Do you know how the business of insurance works? Suppose there are 100 people who have bought an insurance plan. You might know that each of these 100 people will have to pay a specific amount of money every month or every year. If any of the 100 people suffer in a man-made calamity, the insurance company will pay them a huge amount of money they had promised earlier. But that is, only if they suffer a calamity which falls under the agreed upon circumstances.
Now, isn’t it a matter of curiosity as to how does the insurance company determines or ‘guesses’ the number of people who will claim the insurance due to a calamity? This is where Actuarial science comes in.
Actuaries are professionals who are trained to combine the knowledge of mathematics, statistics and financial management to look into the future financial prospects of an insurance company. In simple words, their main job is to assess risk. Actuaries use skills in mathematics, economics, computer science, finance, probability and statistics, and business to help businesses assess the risk of certain events occurring and to formulate policies that minimize the cost of that risk. For this reason, Actuaries are essential to the insurance and reinsurance industry, as staff employees or as consultants as well as to other businesses, including sponsors of pension plans and to the government.