I work in IT (databasers and visualisation), but recently started a new job at a company that deals with actuaries, underwriting etc. Can someone explain what actuaries do in a way i can understand? Their are so many acronyms that get thrown about that when i ask about they literally just say what the letters mean and nothing further. Colleagues have tried, but tend to be quite short with their explanations and i don’t want to annoy them by asking more and more questions.
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Have you gambled? Every bet in a casino or at a bookie has odds of paying out. Actuarials deal with calculating odds only instead of a casino it’s an insurance company.
What are the odds that a 55 year old heavy smoker will die in the next 12 months? What would our pay out then be? Using that information what should we charge them for an insurance premium?
What are the odds that a 19 year old male with a brand new Ford Mustang spins out and drives it through a crowd of people at Cars and Coffee? If he does that, what’s our expected liability? What should we charge that 19 year old in insurance premiums?
It’s all about risk, calculating the likelihood of a risk, the magnitude of a payout and then using that information to determine what they should charge for coverage.
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