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# Actuarial Service

## What Is an Actuarial Service?

Actuarial service is one way that corporations determine, assess, and plan for the financial impact of risk. Actuaries use mathematical and statistical models to evaluate risk in the insurance and finance industries. In addition to mathematical and statistical methods, actuaries call upon other fields including probability, finance, economics, and computer programming to create actuarial models. Actuarial science is used to evaluate and predict future payouts for insurance and other financial industries such as the pension industry.

## Actuarial Service Explained

Actuarial services include the analysis of rates of disability, morbidity, mortality, retirement, survivorship, and other contingencies. By using mathematical and statistical modeling, actuaries are able to provide estimates regarding particular events, such as the lifespan of a life insurance applicant, or the likelihood of a catastrophic, weather-related event for a property and casualty insurance firm. Actuarial services forecast risk and uncertainty and help firms plan for future probabilities and possibilities.

## Actuarial Service in Insurance

Most actuaries work at insurance companies, where their risk-management assessment abilities are particularly useful. With motivations to take on insurance policies that offer little risk, actuarial service practices focus on analyzing factors related to life expectancy, constructing mortality tables that provide a measure of predictability and making recommendations to brokers in individual cases. While actuarial science is most commonly applied to mortality analysis for life insurance, many of the same procedures are also used for property, liability, and other kinds of insurance. The impact of actuarial service on the costs of life insurance can encourage behaviors that would result in lower premiums, like quitting smoking.

The concept of insurance has existed since the late 17th century when the practice of risk assessment became increasingly scientific. By the end of the century, early actuarial scientists had released the first mortality tables, which divided the population into groups based on lifestyle choices and personal circumstances. This advancement made it easier for insurance brokers to quantify the risk of taking on a new insurance policy.

## Actuarial Service in Finance

Actuarial service is also commonly used to examine the risks of investments in the financial world. Combining their ability to statistically measure probability with predictive tools specific to a market, actuaries are very useful at investment banks, for example. In many ways, the fluctuations of a financial market are less predictable than an individual's lifespan. Successful actuaries in the financial world must acquire deep knowledge of potential investments and industries. Competent actuarial service can significantly reduce the overall risks of a portfolio.