to read the whole document from start to finish.

What’s new for 2021

In 2020, the focus was on simplicity and readability and I have used more or less the same format as last year. The aim is to have a salary survey that can be understood by any insurance executive - an HR manager, a CFO and of course a Chief Actuary.

Prior to 2020’s survey, I used a combination of Excel, Tableau, PowerPoint, Google Sheets and Paint. I have now transitioned to the “R” programming language, using an integrated workflow called RMarkdown. The details of how Rmarkdown works are not important, however, the key advantages are that it will always reflect the latest data available, and I can create new analysis and exhibits with ease. As with last year’s results, I have chosen to host this presentation online rather than as a pdf. The advantage is that one perma-link will always lead to the presentation, and any changes can be incorporated anytime. As such, if you are reading this online, you are reading the most up to date version.

For 2021, there is some new analysis, such as slide 8, which summarises earnings over the last 5 years. I have also chosen not to report “Maximum” figures as I find there is always an outlier who earns a lot, often by crystallising their shares due to redundancy or a change of company owner. Instead of a “Maximum”, I now report the “Top Decile”, ie the 90th percentile figure. I have also decided to drop the Appendix, as I wasn’t finding much interest in the regression results.

I also need your help! If you have filled out this year’s survey already, thank you. If you haven’t, I would urge you to complete it; here’s the link. The average completion time is around 4.5 mins, and by completing it you are helping to bring more clarity to a very opaque area. I am particularly keen to get more responses from women, as it will help to better quantify the gender pay gap.

Please remember that this guide is constantly updated, so it may have changed slightly since the last time you viewed it (as new responses and new analysis might have taken place). As of the last update (Feb 22, 2022), the survey is based on 166 responses.

Terminology

• All figures are for the financial year 6th of Apr 2020 to 5th of Apr 2021.
• “P60” refers to the P60 earnings; for the vast majority, it comprises of base, allowances, cash bonus, deductions for pension contributions etc
• “LTIPs” refers to vested long term incentives
• “Earnings” refers to P60 + LTIPs, adjusted for 100% full time equivalent pay; for example, if a respondent stated that they earned a P60 of £80k working 80% (4 days a week), with zero LTIPs, their full time equivalent pay is £100k
• Anyone with more than 20 years experience has had their years of experience set to 20 to prevent potential identification of older actuaries
• “LLM” refers to the Lloyds and London Market
• “PLSME” refers to the personal and small commercial lines market
• “Other” clusters together responses from the regulator and a couple of underwriters who didn’t state their sector. We discarded two responses (a self employed consultant and an individual only undertaking NED work) as the survey was only meant for qualified actuaries in permanent roles (and it may be that it was forwarded to these individuals, but we have no way of knowing as we don’t track individual responses).
• I will often refer to “Earnings” and that should be read as “Total Earnings”

Earnings

This section will focus on total earnings (ie P60 + LTIPs), adjusted for 100% full time equivalent pay. I will cover the following:

• Earnings by sector
• Earnings by gender
• Earnings by number of years experience
• Earnings per year by gender and sector
• Earnings for SMF (Senior Manager Function) roles
• Earnings for Chief Actuaries

The overall average for all respondents is £194,811 with a standard deviation of £141,903. The next slide looks at earnings over the last 5 years, and includes some commentary on LTIPs. Unsurprisingly, LTIPs this year are lower than the previous year, probably due to the PRA messaging about the appropriateness of firms paying dividends due to the uncertainties caused by the pandemics, and this has likely filtered through to LTIPs as well.

Earnings over 5 years

The table below summarises the data for all of our actuarial salary surveys. Our first survey was published in 2018 and collected data for both 2017-18 and 2016-17, hence we have 5 years data. “Year” refers to the tax year ending in April; ie “2017” refers to P60 earnings for the tax year Apr 2016 - Apr 2017. For the first salary survey that we ran, which asked for both 2016-17 and 2017-18 pay data, we did not ask for LTIPs so the figures for those two years refer to P60 earnings only.

Comments: mean and median earnings have risen slightly over the last 5 years, as have Top Quartile earnings. Top Decile earnings are more volatile, and the overall trend is downwards, suggestive perhaps of lower LTIPs and/or cash bonuses. This is because the Top Decile earners are generally in very senior management positions.

Given that (as mentioned above), the 2017 and 2018 summary statistics only include P60 earnings, it seems that the relative importance of LTIPs has been declining. In fact, in 2020, 23% of survey respondents earned an LTIP; in 2021, only 20% did. In 2020, those respondents who received an LTIP earned 14.3% of total earnings from LTIPs, whilst in 2021, respondents who received an LTIP earned 13.3% of total earnings from LTIPs.

