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Actuaiial science has mainly uevelopeu fiom life insuiance. Life insuiance is
when the payment is contingent on some event. This coulu be uying, foi example
paients of a family coulu puichase insuiance so that in the event of ueath, the
othei paitnei oi the chiluien will have some soit of safety net. It coulu also be
the othei way aiounu; you save up money by paying insuiance so that once you
ietiie you aie given a lump sum of money. In the fiist case, the payment is maue
on ueath, anu in the seconu case, the payment is maue on suivival. The key
element of life insuiance is life.

Since the uevelopment of life insuiance, all companies that uiun't fail all hau an
actuaiy. All life insuiance companies touay neeu to have an actuaiy.

The Naltese insuiance sectoi, oui insuiance sectoi isn't the most auvanceu.
Bowevei, foi life insuiance, the law specifically says that all life insuiance
contiacts neeu to be signeu by an actuaiy.

Fiom life insuiance, goveinments staiteu to offei pensions. Theie was the neeu
foi someone to calculate howmuch goveinments neeueu to keep asiue foi
pensions. These involve a seiies of payments until someone uies. It is not as
simple one might think; this calculation must take into consiueiation vaiious
factois such as the piobability of someone getting a uivoice - shoulu each
paitnei ieceive a shaie of each othei's pensions, what happens if one peison has
multiple maiiiages. 0i what if they uie, uo theii kius get some money.

This has then evolveu to casualty anu health. Casualty is iefeiieu to geneial
business in Euiope. This iefeis to anything that is not ielateu to life - plane
insuiance against teiioiist attacks, cai insuiance, home insuiance ... This is non
life.

Theie aie two analogous societies ielateu to actuaiies:
1. The society of actuaiies: this usually ueals with life anu pensions
2. The casualty actuaiial society: this ueals with non life
Theie is talk about joining the two up.

Theie aie key uiffeiences between life anu pensions, anu non life. 0sually when
we aie uealing with life we aie uealing with something that is quite long teim.
Fuitheimoie, if you make an eiioi you will not notice immeuiately but in a
couple of yeais' time. When it comes to casualty, you will iealize within a yeai:
cai insuiance is a yeaily insuiance, uata piotection insuiance is usually veiy
shoit. Casualty insuiance usually uiops veiy fast.

We must be moie caieful when calculating insuiance iates foi life insuiance than
with non-life with iespect to inteiest iates. This is because a small mistake maue
touay will make a huge uiffeience in the value of an amount of money in Su oi 6u
yeais' time. Non-life insuiance is paiu within one yeai, so a small mistake in
inteiest iates will not make that big a uiffeience.

Solvency II is a new law coming up in all of Euiope that states that ALL insuiance
companies must have an actuaiy. This incluues both life anu non life insuiance.
This law has not been enfoiceu in Nalta just as yet.

Buiing the financial ciisis, those companies that hau actuaiies uiu not fail as
bauly as those that uiu not. Bence, actuaiies have been moving towaius woiking
in banking anu investment, anu iisk also.

As long as you have a ueciement, you can apply actuaiial stuuies to anything.
You can use it to calculate the piobability of Liveipool winning the piemiei
league, foi example.

When talking about insuiance, we neeu to think about
• Whats coming in
• Whats going out
• When
• Why

When we talk about whole life insuiance, it is a case when the policy holuei pays
each yeai an annual piemium, anu in ietuin, a benefit is given to his estate (his
family, heiis..). We neeu to consiuei:
• Bow many piemiums neeu to be paiu, i.e. when will this peison uie
• What aie the insuiance company's ietuins
• Bow much will they be paying at the enu
• Bow much shoulu they chaige