What is the primary role of an actuary in insurance?

The primary role of an actuary in insurance is to provide statistical information for risk calculation. Actuaries utilize mathematical and statistical methods to evaluate the likelihood of future events, which is critical in determining premium rates, calculating reserves, and ensuring the financial stability of insurance companies. By analyzing data, actuaries help insurers quantify and manage risks associated with underwriting, pricing insurance products, and setting adequate reserves to pay for future claims.

This foundational work is essential for the insurance industry, as it directly influences how premiums are structured and how insurers maintain financial health while serving their clients. Actuaries also play a significant role in developing insurance products that are sustainable over the long term, ensuring that insurers can meet their obligations to policyholders. Their expertise in understanding and predicting trends in data makes their contributions invaluable in the insurance sector.