What Math Do Actuaries Use?

Video Transcript

"What kind of mathematics to actuaries use? Hi, I'm Jimmy Chang. I've been teaching college math for almost a decade and we're here to talk about some math areas in which actuaries work in intensively. Now, actuaries as you might know, work in insurance, and their job is that they deal with the financial consequences of risk. A huge part of their job is probability in that they have to figure out among other things, the probability of some things happening or not happening. For example, the chances of your home being hit by a hurricane, given your location. Or given your car, the chances that you'll be in a car accident. And they figure things out like what age bracket you're in, what kind of car you drive, what kind of problems, what kind of features your car has, and so on and so forth. Now, what they do is... besides probability, they work a lot with statistics. They do a lot of number crunching. They look at a lot of graphs, and it takes them a long time before they make a decision on charging rates on your home, your car, anything else you might have insurance on. So when you get your bill explaining to your car premiums or your home premiums, that final number is based off of lots of hard work that the actuaries have done in terms of determining your cost. So they work behind the scenes, but the work that they do really figures prominently into every day mathematics. So, I'm Jimmy Chang and that is exactly how math is used in the actuary field."