To what does the term "actuarial" relate in insurance?

The term "actuarial" in insurance primarily relates to the mathematical analysis and evaluation of risk, which is essential for calculating premiums and setting reserves. Actuaries utilize statistical methods and mathematical theories to assess the likelihood of events such as death, illness, injury, disability, or property damage. By analyzing various data points, they can determine the appropriate premium rates that insurance companies should charge to remain profitable while also ensuring that they have sufficient reserves to pay out claims over time. This process is critical for maintaining the financial health of an insurance company, as it ensures that the premiums collected are adequate to cover future liabilities.

Other aspects of insurance, such as the legal process of settling claims, customer service, and marketing strategies, do not fall under the definition of "actuarial". Each of these areas is important in the insurance industry, but they involve different skill sets and functions that are distinct from the numerical and analytical nature of actuarial work.