Insurance For Actuaries Policy Information
Insurance For Actuaries. Actuaries evaluate and determine the financial consequences of risk by applying mathematical principles to quantify uncertain events, such as death, disability, injury, or loss to property.
While some projects are of a short-term nature, most involve long-term projections of rate adequacy, premium income, adequacy of loss reserves or pension plans, and investment results.
Actuaries generally work for insurance companies, rating bureaus, or regulatory agencies, but may offer their services as consultants on an independent basis.
Accredited actuaries must pass a rigorous series of exams to earn their designation through the Casualty Actuarial Society or the Society of Actuaries.
Actuaries can work in a variety of settings as employees, but many find that owning and running their own consultancy firms offers a rewarding and interesting career.
As actuaries specialize in risk assessment, nobody will need to make them aware of the hazards they will face by running their own businesses, nor tell them about the vital role comprehensive insurance coverage plays in reducing the financial consequences of the multitude of perils they could encounter.
However, if you are curious what types of insurance for actuaries coverages would be needed to protect their business, this brief guide offers some answers.
Insurance for actuaries protects your actuarial firm from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked actuary insurance questions:
- What Is Insurance For Actuaries?
- How Much Does Actuary Insurance Cost?
- Why Do Actuaries Need Insurance?
- What Type Of Insurance Do Actuaries Need?
- What Does Insurance For Actuaries Insurance Cover & Pay For?
What Is Insurance For Actuaries?
Insurance for actuaries is a type of insurance policy designed specifically for individuals who work in the field of actuarial science. This insurance typically provides coverage for a variety of risks associated with the practice of actuarial science, including professional liability, errors and omissions, and cyber liability.
The coverage is designed to help protect actuaries from the financial consequences of any mistakes they may make while performing their duties, as well as from other potential risks associated with the use of technology and sensitive data in their work.
Overall, insurance for actuaries is an important tool for helping actuaries to manage risk and maintain financial stability.
How Much Does Actuary Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for actuarial businesses ranges from $37 to $59 per month based on location, type of projects, revenue, claims history and more.
Why Do Actuaries Need Insurance?
While actuaries who are employed in commerce, in the non-profit sector, or in a public institution will have similar insurance needs as any other skilled professional, those actuaries who own and manage their own consultancy practices will require additional forms of coverage.
They can, after all, encounter some of the same perils as any other commercial venture - even the most seasoned risk-assessment professional will not be able to prevent all disasters from occurring.
Actuaries running their own firms will not, for example, be able to thwart acts of nature, such as wildfires, earthquakes, serious floods, or storms.
These catastrophic events beyond anyone's control can not only severe damage an actuary's office space, but also their smaller physical assets, such as computers, and at the same time force them to temporarily close their business.
Even alongside excellent safety measures, threats such as burglary, cyber theft, acts of vandalism, and accidents like fires, also remain very real.
Liability risks are another major hazard. A client could accuse an actuary of missing something important in their analysis, a computer virus that infects an actuary's machine could have far-reaching consequences for clients, or a client may be accidentally injured on an actuary's commercial premises.
In these cases, costly lawsuits are almost inevitable - but actuaries also always have to keep in mind that they can be sued even if they did not make any mistake in carrying out their professional duties.
Investing in a insurance for actuaries plan serves the purpose of safeguarding actuarial firms' financial interests - even if disaster could not be averted.
What Type Of Insurance Do Actuaries Need?
The precise nature of the coverage an actuary running a consultancy firm will need to protect their business is dependent on multiple factors.
The exact nature of the work, the size of the business, the number of employees, and the jurisdiction where the actuary is based all play important roles in determining the types of insurance for actuaries policies required, as well as the costs.
Consulting a commercial insurance specialist will give actuaries insights tailored to their unique circumstances, but some of the most important forms of coverage actuaries need to carry include:
- Commercial Property - This coverage will protect your food distribution operation from third-party premises and product liability issues. For instance, if someone were to claim that the products you provided caused a foodborne illness and filed a lawsuit against you, general liability insurance would cover the related expenses.
- Professional Liability - This type of insurance for actuaries coverage helps with legal defense cost in the case of professional liability claims - claims in which a client alleges that an actuary carried their duties out negligently, or caused active harm.
- General Liability - Designed to cover broad liability issues, specifically third party bodily injury or property damage claims, actuaries are also likely to need this form of insurance.
- Workers Compensation - Generally, any commercial venture that has employees requires workers' comp insurance, which covers the medical costs and lost wages for employees who sustain work-related injuries.
- Commercial Auto - Actuaries who drive vehicles in a professional context will also be required to carry commercial auto insurance, in the event of accident, damage, or theft.
Because actuaries carry out diverse responsibilities, and each business has specific needs, consulting a commercial insurance broker about your particular insurance for actuaries requirements is indispensable
Actuary's Risks & Exposures
Premises liability exposure is often minimal since most client contact is done electronically or by mail. If clients visit the premises, they must be kept in designated areas so that they cannot view or overhear conversations regarding other clients' confidential information.
