Actuarial Adjustment
What Does Actuarial Adjustment Mean?
An actuarial adjustment is an alteration an insurance company makes to the premiums on its policies or other important values. Actuarial adjustments are commonly made to adapt to unexpected changes in insurance claim payouts or other relevant data. In other words, insurance companies make actuarial adjustments to help them restructure their business when it is necessary to do ensure liquidity and profitability.
Insuranceopedia Explains Actuarial Adjustment
Everything does not always go to plan in the insurance industry. For example, a life insurance company may have to pay 20% more death benefits than anticipated in a given year. In circumstances such as these, it may be necessary for the company to make actuarial adjustments to prevent underwriting losses. Unfortunately for customers of the insurance company, this can mean that premiums go up. However, actuarial adjustments can keep the company in business, which can benefit the customers in the long run.
