What is the primary function of an actuary in relation to insurance?

The primary function of an actuary in relation to insurance is to use statistics for determining expected losses. Actuaries play a critical role in the insurance industry by analyzing data and applying mathematical and statistical methods to estimate the likelihood of future events, such as accidents or natural disasters. This skill set allows them to evaluate risks and help insurance companies set appropriate premiums and reserves to ensure they can cover potential claims.

By effectively analyzing historical data and trends, actuaries can predict the financial implications of various risks, which is essential for maintaining the solvency of insurance companies. Their work directly influences how insurance products are structured, priced, and managed, making it a vital component of risk management in the industry.