Actuarial
Statistical analysis of risk and probability used to calculate insurance rates.
Full definition
Actuarial science is the mathematical discipline insurance companies use to evaluate risk and set prices. Actuaries analyze massive datasets — accident rates by age, weather patterns, crime statistics, health outcomes — to predict how likely claims are and how large they'll be. Your premium reflects actuarial analysis of thousands of people like you, not just your individual history.
Real-world example
Actuarial data shows that 18-year-old male drivers in urban areas have accident rates 4x higher than 35-year-old female drivers in suburban areas. This directly drives the premium difference.
Quick summary
Statistical analysis of risk and probability used to calculate insurance rates.
Related terms
- Underwriting
The process insurers use to assess your risk and set your premium.
- Premium
The amount you pay for your insurance policy, usually monthly or annually.