After reading this article you will learn about the meaning and requirement of an actuary in general insurance.

Meaning of Actuary:

An Actuary is an officer of any insurance company, skilled in statistics, especially on the expectancy of life and the average proportion of losses by time and other accidents. In fact the Actuary is a specialized field of a profession.

An actuary performs many type of functions but his core profession is to calculate and make forecast and make predictions of future outcome in a situation of uncertainty. But all this cannot be done without any pre -record or past data. Even if all the sufficient credible past data and other relevant information is made available what is the method to accept the predictions of any Actuary remains a big question.

An actuary is a professional who has passed the examination conducted by Institute of Actuaries of India and who is a Fellow of the Institute of Actuaries. He must also posses a certificate of practice issued by Institute of Actuaries of India.


SO far as Life Insurance is concerned the appointment of an Actuary he has been there from the very beginning, unlike the general insurance where his entry is of recent origin. In order to calculate life expectancy one has to look into different aspects of life throughout the world because it depends on any number of factors like incidence of disease to the day to day changing life style, environment conditions, genetic conditions, hierarchy history.

Taking a number of things in account the life expectancy statistics are collected. In fact Life expectancy is the age to which a person is expected to live or it can also be described as the remaining number of years a man is expected to live.

It is not easy to define the norms of life expectancy, in different atmosphere, living style, dependence on nature, food habits, quality of food, the race to which one belongs to, the area one lives in, the medical facilities available in the area of living and so many other factors constitute to decide life expectancy.

It is seen that certain persons living in particular area have a very short span of life while people living in other particular areas live beyond 100 years of age. It is the role of actuary to collect all type of statistical data and compile a chart showing life expectancy of people.


Any actuary takes into consideration some major factors for deciding life expectancy main of which are:

1. When were you born,

2. What was your gender,

3. What is your race,


4. Personal medical conditions, and 

5. Family Medical history.

All above conditions are not permanent. All these go on gaining with the growing age of persons. With the result life expectancy also go on changing because of more and more complex formulas adopted by actuaries very frequently.

The Life expectancy bears major affect in prescribing the amount to be paid by the policy purchaser. In other words it helps in deciding the premium to be paid for any life insurance policy. Young people have long span of life having lower risk to life.


In such cases any insured persons pays the premium for the entire period for which the policy has been purchased. This situation remains always beneficial to any insurance company and accordingly they charge premiums at lower rates.

On the other hand in case of purchasing any insurance policy after waiting for a longer period results into higher rate of risk for the insurance companies as such in order to compensate the higher risk the rate of premium is also raised. In short the life expectancy has direction relation with the amount of premium.

The Requirement of Actuary in General Insurance:

In case of life insurance the appointment of actuary was necessary from the very beginning but in case of General Insurance it was made mandatory only after passing an amendment Act to the Life Insurance Act 1938 which was exacted in the year of 2000 with passing of IRDA ACT 2000.

This latest amendment of 2000 brought in its wake for the first time the concept of “appointed Actuary” in general insurance companies operating in India. Every general insurance companies, must now is necessarily required to have an “appointed actuary.”


His role has been defined in the regulations issued by IRDA. While the appointed actuary will receive his remuneration from the company, he will also be reporting to IRDA directly on certain matters which are critical and may require immediate IRDA intervention.