What is role of Actuaries in Life Insurance sector?
Life Insurance is one of the largest practice areas for Actuaries. With Life Insurance, comes associated long term liability for the policies sold by the Insurer that it needs a plan or strategy for, in advance.
A person with expertise in the fields of economics, statistics and mathematics, who helps in risk assessment and estimation of premiums etc for an insurance business, is called an actuary.
Actuaries are professionals who apply their abundant knowledge to perform different functions across various verticals in Insurance Companies. Be it Life or Non-Life domain, they are key persons who understand working of their domain very well and perform complex calculations to keep things going!
Life insurance actuaries help develop annuity and life insurance policies for individuals and groups by estimating, on the basis of risk factors such as age, gender, and tobacco use, how long someone is expected to live. Actuaries must have a strong background in mathematics, statistics, and business.
An actuary uses statistics and a concept called the law of large numbers in order to be able to make these predictions. Statistics, such as the expected cost and timing of future events, can be obtained by studying and analyzing large amounts of data on car accidents (for example).
What are the two main types of actuaries?
Most traditional actuarial disciplines fall into two main categories: Life and Non-life. Life actuaries, which include health and pension actuaries, primarily deal with mortality risk, morbidity risk, and investment risk.
A thorough and thoughtful risk management plan is the commitment to prevent harm. Insurance pays for the damages if the risk were to occur. Risk management provides a clear and structured approach to identifying risks. Like actuaries in insurance, there are actuaries in finance, who examine the risks of investments in the financial market.
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