How Does Insurance Actuary Work Roles and Functions

How Does Insurance Actuary Work Roles and Functions

An Insurance Actuary is a professional advisor who analyzes the financial risk using a statistical,
and mathematical formula to provide an outcome of financial uncertainty in case of a claim.

In other words, Insurance Actuary is a person who determines the value of your policy based on the probability,
that the company has to pay in case of future uncertainty.

The Role of an Actuary in Insurance:

  • An Actuary is required to have adequate knowledge of business, financial analysis, and statistics.
  • The main task of an actuary is to evaluate the complex risks compelling to the business.
  • The nature of their profession has helped them to make a way into the insurance industry.
  • An Actuary analyzes data to evaluate the probability of financial consequences has to be faced by the business, in case of future uncertainty.

How Does Insurance Actuaries Work?

The company analysis the to survive in the market they need to access the risk that they have
acquired from providing the policy to their customer.

That when the Insurance Actuaries come into the business, it is the job requirement to analyze
the risk factor and provide the financial decision based on the lifestyle, choices,
and life expectancy the actuary should provide a new policy to the insurance company.

Role of Insurance Actuary:

As we have already discussed few fundamental roles of the Insurance Actuary here we will understand
them few more aspects of Actuary

Risk Assessment

Insurance actuaries Provide the insurance companies assess risk, that assessment report is used to analyze
to help design and price new insurance policies.
The higher the risk it is more likely to be considered that the insurance company
will be liable to pay out the claim.

Assessing the risk factor involves measuring the probability such as:

  • Death:

    Death/Mortality risk is one of the primary aspects that play a huge role in the valuation of an insurance policy. Mortality risk determines/identifies the probability of life span and when a person is likely to die. After determining that the risk of death is lower based on certain factors (For Example age, health, lifestyle), that insurance policyholder is offered a lower premium-priced life insurance policy.

  • Sickness:

    It is an actuaries job who works in health insurance, to look after the life cycle and lifestyle factors and the past history of health conditions of the policy buyer when providing insurance rates. Insurance companies collect this report and finalize the value of the premium to charge to the customer so that they will be able to pay out claims while remaining still be profitable.

  • Injury/disability:
    It is the Insurance Actuary professional to determine the value for the life of a person. compensation insurance is completely based on the impact of injury, whether is it a  temporary disability, or permanent disability. Actuaries analyze the chances of workers becoming injured or disabled based on the type of work, then companies decide the insurance premium accordingly.
  • Property loss:
    The actuary does not analyze the life factor of the person but also has to be an expert in analyzing the risk factor of all kinds, he must understand the risk affecting the insurance policy.
  • Investments:

    A profession itself indicates the role of analyzing the risk and increasing the return on their investment, an actuary helps the insurance company to acquire in creating a portfolio of investment so that the company invests wisely to maximize the return and should be able to provide any potential claims in the future.

  • Managing Financial Reserves:

    Managing the financial reserves is one of the very important aspects of any business to have an adequate reserve for the operating business cycle, It is one of the major function of an insurance actuary’s job is to identify the insurance rates, another important aspect is providing the insurance company to provide the report and advice the company to set the reserves to pay for any potential claims.
    However, On the basis of the past claim history, the actuary can determine how much money has to be kept aside (or reserve) for each potential claim to make sure that there are enough funds to pay for any of the uncertain possibility.

Fields Actuaries Are Employed: 


  • Insurance Industry
  • Investment Banks
  • Management Consultancies
  • Actuarial Consultancies
  • Accountancy Firms


Is it a viable career option

Choosing a career to be an Actuary needs a lot of dedication and requires hard work and commitment with saying, but those who are looking for a job that needs to constantly challenge should definitely take this job into consideration, while the is as hard as it determines but has a definitely reflects on your pay skills, however, the paycheque is determined on your skills and experience and on the basis of the company pay scale regulations.



In summary, to the topic “How Does Insurance Actuary Work Roles and Functions” we have not only discussed the roles and functions of the insurance actuary but also focused on whether it is a viable career and being an investor myself it is difficult just to create a portfolio just for the sake of an indivusual, but doing it for the sake of other determines the value of the other life, a simple wrong mistake can lead to determining in the change of the value of people in the eyes of an insurance company. So it can be summarized that the role of an actuary is huge in an insurance company.


[ Read More: Tata AIA Life Fortune Guarantee Plan: Eligibility, Features, and Benefits. ]


[ Read More: How To Apply For Insurance Ombudsman ]

Leave a Comment