Actuarial Gains And Losses
What Does Actuarial Gains And Losses Mean?
Actuarial gains occur when an insurance company pays out less in benefits than anticipated within a given time period, resulting in a higher profit than expected. On the other hand, actuarial losses arise when the company must pay out more than anticipated, leading to a lower profit or possibly even a loss.
Insuranceopedia Explains Actuarial Gains And Losses
For insurance companies, actuaries calculate the expected amount of claims the company may need to pay out to policyholders within a specific period. These calculations are based on highly complex statistical analyses. However, the predictions are not always accurate, as unforeseen events can result in significantly more or fewer claims being filed. The number of claims filed and paid out ultimately determines whether the company experiences actuarial gains or losses.
