Actuaries
What would happen if a fire broke out in your house and completely destroyed it — would your parents think about buying a new house then? But what if they didn't have enough money for that? Did you know there are companies called "insurance companies" that can take on the cost of rebuilding your home exactly as it was? The way insurance companies work is that they offer to cover the costs of losses from accidents people might face in the future, such as a house fire, a car crash, or damage to other property, in exchange for customers paying them a fixed monthly premium. These insurance companies deal with thousands of customers, and most of the time, most of their customers won't experience any accidents at all — and that's exactly what generates their profits. But what if a company's customers all had accidents at the same time, or let's say within a single year? The company would then be obligated to cover the cost of all their losses, which could run into millions of dollars — more than the company could possibly bear, putting it at risk of bankruptcy and legal liability. In reality, this doesn't happen, and insurance companies don't lose money — in fact, they make enormous profits, thanks to their ability to analyze reality and predict the future using certain facts uncovered by experts called "actuaries," or as we call them in the Arab world, "financial engineers." These people have extensive experience in the world of finance and business and everything related to funding, insurance, and loans, and they're able to assess reality, predict the future, and help their companies deal with any potential risks. An actuary can predict the number of accidents that might happen to their company's customers each year based on statistics on accident and mortality rates and other factors, and based on that, they advise their companies on the amounts of money they might need to pay out each year. They're also the ones who determine the value of the monthly premium insurance customers need to pay, and the amount of money the company should pay out to a customer who's had an accident. They don't work only in insurance companies, but across various financial institutions that always need forecasts about the future of the market and the financial risks they might face.
Meet the Writer: Waleed Abo Omiraa
What You'll Actually Do
The core tasks and responsibilities that fill a typical day.
- Ascertain premium rates required and cash reserves and liabilities necessary to ensure payment of future benefits.
- Analyze statistical information to estimate mortality, accident, sickness, disability, and retirement rates.
- Design, review, and help administer insurance, annuity and pension plans, determining financial soundness and calculating premiums.
- Collaborate with programmers, underwriters, accounts, claims experts, and senior management to help companies develop plans for new lines of business or improvements to existing business.
- Determine, or help determine, company policy, and explain complex technical matters to company executives, government officials, shareholders, policyholders, or the public.
- Testify before public agencies on proposed legislation affecting businesses.
- Provide advice to clients on a contract basis, working as a consultant.
- Construct probability tables for events such as fires, natural disasters, and unemployment, based on analysis of statistical data and other pertinent information.
- Determine policy contract provisions for each type of insurance.
- Provide expertise to help financial institutions manage risks and maximize returns associated with investment products or credit offerings.
- Determine equitable basis for distributing surplus earnings under participating insurance and annuity contracts in mutual companies.
- Negotiate terms and conditions of reinsurance with other companies.