A professional who uses mathematics, statistics, and financial theory to assess risk and set insurance premiums. Actuaries analyze historical data and probability models to predict future losses and ensure insurers can pay claims.
Related Terms
Premium
The amount you pay to an insurance company to maintain your coverage, typically billed monthly, quarterly, or annually. Premiums are determined by factors such as risk level, coverage amount, deductible, location, and claims history.
Loss Ratio
The ratio of claims paid by an insurer to premiums collected, expressed as a percentage. A loss ratio of 60% means the insurer pays $60 in claims for every $100 in premiums. Regulators and analysts use loss ratios to assess insurer performance and pricing adequacy.
Underwriting
The process insurers use to evaluate the risk of insuring a person or asset and determine the appropriate premium. Underwriters review applications, claims history, credit scores, and other data to decide whether to issue a policy and at what price.