Interview with Nikita Prabhu - General Insurance Actuary

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Ques 1: Why did you choose Actuarial Science as a career? Ans: I came to know about Actuarial Science when I was in high school from my father who is an insurance agent. He showed me the Ready reckoner for premium rates and told me that ‘actuaries’ were behind the mathematics of it. I researched the profession and found it quite fascinating. I could apply the knowledge gained from the study of mathematics, statistics, economics, and finance to solve a range of real-world problems. It seemed highly rewarding. Ques 2: How is it like to work in both consulting and core Insurance based company environments? Ans: I was fortunate to start my career in consulting with Ernst & Young. Early on in my career, I got exposure to the different fields that actuaries work in, such as life insurance, employee benefits and general insurance. This initial experience aroused my curiosity towards general insurance (GI) and hence I chose to become a GI actuary. In a consulting firm, you get the

Do you know the difference between Excess and Deductibles ?

Excess vs Deductibles:

Let's have a look at little bit of background

  • The main motive behind both of these is to safeguard the insurance company from frequent or frivolous claims. People after purchasing the insurance policy become careless because they know that in case of any incident they will be paid off from the insurance company so to avoid this excess or deductible are used.
Now,the main difference are as follows:
  • An excess is an amount a policyholder must bear before the liability passes to the insurer (subject to the sum insured)
  • Deductible is an amount withheld by the insurer from the claim amount paid to the policyholder.

Let's see 2 examples to understand in an easy way.
Scenario 1
  • A policy has a sum assured of $1000 and an excess of $100
  • Now if the loss to insured is $500, then insurer will pay 500 -100 = $400
  • If loss to the insured is $1500, then insurer will pay $1000 (as it is the max amount that insurer can pay)

Scenario 2
  • A policy has a sum assured of $1000 and deductible of $100
  • Now if the loss to insured is $500, then insurer will pay 500 -100 = $400
  • If loss to the insured is $1500, then insurer will pay 1000 - 100 = $900 (i.e. sum assured less deductible)
Deductible reduces the maximum payout but excess does not 

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