Risk Management and Insurance Policies
Meet Arnie. He works for an insurance company. Arnie works as an actuary, and his job is very important. He’s an expert in higher-level mathematics, probability and statistics. He uses his math skills to help his company assess uncertainty and risk so that the company can decide whether it wants to offer insurance and at what price. Arnie is crucial to the insurance company’s risk management, which is the process of identifying, assessing and mitigating risks.
Arnie’s work helps an insurance company decide whether to provide insurance to a person or business through issuance of an insurance policy. An insurance policy is a special type of contract that transfers risk from the policyholder to the insurance company in exchange for a fee, called an insurance premium.
Insurance policies often have deductibles, which are out-of-pocket amounts an insured party must pay before the policy kicks in. There are also limits to the amount an insurance company will pay pursuant to the policy. Finally, the policy will have exceptions and exclusions to the coverage.
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