We studied theoretical part of Life actuarial concepts and components in CM1/CT5. But, did you ever wonder what do actuaries do practically in life insurance companies? Well, let’s find out…
Insurance is a contract between and insurance company and policyholder(s) with the motive of providing protection against a possible event in future. It is important to protect oneself from the possibility of heavy losses due to an event. Life insurance is one of the traditional and largest areas of practice for Actuaries.
• What is life insurance?
Risk of death, illness, lack of funds after retirement etc are some examples of events that occur during the life of any person. To prevent or reduce the risk coming from these events, individuals need to protect life of themselves and their families. This done through buying a life insurance policy. When a person has bought life insurance, he gets a sum assured as mentioned in the policy statement during/after the events mentioned above.
• How does Life insurance company works?
Insurance company (insurer) receives premium regularly paid by policyholders in exchange of coverage of risks during the lifetime of policyholder. Some part of this premium goes in admin tasks. As per regulations of IRDA, insurers are required to maintain reserves which is monitored periodically based on the risk the insurers accrues. For each event happening in every policy holder’s life, the insurer will pay out the sum assured. To ensure that they have sufficient liquid assets, they usually invest in low risk investments such as debentures and money market.
More details can be found here : https://www.irdai.gov.in/ADMINCMS/cms/Uploadedfiles/Actuarial_Department…
Every Life insurance company in India offers different kinds of products, for example:
• Life insurance
• Annuities
• Retirement savings products
• Disability/illness products
• Living benefit products
• Health insurance
• Group life/health products
Major Actuarial departments in Life insurance companies, for example:
• Pricing
• Reserving
• Product development and designing
• Solvency II
• Reporting as per IFRS 17
• Modelling
• Investments
We will cover each of these departments in detail in the next article.
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