What role does math play in the insurance industry?

Insurance companies use statistics to find how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit.

Insurance companies use algebra and geometry to calculate the distance from clients' major emergencies to nearest hospitals.

Insurance companies use statistics to hypothesize how likely clients are to switch over to competitive companies.

Insurance companies use calculus to find out how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit.

Question

Jamir Hensley

Mathematics

22 February, 05:24

What role does math play in the insurance industry?

Insurance companies use statistics to find how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit.

Insurance companies use algebra and geometry to calculate the distance from clients' major emergencies to nearest hospitals.

Insurance companies use statistics to hypothesize how likely clients are to switch over to competitive companies.

Insurance companies use calculus to find out how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit.

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Answers (1)

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Julio Marquez · Answer 1

The role math plays in the insurance industry is:

Insurance companies use statistics to find how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit.

Step-by-step explanation:

Two reasons back this answer, first of all the insurance companies study the complete profile of the applicant to understand what will be the probability of the insurance usage as well as the most common way it will be used to charge the premiums at the best probability their model suggest. Consider a teacher who works in a school relatively close to his house and doesn't practice any high-risk activity. He is going to likely have a small premium while a snowboarding pro will have a very expensive premium.