What do actuaries primarily focus on in the insurance industry?

Actuaries play a crucial role in the insurance industry by evaluating financial risk and uncertainties. Their expertise lies in applying mathematics, statistics, and financial theory to assess the likelihood of future events and magnitude of potential losses. By analyzing data from various sources, actuaries help insurance companies determine appropriate pricing for policies, ensure that reserves are set aside for future claims, and develop financial strategies that support the overall stability and profitability of the insurer.

Their work is integral in calculating premiums, defining policy coverage limits, and managing the overall risk profile of the insurance company. This focused approach allows actuaries to provide essential insights that guide decision-making regarding underwriting policies and establishing rates that reflect the risk each policyholder brings. The core of their functionality is to ensure that the financial obligations of the insurance company can be met, which is central to the sustainability of the business.