Actuarial science became a formal mathematical discipline in the late 17th century with the increase in demand for long-term insurance coverage, such as burial, life and annuity insurance. Actuarial discomfort with market values reached one of its episodic peaks in the years following World War I, when an inflationary shock caused significant increases in the long-term interest rate. The ideas of financial economics began to stand out in actuarial thinking, and actuarial science has begun to dive into the more modern and sophisticated mathematical modeling of finance. Few actuarial debates have had the same intensity or longevity as the question of how to value the assets and liabilities of defined benefit pension funds.
Perhaps the creativity and perseverance evidenced by these advances could inspire the development of the next milestones in actuarial thinking. This sparked a revolution in actuarial approaches to risk measurement and capital valuation, opening the way for David Wilkie and others to develop stochastic asset models that can be considered the forerunners of economic scenario generators that are widely used in life insurance, general insurance and pensions. today. Using their extensive knowledge, actuaries help design and price insurance policies, pension plans and other financial strategies in a way that helps ensure that plans are maintained on a sound financial basis.
By the time of World War II, British actuaries had accumulated nearly two centuries of successful experience in estimating probabilities and applying them to fixing and reserving insurance premiums. However, finance is not the only field that actuaries now handle, other fields include health, large organizations and social affairs. Non-life actuaries, also known as property and casualty insurance actuaries or general insurance actuaries, deal with physical and legal risks affecting individuals or their property. Taken together, they highlight the breadth of British actuarial thinking that has emerged over the past 300 years and which underpins contemporary actuarial theory and practice.
Redactive Publishing Limited publishes The Actuary on behalf of the Institute and the Faculty of Actuaries. While its immediate direct impact on British actuarial practice was negligible, in retrospect, it can be considered as the starting point in the development of a more quantitatively and statistically sophisticated approach to actuarial science that has characterized it ever since. The first British actuarial article to apply risk theory to the measurement of general insurance capital and risk requirements. Actuaries work relatively reasonable hours, in comfortable conditions, without the need for physical effort that could cause injury, are well paid and the profession always has good recruitment prospects.
This illustrates how knowledge of historical work can provide direct inspiration for solving current actuarial problems and can help avoid the reinvention of wheels. Actuaries use their skills mainly in mathematics, particularly in mathematical and probability statistics based on calculus, but also in economics, computer science, finance and business.
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