Definition
Actuary
An actuary is a professional who applies mathematics, statistics and financial theory to price insurance, value liabilities and assess long-term risk.
In India, actuaries are governed by the Institute of Actuaries of India, and every insurer must have an Appointed Actuary under IRDAI rules. The appointed actuary certifies premium rates, computes policy reserves, recommends bonus rates for participating funds, and confirms the insurer's solvency.
Actuaries rely on mortality and morbidity tables, investment assumptions and expense studies to ensure products are both competitive and financially sound. Their judgement underpins reserving, product design and the insurer's ability to honour very long-dated promises like annuities.
Related terms
- UnderwritingUnderwriting is the process by which an insurer evaluates a risk, decides whether to accept it, and on what terms and premium.
- Mortality TableA mortality table shows the probability of death at each age, used by actuaries to price life insurance and value liabilities.
- Solvency MarginThe solvency margin is the surplus of an insurer's assets over its liabilities that regulators require it to hold to ensure it can meet claims.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.