What role does an actuary play in an insurance company?

An actuary plays a critical role in an insurance company by assessing risk and determining pricing based on statistical data. This involves analyzing data related to various types of risks (such as life expectancy, accident rates, and natural disasters) to develop models that predict the likelihood of claims being made in the future.

By quantifying these risks, actuaries can set premium rates that appropriately reflect the level of risk associated with different policies. Their work ensures that the insurance company remains financially viable by balancing risk and reward, helping to ensure that it can cover the claims that policyholders file while also maintaining profitability.

Actuaries also contribute to the design of insurance products and help in the strategic planning of the company by providing insights based on statistical analysis. Their expertise in mathematics, statistics, and financial theory is essential for making informed decisions about risk management and pricing strategies. This understanding of risk assessment distinguishes the role from those focused on customer service, legal disputes, or direct sales.