Distribution of earnings, excluding SMF roles

Here we have produced a boxplot of Total Earnings for both men and women excluding those in SMF roles (ie the most senior “Chiefs”). The intuition here is that far more respondents were male “Chiefs” than female, and excluding the “Chiefs” provides a better like for like comparison. We have truncated any earnings over £300k (as no female respondent earned above that amount) and we have excluded the “Intermediary” and “Other” sectors to aid clarity (they had very few responses). The width of the boxplot indicates the number of responses, ie a thinner boxplots mean fewer responses.

Although at first it looks like there is a stark difference in men’s and women’s median earnings in Lloyds and personal lines, that is largely due to a slightly different experience profile for our respondents (across these three sectors, the average number of years experience for women is 13.4 vs 15.0 for men). The slide also shows a greater similarity for men vs women in consultancies. The theory is that consultancies pay closer attention to salaries within payscales and there is likely more transparency over the pay scales for each grade (at a consultancy) compared to within a company.

Earnings by sector

Comments:

• As with 2020, “Intermediary” responses are somewhat younger (in terms of the average number of years of experience per respondent), compared to the other categories
• “Consultancy” responses need to be treated carefully; our survey has a high percentage of senior actuaries, with the average years of experience of a respondent from consulting being 14 years. It is likely many of them are directors or partners, judging by the size of their P60. Our responses are therefore not representative of the typical “pyramid” structure of a consultancy (with lots of juniors and relatively few seniors).
• Later in the report I will talk about a concept I call “Earnings per year”, that is, earnings per year of experience; ie if someone is earning £120,000 and has 6 years experience, the “Earnings per year” is £20,000

Earnings by gender

First we look at summary statistics for all respondents:

Next, we look at respondents with 11 or more years experience:

Last we look at respondents with 10 years experience or less:

Comments: I am heartened by the fact that among younger actuaries (ie those with 10 years or less experience), the gender pay gap (as measured by the ration of female/male pay) is relatively narrow (albeit men still earn more). When looking at the more senior end (11 years experience or more), men earn significantly more, especially at the top quartile and top decile. Recall that these earnings are all for 100% full time equivalent.

Earnings by years experience

The table below shows earnings by number of years experience. Recall that actuaries with 30 or more years experience have all been re-coded as having 30 years experience to prevent the possible identification of older actuaries. We have grouped individual results into “buckets” of 3 years experience, ie 3-5 years, 6-8 years etc. We explain the “Max-min” ratio in the next slide.

Max-min and 90-10 ratios

What is the “Max-Min Ratio” and the “90-10 Ratio”? Very simply, “Max-Min” is the ratio of the highest pay disclosed by a respondent divided my the lowest disclosed by a respondent (for each respective category) and is a measure of dispersion (or variation, or perhaps you could say inequality). For example, the lowest age bands have relatively narrow ratios (a ratio of 1.5 means the highest respondent earned 1.5 times the lowest respondent).

The ratios grow in line with experience, and are highest in the 21-23 year experience bracket, when the highest, usually “Chiefs” will vastly out-earn the “non-Chiefs”. In a similar vein, the 90-10 ratio is the ratio of the 90th percentile divided by the 10th percentile, and is narrower as we strip out the top and bottom decile, and thus remove many of the outliers. I personally prefer the 90-10 ratio, although I accept the Max-Min ratio is intuitively easier to understand.

90-10 ratios by sector

We can also look at the 90-10 ratios by each sector to get a sense of earnings dispersion. It is interesting to note that aside from the “Other” segment (where we only have 4 responses), every other sector has a 90-10 ratio within a fairly tight bound (3.2 - 3.6). A higher 90-10 ratio indicates that earnings are spread over a higher range. Personal lines (“PLSME”) has the lowest 90-10 ratio.

Earnings by sector for new(ish) Fellows

The table below provides a comparison of total earnings for FIAs with 10 years experience or less. Assuming a mean qualification time of 5 years (+/- 2 years), this would suggest around 5 years post qualification experience (+/- 2 years).

Please note again that median and mean years of experience for the respondents differ slightly.

Earnings per year by gender

Recall that we define the “Earnings per year” as the ratio of Total Pay (adjusted for 100% FTE) divided by the number of years experience that individual has. For the Earnings per year calculations, we have used the original number of years experience provided by respondents.

