Actuaries, Actually

What does the term, actuary, mean? It derives from the Latin word, actus, meaning a legal action or a thing done and from the medieval Latin term, actorius, referring to a registrar or clerk. As the use of the term evolved, it’s now generally accepted to have two meanings:

In law, it’s still understood to refer to a registrar or a clerk.
In insurance, it refers to one who calculates risks and premiums for Life, Health, Property & Casualty, and other kinds of insurance.

To put it another way, actuaries assess the likelihood of future events and reduce risks or mitigate their effects. They help set policy premiums by analyzing factors like the location of insured properties, construction materials, and susceptibility to various perils. They also evaluate risks related to liability (such as professional services) by analyzing data on past lawsuits, claims, and industry trends to estimate the likelihood of liability claims and to ensure premiums align with the risk.

More specifically Property & Casualty Actuaries:

Assess the risks associated with different types of insurance policies — auto, homeowners, commercial property, workers’ compensation, malpractice, and other liability lines.
Calculate auto rates by analyzing data on past accidents, driver demographics, vehicle types, and driving behaviors to estimate the likelihood of claims and the expected number of claims resulting based on policyholder ages; driving histories; makes, models, and years cars, and other relevant variables.
Estimate reserves required to cover future claim payouts.
Perform loss triangulations to reflect changes in losses after initial reserve establishment, to identify growth in losses due to incurred but not reported claims, and to determine loss payment patterns over time due to frequency and severity.
Conduct stress tests to assess the resilience of insurance companies under various adverse scenarios.
Help develop products by analyzing market trends, customer needs, and regulatory requirements.
Ensure compliance with actuarial standards and regulatory requirements.
Develop financial models to assess the solvency of insurance companies and ensure they have adequate capital to meet their obligations.
Conduct market research by analyzing market trends and consumer behavior to identify new opportunities and potential risks.

Where We Come In

Policy administration systems like our Aspire give Property & Casualty actuaries tools for advanced actuarial calculations and underwriting with real-time policy data, analytics, and predictive modeling, enabling them to better manage risks and ensure policies remain financially sound. Such systems also help actuaries review and manage policy lifecycles from design and pricing to administration and maintenance.

To be most helpful to Property & Casualty actuaries, policy administration systems should allow them to:

Design and develop new insurance products with libraries of saved product features, which reduce the time to market.
Perform advanced actuarial calculations for accurate premiums, reserves, and profit margins.
Access real-time data and analytics tool for effective decision-making.
Have risk management and compliance tools for dynamic financial analysis and stress testing to help assess financial stability, to formulate corporate risk policies, and to comply with regulatory requirements.
Integrate with other systems and data sources to ensure processes are aligned and data is consistent across departments.
Enhance policyholder satisfaction and retention with more personalized products, self-service tools, and accurate financial records.

The Last Word

Property & Casualty insurance depends on accomplished actuaries, the data to which they have access, and the tools they have to analyze that data and apply their findings. Their expertise is essential for assessing the likelihood of future events, reducing risks, proper pricing, setting reserves, and mitigating losses.

The financial stability and solvency of your company depends on actuaries and their tools. So does your bottom line.

That’s why we’re here.