Actuarial Analysis

DEFINITION of 'Actuarial Analysis'

The examination of risk by a highly educated and certified professional statistician. Actuarial analysis uses statistical models to manage financial uncertainty by making educated predictions about future events. Insurance companies, banks, government agencies and corporations use actuarial analysis to design optimal insurance policies, retirement plans and pension plans and to analyze investment risks.

BREAKING DOWN 'Actuarial Analysis'

For example, actuarial analysis is an essential task performed by insurance companies to analyze data and estimate the probability of an insurance claim being filed for a given event. This work allows insurance companies to predict with a reasonable degree of accuracy the amount of claims they will pay out, which helps them determine what premiums they must charge to remain profitable.