• The average “Earnings per year” for all respondents is £ 13,939
• The average “Earnings per year” for all male respondents is £ 14,601
• The average “Earnings per year” for all female respondents is £ 11,922

We have a high number of male respondents who are either Chief Actuary PC holders and/or hold an SMF position. This could “bias” our results as effectively we would be mixing “leaders” with “doers”. Excluding all respondents with a Chief Actuary PC or who hold an SMF position, we have an “apples for apples” comparison for male vs female “non-Chief Actuaries”. In this case we have a male Earnings per year of £ 14,035 and a female Earnings per year of £ 11,076. By the way, here “doer” is simply used to denote a “non-leader”, although these “doers” may well be senior and lead teams (eg a Head of Reserving). What we really mean is that these “doers” are not regulated Chief Actuaries or hold a regulated (SMF) role.

What are the implications? Men are currently paid more for each year of experience, and the extra pay is substantial, amounting to around 30% more per year of experience. In other words, employers seem to pay less for each year of a woman’s experience. We look into this disparity further in the next slide.

Earnings per year by gender (2)

One argument for the disparity is that our results contain a number of very senior (all male) respondents in consulting, likely director or partner level. We can exclude them and only focus on the “in-house” actuaries at underwriting organisations. As before we focus on “doers” and not “leaders” ie we exclude anyone with a Chief Actuary PC or anyone who holds an SMF position.

Our results are now as follows:

• The average “Earnings per year” for male “doers” in the Lloyds and London Market is £ 14,190
  

• The average “Earnings per year” for female “doers” in the Lloyds and London Market is £ 12,347

• The average “Earnings per year” for all male “doers” in the PL/SME market is £ 13,061
  

• The average “Earnings per year” for all female “doers” in the PL/SME market is £ 7,954

The Lloyds and London Market gap between male and female “doers” “Earnings per year” highlighted in last year’s survey seems to have narrowed. Currently a female “doer” earns 87% of what a male “doer” earns.

Within personal personal lines and the SME market, the average female “doer” earns 61% of what a male “doer” earns, per year of experience. This disparity here is largely an artifact of the small number of female respondents and I am wary of jumping to conclusions, especially since in last year’s survey women actually earned slightly more in personal and SME lines.

Earnings for SMF role holders

The following table contains a summary of earnings for those who declared they hold a controlled function (more recently referred as a “Senior Management Function” by the PRA). Our survey did not ask respondents to identify the exact Senior Management Function role they held, so we don’t know whether the individual was the SMF20 Chief Actuary, SMF4 CRO, SMF22 CUO etc. It is also possible that some held multiple SMF roles.

Another way to look at the data is to segment those who hold either type of Chief Actuary PC and also held an SMF position (these are the respondents that the PRA would recognize as the “Chief Actuary”). In other words, “The Rest” in the table below are the Fellows who hold a Chief Actuary PC but are NOT undertaking an SMF role.

Earnings for Chief Actuaries

The first table covers all holders of a Chief Actuary Practicing Certificate (“PC”), the second and third segment by whether the individual holds a “with Lloyds” or “without Lloyds” PC. Although not shown fully here, the Chief Actuary PC holders in companies tend to be paid more than those with a PC working for a consultancy.

As an aside, I am, as ever, exceptionally grateful that numerous Chief Actuary PC holders have elected to complete the survey. It is a testament to the level of engagement we have with the actuarial community.

Total Earnings by Gender and Staff Managed

There is a clear upward trend between the size of team managed and total earnings. It is worth noting that we have truncated the largest teams in the market, as showing these on there risks identifying the individuals involved. If you are running a team of more than 20 staff, please feel free to contact me directly for a confidential discussion.

Newly qualified fellow earnings

Clients often ask about salaries (or earnings) for newly qualified actuaries. Given the average qualification time is 5 years (+/- 2 years), we have selected all respondents with 7 years of experience or less. Given the low number of responses, I feel somewhat wary of over generalising but it does seem like newly qualified Fellow earnings are lower in consultancy than other sectors. The explanation for this, I think, lies in the fact that many graduates who join a consultancy as an actuarial trainee will not have changed jobs by the time they qualify, whereas in the other sectors, most newly qualified actuaries will have moved once and so have benefitted from a pay bump. Recall, this is a P60 so it will be inclusive of any (presumably small at this level) cash bonus.

I personally feel median salaries are a better indicator of “where the market is at”. In this case, total earnings range from late 70s to mid 90s, depending on sector.

Also please recall that the overall average for all respondents is £194,811.

Conclusion

First of all, thank you for taking the time to read this report.

