Perhaps your wondering a bit about why such a rigorous exam schedule is so important and why work that is done by an actuary for the insurance industry is that much different from what an accountant might do for other businesses. This table that Chris and I developed should help to clarify this. |
Insurance |
Other Businesses |
Cost of Production | |
Even though customers pay for insurance today, the final cost of the product may not be known for many years. | Known at time of production |
Valuing of Assets | |
Regulation of investments makes it easier to value an insurer's assets. | Assets are more difficult to value (e.g. value of bonds). |
Valuing of Liabilities | |
Liabilities such as unpaid losses and expenses are more difficult to value. | Amounts are more explicit and more easily quantifiable. |