What function does the actuarial department perform in an insurance company?

The actuarial department plays a crucial role in an insurance company by predicting losses based on historical data. Actuaries use mathematical models and statistical techniques to analyze past trends, claims, and various risk factors to forecast future events. This predictive analysis is essential for assessing the financial stability of the insurance company, setting appropriate policy prices, and ensuring that the company can cover future claims while remaining profitable.

This function is key to the overall risk management strategy of the insurer, as it helps determine the likelihood of different claims occurring and informs underwriting processes. By understanding these patterns, the actuarial team can provide insights that drive strategic decisions, including pricing strategies, reserve requirements, and product development.