What is insurance mathematics?
Insurance mathematics is an area of applied mathematics that studies different risks for individuals, assets and companies and ways to drive these risks. Insurance mathematics relies on the number, probability, statistics and theory of interest. These disciplines are used in insurance to interpret data from past events and to model future events. Some insurance mathematics applications are insurance contracts, determine cash reserves to cover the claims and modeling of scenarios of the allocation of capital assets.
Mathematics insurance is one of many tools used in the insurance --matematic science to assess the risk. By definition, the risk of the possibility of occurrence. Individuals are exposed to risks such as disease, disability and death. The property could be stolen, destroyed in fire or floods. Businesses could be interrupted by natural disasters or suffer losses by court disputes.
Insurance Mathematics is used to better define and manage Riskka. Life insurance protects individuals and other insurance protects assets and companies, which reduces the financial impact of unforeseen events. Risk theory is used to define the likelihood that there is a risk, and to measure the financial impact of danger. The number is the basis of most mathematics insurance. The probability is another basic object in defining risks uncertainty. Statistics are important for studying past events. Interest theory and other financial mathematical topics are important in defining the current value of future payments.
In order to predict the future, the past is studied and combined with good judgment to model risks. Statistical methods such as regression and time series models are used to extract useful information. This information is used to create models to predict future events. SomeRé frequently used models are survival models, Markov's chain models, frequency and severity models, aggregated models, empirical models and parametric models.
Once mathematics is used to model future events, this model can be used for insurance. The expected number and severity of the claims can be used for price insurance. The model can also be used to determine how much cash will be necessary to cover future demands and expenditure. Models are used to analyze scenarios of corporate financing, which often contain derivatives to ensure different types of asset risk. Various investment strategies are studied using the theory or simulation that require intimate knowledge of financial mathematics.