Page 45 - ic92 actuarial

Foundations of Casualty Actuarial Science

actuarial science :
(i) Actuaries begin with the problem , and then work

backwards to devise an optimal solution. The
problem range from determination of adequate rates,
to the development of accurate reserves or optimal
classification plans.

Often, the problem is vague, does not have a definite
answer, and there are multiple methods of
proceeding. So the actuary's task is to develop
appropriate procedures, to determine the data
requirement, to examine the feasibility and cost of
data procurement and analysis.

(ii) Actuaries seek optimal solutions, not perfect
solutions, as business problems rarely have perfect
solutions, perfect classification systems, perfect
experience rating plan, or perfect loss reserving
method. Some systems might be perfect, but cost
might be too high , whereas some systems may be
within budget, but is not accurate.

Some procedures are also well suited for particular

Sashi Publications - www.sashipublications.com 45

Copyright@ The Insurance Times. 09883398055 / 09883380339