What is the role of actuarial science in insurance?

Actuarial science plays a crucial role in the insurance industry by applying mathematical and statistical methods to assess and manage risk. Actuaries are responsible for evaluating the likelihood of future events, which allows insurers to set appropriate premiums that reflect the level of risk associated with providing coverage. This involves analyzing data on mortality rates, accident statistics, and other relevant factors to predict the financial outcomes of different policies.

The insights derived from actuarial science enable insurers to make informed decisions about underwriting policies, establishing reserves for future claims, and maintaining the overall financial stability of the company. By quantifying risks, actuaries ensure that insurance products are both sustainable for the company and fair for consumers, striking a balance between profitability and affordability.

The other roles listed, such as creating marketing strategies, managing customer relations, and ensuring compliance with regulatory standards, are indeed important functions within an insurance company, but they do not encompass the core responsibilities of actuarial science. These functions typically involve more strategic, operational, and regulatory aspects of the insurance business, while actuarial science focuses specifically on the analysis and management of risk through quantitative methods.