What role do actuaries play in the insurance industry?

Actuaries play a crucial role in the insurance industry primarily through their expertise in statistical analysis and risk assessment. They are responsible for determining premiums, which are the amounts that policyholders must pay to maintain their insurance coverage. This process involves analyzing various risk factors and utilizing statistical models to predict potential losses for the insurance company. By assessing the likelihood of events such as accidents, natural disasters, or health claims, actuaries ensure that the premiums charged adequately reflect the risks involved while also allowing the insurer to remain financially viable.

Their work is foundational because setting premiums correctly is essential for maintaining the balance between attracting enough customers and ensuring that the insurer can cover the claims that arise. This analysis is based on historical data, projections, and financial theory, making actuaries key players in ensuring the insurance company's profitability and sustainability.