insurance

Appointed Actuary

A qualified professional mathematician officially designated by an insurance company to calculate risks, set premium rates, and ensure the company maintains adequate reserves to pay claims. This person is responsible for the mathematical foundation that keeps insurance companies financially sound.

Example

“The appointed actuary recommended raising homeowners insurance rates by 8% after analyzing claims data showing increased storm damage in the region.”

Memory Tip

Remember 'appointed actuary' as the 'appointed number wizard' - they're officially chosen to be the math expert who keeps insurance companies honest and solvent.

Why It Matters

The appointed actuary's work directly affects your insurance rates and your insurer's ability to pay claims when you need them. Their calculations determine whether you're paying fair premiums and help ensure your insurance company will be financially stable when disaster strikes.

Common Misconception

People often think insurance rates are set arbitrarily by executives trying to maximize profits. However, appointed actuaries use rigorous mathematical models based on actual claims data and risk factors to determine rates, and they're legally required to ensure the company can meet its obligations to policyholders.

In Practice

XYZ Insurance's appointed actuary analyzes data showing that drivers aged 25-35 in urban areas have 15% more accidents than previously calculated. Based on this analysis, she determines that premiums for this group should increase from $1,200 to $1,380 annually. She must then certify to state regulators that the company holds $50 million in reserves to cover expected claims, ensuring the company can pay out even if claims exceed normal levels by 20%.

Etymology

"Appointed" comes from Old French "apointer" meaning to arrange, while "actuary" derives from Latin "actuarius" meaning account keeper or record keeper, first used in insurance in the 18th century.

Common Misspellings

appointed acturaryapointed actuaryappointed acutaryappointed actuairy

Related Terms

Risk Assessment

More in insurance

Other insurance terms you should know

deductibleThe amount you pay out-of-pocket before your insurance begin…insurance premiumThe amount paid periodically to an insurance company in exch…deductibleThe amount a policyholder must pay out of pocket before insu…copayA fixed amount paid by an insured person at the time of a me…coinsuranceA cost-sharing arrangement where the insured pays a percenta…out-of-pocket maximumThe most an insured person will pay for covered healthcare s…