I concluded last year’s survey with a couple of concluding comments on the number of non-life actuaries qualifying, as well as the number of actuaries taking up data science roles. I won’t rehash that slide, except to say that anecdotally, this year has seen the creation of many new roles, partially as a result of the hard market at Lloyds; several new (re) insurers have been created and staffed up quickly, and that demand for staff has led to a robust job market since the summer of 2020. I have also witnessed more vacancies in the data science area, especially well paid ones at the £100k+ level. I have also seen a number of syndicates and reinsurers ask for portfolio management and/or portfolio optimisation staff and whilst the skill-set here is not purely actuarial, nonetheless it is a skill-set that a capable actuary with good programming skills can undertake.

One issue that I am always happy to talk about is data quality. As I have re-iterated many times, there is no way we can verify the accuracy of any of the data. We have on occasion modified the raw data if we feel the respondent made an honest mistake. This year we modified one response where the respondent, a relatively young actuary within broking (with less than 10 years experience) input their salary as £900,000 instead of (we assume) £90,000. There are a few data points that seem very “rounded” off and it’s impossible to say whether the respondent happens to have a very rounded number as their total earnings, whether they’ve rounded it off themselves, whether they’ve forgotten to add something etc.

Last but not least, a number of senior actuaries have informed me they are now taking their pension as part of their P60, rather than as a pension, as a result of hitting their lifetime allowance. The majority of respondents won’t be in this situation, so it’s worth bearing this in mind when examining salaries at the very highest level.

About me

I have spent the last 15 years recruiting for senior actuarial, catastrophe modelling and analytical positions in the UK, and abroad (principally the Americas and Bermuda). My client base ranges from consumer insurance, commercial lines and Lloyds of London to more unusual operations involved in insurance linked securities, private equity and broking. I also research and write virtually all of our research reports, including compensation surveys.

Prior to joining Hanover Search in 2010, I spent 6 years working as lead consultant for the insurance and financial services division of Hays, a global FTSE-250 listed recruitment group.

Prior to university I spent 2 years working in sales for Churchill Insurance, one of the legacy companies of Direct Line Group.

I have a degree in Economics and Mathematics from York University and have completed a number of development courses, including a Strategy and Finance module with INSEAD and a psychometrics certificate with Cambridge University. In the summer of 2020 I completed two R-based courses with Essex University’s Summer School in Quantitative Social Science.

I have 2 young children under 5 so I don’t really have any spare time, but when I get a moment, I usually spend it reading.

Get in touch

Other than my research work (eg salary surveys), I am an active member of Hanover’s search and selection team. I have spent the last 15 years recruiting actuaries for the UK and Anglo-America (re) insurance markets. My client base ranges from consumer insurance, commercial lines and Lloyds of London to more unusual operations involved in insurance linked securities, private equity, captives and broking. I have significant experience of completing difficult searches, especially where the “candidate pool” is very small.

My recruiting philosophy can be summarised as very simply:

• Contrary to what most recruitment firms claim, the world does not revolve around “superstars”; a hard working, knowledgeable, experienced actuary who gets on with people is the kind of employee any company would be happy to have

• I look to provide enormous amounts of information to candidates for the searches that I run, and I’ve lost count of the number of times people have said “This is the best information pack I’ve ever seen”. I’ve also never had a candidate complain that I sent them too much information.

I am always happy to:

• discuss the results and methodology of this survey
• help your organisation with recruiting at the £100k+ base salary level
• provide customised benchmarking advice on salaries

Feel free to email me to discuss anything contained in this document.

Other reports

Since early 2018, I have authored a number of reports/briefs and a selection is listed below. All are available to download directly from my Box folder (right click, save as, no registration needed).

-Demographic Analysis of Actuarial Teams in the London Market

-Demographic Analysis of Cat Modelling Teams in the London Market

-Market Conditions for Actuarial, Catastrophe and Data Science

-AI & ML Expertise in the major insurance Companies

I also maintain an up to date online Tableau viz of all “The Actuary” print magazine job ads in the GI sector (whether qualified or not). Whilst I won’t be developing the viz any further, I update the underlying data on a monthly basis when “The Actuary” arrives and you can view it here.

Last but not least, if you recruit or manage cat modellers, you will want to see my 2021 Cat Modelling Salary Survey

Disclaimer: The information in this publication is of general interest and guidance. The information is not advice, and should not be treated as such. You must not rely on the information in the report as an alternative to advice from an appropriately qualified professional. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information in the report. To the maximum extent permitted by applicable law and subject to the section below, we exclude all representations, warranties, undertakings and guarantees relating to the report. Without prejudice to the generality of the foregoing paragraph, we do not represent, warrant, undertake or guarantee: a) that the information in the report is correct, accurate, complete or non-misleading; b) that the use of guidance in the report will lead to any particular outcome or result.