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What are the jobs or works of an Insurance Actuarial ?
An Insurance Actuarial is one of the most important personnel needed by all Insurance Companies. Insurance Companies depend on the Actuarial to provide Evaluation Reports on their products so that they can make their financial decisions on the products.
The works of an Insurance Actuarial involves :
1. Analyzed past events of insurance claims by policy holders.
2. Using various mathematical models and historical statistics to calculate the probability and financial risk exposures of the Insurance Company.
3. Prepare risk assessment reports with explanation on their implications and level of limitations.
4. Perform actuarial valuations.
The job responsibilities of the Insurance Actuarial can be summarized as follows:
1. Calculate the amount of insurance premiums.
2. Perform periodical valuations of assets and liabilities of the Insurance Company.
3. Calculate the amount of bonuses due to insurance policy holders.
4. Calculate the funding rates for pension schemes.
5. Oversee asset liability modeling, product development and profit testing.
Actuarial may also be involved with the acceptance of proposals for new policies, with legal and taxation matters affecting life assurance, or with the investment of funds.
Why is Insurance Actuarial crucial to an Insurance Company ?
The core business of an Insurance Company is to sell insurance policies to the public. Insurance policies provide financial coverage to holders against unforeseen future events or risks.
When a policy holder makes a claim on the policy, the Insurance Company will pay the holder a coverage amount which is usually more than 100 times the annual insurance premium amount. Therefore, it is very important that the Insurance Company to make money from the collected premium in order to have adequate funds to pay the policy holders and at the same time be profitable.
One of the most important tasks of an Insurance Actuarial is to calculate the amount of insurance premium that a policy holder has to pay in order for the Insurance Company to still be profitable after settling claims by the policy holder.
In order to achieve this, this insurance premium collected over a period of times must be smartly invested to maximize returns to the Insurance Company. Insurance Actuarial is required to make financial proposals to the Insurance Company on how to invest the collected insurance premiums to earn adequate income to cover all costs of settling potential future claims made by the policy holders and also operating costs.
Such job is very tough. A lot of calculation, statistical information, financial forecasting models, assumptions and mathematical skills are involved. If the insurance premium is too high, Insurance Company risks losing business as potential customers will turn to their competitors. But if the insurance premium is too low, the Insurance Company will make a loss in the business as the policy amount collected may not earned enough revenue to cover claims by policy holders and operating expenses.
It is the ultimately aim of the Insurance Actuarial to ensure that the every insurance products makes profit. In addition, he must also ensure that Insurance Company stays solvent at all times.
Insurance Actuarial usually works closely with the senior management staff of the Insurance Company to deliberate on all financial and investment matters.
If you intend to pursue your ambition as an Insurance Actuarial or Actuary, do not miss the below articles.
