Who is an actuarial analyst?

Dec 19, 2018 | 3 months ago | Read Time: 4 minutes | By iKnowledge Team

Actuarial analysts are experts in the fields of economics, statistics and mathematics who are involved in risk assessment and estimation of premiums for an insurance company or other financial institutions.

It is common to hear of engineers and doctors as preferred careers, since most students decide their fate in high school. These are of course important fields, but there are some other professions too that serve specific needs.

In the case of the actuarial profession, though it has existed for far too long, not many know of its function. Let’s look at what this role entails.

What does an actuarial analyst do?

You might have come across the term ‘actuary’ or ‘actuarial science’ but may not know what it entails. In a nutshell, actuarial analysts are experts in the fields of economics, statistics and mathematics and are greatly involved in risk assessment and estimation of premiums for an insurance company or other financial institutions.

These professionals use data to assess risk for organisations, ranging from financial service providers to insurance businesses. They make use of certain statistical models to analyse data and measure the probability and attached costs associated with events, such as failure in launching a product, accidents, damage of property or even if the person passes away. They analyse these results to draft and accordingly decide the cost of life insurance policies. Besides, some of them also estimate catastrophic incidents, such as earthquakes, floods or similar calamities and at the same time, also measure the risk situation of these insurance providers.

They are generally hired by the insurance industry and specialise in different areas, sometimes life or health insurance. They generally work in sync with underwriters and market research analysts to ensure smooth functioning at insurance companies or other financial firms.

To do this, they should have sound technical knowledge, since they need to understand the nature of insurance products, the risks involved in different types of assets, the ways in which statistical models can be used as well as legal and regulatory constraints.

Why actuarial analysts?

The nature of the transactions and estimates related to such issues is complex, which is why specialists are required. Average accountants as well as financial analysts do not possess the required skill set to work in these areas. The responsibilities do vary from industry to industry and are based on specific needs. For instance, the insurance sector requires them to work on the plan rates and probability factors to determine appropriate costs. In the finance sector, they are required to analyse different strategies needed to adapt to different risk scenarios. If an actuarial analyst is working with a large corporation, he/she needs to commonly aid the top leadership in decision-making scenarios where the risks are complex.

Besides, these professionals are also involved in financial forecasting, since there are many different factors to consider. Some of them are also employed in the government sector to help in analysing government budgets and projects that have long-term consequences. Doing so without a specialist is not an easy task.

The role of actuarial analysts in insurance

Insurance is a business that revolves around probabilities. Most insurance policies provide protection to the insured policyholder from financial instabilities during unforeseen circumstances, such as death or accidents. In such cases, it is not difficult to predict what will happen with respect to the policy holder. However, when there are many such policyholders with similar risk characteristics, the outcome for them can be predicted even more easily.

This predictability helps insurers to take on risks and aid the insured policyholders financially through the premiums charged. What is a life insurance policy without this professional? This is because actuarial analysts measure the risks that are insured to determine the probabilities of occurrence and use them in a wide range of calculations.

Actuaries often use mathematical models; some might be simple, while others that are used to price life insurance plans or test the capability of an insurer to withstand a range of adverse scenarios can be complex. They include several mathematical equations with hundreds of parameters taken into consideration.

Trusted insurance providers like Aegon Life involve actuarial analysts to ensure the best policies are provided to their customers and by paying a nominal premium. A term insurance plan is most preferred, wherein the sum assured is given to a beneficiary, in case something untoward happens to an insured policyholder. You get the entire sum assured when an eventuality strikes the insured policyholder, and at the same time, you get greater coverage at a lower premium.

Under Aegon Life’s iTerm insurance plan , you get a cover for upto the age of 100 years, which means you can secure your family for a longer term. Besides, you can opt for either a monthly or annual premium on them. Plus, these premiums are low even if you opt for additional benefits.

The role of actuarial analysts is certainly significant and indispensable, especially when it comes to insurance. Always do your research and go for well-rounded policies, after all, only a few might have had the expertise of these professionals!

II/Dec 2018/4696

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