Actuarial Rate

What Does Actuarial Rate Mean?

An actuarial rate is the projected value of a future loss shown through an estimate. Insurance companies calculate their actuarial rates to know and prepare for their financial obligations. Since the estimate is based on past losses, it is not wholly accurate.

Insuranceopedia Explains Actuarial Rate

Insurance companies rely on its actuaries to tell them how much to charge for risks that they underwrite in their policies. The actuarial rate also predicts the amount of money a company has to shell out for risk coverage over a certain period.

Because it is not 100% accurate, the actuaries’ estimates can either turn into a profit or a loss for the company.