Summary |
Practical Risk Theory for Actuaries is a textbook for practicing and student actuaries on the practical aspects of stochastic modeling of the insurance business. It has its roots in the classical theory of risk but introduces many new elements that are important in managing the insurance business but which are usually ignored in the classical theory. These include modeling the stochastic behaviour of inflation and investments, cyclical effects affecting both claims and premiums, claim run-off uncertainty and feed-back mechanisms. The main focus of the book is on general insurance (property/casualty insurance) but there are also chapters on life insurance and pensions. Practical tips are given for the use of simulation to solve both short-term and longer-term problems, with many practical applications. The text avoids the use of unnecessarily complex or abstruse mathematical formulations and makes liberal use of diagrams and graphical representations.
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