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4 Responsibilities of an Actuary
An actuary is a statistician who is in charge of evaluating various types of risks. Most actuaries are
employed by insurance companies, which use their expertise to set the terms, conditions and premium
rates for their insurance policies. They are also hired by pension funds and various private companies to
detect risks and help design procedures that can help mitigate risk. And while the actuaries'
responsibilities vary depending on who hired them, and what kind of data they are working with, the
basics tend to remain the same.
When an insurance company sells off an insurance policy, it operates under the assumption that the
person who bought bought will not require the coverage. There are only so many times insurance
companies can pay claims before those payments start costing them more money. In order to avoid pay-
outs, insurance companies need someone to analyse what kind of risks their potential beneficiaries will
be facing and calculate whether or not selling insurance to them is worth the risk. This is where the
actuaries come in.
The actuary will use their extensive knowledge of statistics, finance and economics to analyse the data.
They serve similar purpose when they work for pension funds. Private companies used them to evaluate
risks involved in implementing their business strategies in hopes that they will be to avoid putting their
money in something that will ultimately backfire and cost them far more than it's worth. The
responsibilities include the compiling and reviewing statistical data, using that data to suggest policy
guidelines for their employers, providing expert testimony at trials and legislative hearings and coming
up with new and improved ways to consider risk.
This is the first and the most important responsibility of the actuary. Actuaries gather data on mortality,
sickness, accidents, disability and retirement within their community, as well as any other data that may
be relevant to their employer. They plug those variables into advanced statistical models to calculate
how those variables would affect the insurance beneficiaries in the future. The data that is produced is
fairly reliable.
The actuaries are sometimes asked to provide testimony in lawsuits that revolve around insurance or risk
in general. Sometimes, they are asked to testify on the behalf of their employees, but they are also asked
to act as expert witnesses. They may also be asked to testify in similar capacity when state and federal
legislatures are trying to create laws that have anything to do with insurance companies.
While actuaries often rely on statistical models devised by other actuaries or mathematicians in general,
they are sometimes asked to come up with new statistical models in order to evaluate risks for new
insurance policies, or modify existing models to account for circumstances that did not previously exist.
They may also be asked to make existing models more exact and more efficient.
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