In the pension industry, actuarial methods are used to measure the costs of alternative strategies with regard to the design, funding, accounting, administration, and maintenance or redesign of pension plans.
Actuarial science became a formal mathematical discipline in the increased demand for long-term insurance coverage such as burial, life insurance, and annuities. These long term coverages required that money be set aside to pay future benefits, such as annuity and death benefits many years into the future. This requires estimating future contingent events, such as the rates of mortality by age, as well as the development of mathematical techniques for discounting the value of funds set aside and invested.
What is Actuarial Science?
Actuarial Science deals with evaluating risks and maintaining the economic stability of insurance or financial organisations. Actuarial Studies graduates learn how to use Mathematics, Statistics, and Probability principles to anticipate future events and take preventive measures.
Actuarial Science is best career opportunity for you. It is one of the demanding fields where career prospects are abundant.
What does an actuary do?
Actuaries analyse past data and use that information to determine how much money should be set aside to cover the financial losses which could occur in the future.
Let’s take car accidents as an example. If an actuary wants to predict how many people in London will get in an accident in November, this year, they will look at the percentage of people involved in accidents in the previous years.
Based on that data, the actuary will identify a trend and use it to predict the percentage for this year and establish how much each person should pay for their insurance so that it would cover the damages of a car crash.
One of the main challenges for an actuary is when there isn’t any past data or when the data isn’t relevant due to policy or other types of changes.