A professional who uses mathematics, statistics, and financial theory to assess risk and calculate insurance premiums. Actuaries analyze historical data and predictive models to determine the likelihood of future events such as accidents, natural disasters, or death. Their work is essential to setting fair and sustainable insurance rates.
Understanding actuary is important for Canadian insurance consumers because it directly affects how your coverage works and what you can expect when you need to use your insurance. This is a foundational insurance concept that applies across multiple types of coverage and is worth understanding regardless of what insurance you carry.
If you have questions about how actuary applies to your specific insurance needs, speaking with a licensed insurance broker can help clarify your options and ensure you have the right level of protection.
The amount of money a policyholder pays to an insurance company for coverage, usually on a monthly, quarterly, or annual basis. Premiums are calculated based on factors such as the level of risk, type and amount of coverage, deductible, and the policyholder's history. In Canada, auto insurance premiums vary significantly by province.
The process by which an insurance company evaluates the risk of insuring a person or property and determines the terms and premium for the policy. Underwriters assess factors such as age, health, driving record, property condition, location, and claims history. The underwriting process ensures that premiums accurately reflect the level of risk.
The ratio of claims paid by an insurer to premiums earned, expressed as a percentage. A loss ratio of 60% means the insurer pays out 60 cents in claims for every dollar of premium collected. Loss ratios are used to measure the profitability of an insurance company or product line. A ratio above 100% indicates the insurer is paying out more than it collects.
A licensed insurance broker can explain how actuary applies to your specific situation and help you find the right coverage.
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