To prevent slips, trips, or falls, all areas accessible to clients must be well maintained with floor covering in good condition. The number of exits must be sufficient and be well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
Off-premises exposures include visits to clients' premises. There should be policies and training as to off-site conduct by employees. Personal injury liability exposures include allegations of assault, breach of confidentiality, discrimination, and invasion of privacy.
Professional liability exposure is extensive. The actuary determines the financial consequence of risk, projecting results from current data into the future.
Hazards increase if the firm fails to conduct thorough background checks to verify employees' credentials and education, ignores or has inadequate error checking procedures, or allows clerical workers to do tasks that only professionals should handle.
Ongoing training must be required for all employees. All assumptions used in analyses must be identified and discussed with clients. The firm should have stated procedures and must follow the standard and practices set by the American Academy of Actuaries.
Workers compensation exposure is generally limited to that of an office. Since work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.
Some actuarial firms have significant off-site work at clients' premises for data collection, presentations, and similar activities. Employees who travel can be injured by slips and falls at clients' premises, assaults, or in automobile or aviation accidents.
Overseas exposures will require special foreign coverage. If an employee is injured in another country, the cost of returning home could be extremely high. Repatriation coverage, including air ambulance services, should be considered.
Property exposure is generally limited to that of an office. Ignition sources include wiring, heating and air conditioning systems, wear, and overheating of equipment. There may be storage of client information in paper form, although these are now often digital instead of paper format.
Storage of paper documents should be in fireproof cabinets. Fire suppression systems must not damage the papers. Computers and other electronic equipment may be targets for theft.
Inland marine exposures are from accounts receivable if the firm offers credit, computers, and valuable papers and records for clients' information. For computers, the hazards may be extensive if equipment or laptop computers are used off-premises due to the potential for theft or transportation losses.
A morale hazard may be indicated if the insured does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water, and fire. Power failure and power surges are potentially severe hazards. Duplicates should be kept off-site to allow for re-creation in the event of a loss.
Crime exposures are from employee dishonesty and computer fraud. The exposure can be quite serious as actuaries have access to individual customer's personal and proprietary information. Background checks should be conducted on all employees.
Hazards increase without monitoring procedures and securing all records to prevent unauthorized access. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.
Business auto exposure is generally limited to hired and non-owned. If vehicles are supplied for use by employees, there should be written procedures in place regarding personal use by employees and their family members.
All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained, and records kept in a central location.
What Does Insurance For Actuaries Insurance Cover & Pay For?
Actuaries are professionals who deal with the financial impact of risk and uncertainty. They use mathematics, statistics, and financial theory to study uncertain future events, particularly those of concern to insurance and pension programs. Like all professionals, actuaries can face lawsuits due to various reasons:
1. Professional Negligence: This typically occurs when an actuary fails to exercise the degree of skill expected of them, resulting in financial loss or harm to the client. For example, if an actuary miscalculates the amount of money a company needs to set aside to cover potential insurance claims, the company could suffer significant losses. To protect against such liabilities, an actuary can purchase Professional Liability Insurance (also known as Errors and Omissions Insurance). This insurance can help pay for defense costs, settlements, and judgments arising from claims of professional negligence.
2. Breach of Contract: Actuaries can also be sued if they fail to deliver the agreed-upon services as per their contract with a client. This could involve not meeting deadlines or not achieving promised results. To protect against this risk, actuaries can maintain Professional Liability Insurance, which typically covers claims of failing to perform contractual duties. This insurance can help in covering the legal expenses involved in defending against such a lawsuit and the damages, if the actuary is found liable.
3. Misrepresentation: This could occur if an actuary provides inaccurate or misleading information to a client, leading to financial loss. For example, an actuary might overstate the financial health of a pension plan, leading a client to make poor investment decisions. Professional Liability Insurance can again protect actuaries in such situations, covering the costs associated with legal defense and any damages awarded.
4. Breach of Fiduciary Duty: Actuaries often have fiduciary duties to their clients, meaning they are required to act in the client's best interest. If an actuary violates this duty, such as by recommending an unsuitable insurance product because it earns them a higher commission, they can be sued for breach of fiduciary duty. In such cases, Fiduciary Liability Insurance can help cover the costs associated with defending against the lawsuit and any resulting damages.
Insurance plays a critical role in mitigating these risks. It's important to note that the specifics of what is covered will depend on the terms of the insurance policy. Actuaries should work closely with their insurance providers to ensure they have adequate coverage for the types of risks they face in their practice.
Commercial Insurance And Business Industry Classification
- SIC CODE: 8999 Services, Not Elsewhere Classified
- NAICS CODE: 524298 All Other Insurance Related Activities
- Suggested Workers Compensation Code(s): 8810 Clerical Office Employees NOC, 8742 Salespersons or Collectors - Outside
Description for 8999 Services, Not Elsewhere Classified
Division I: Services | Major Group 89: Miscellaneous Services | Industry Group 899: Miscellaneous Services
8999: Services, Not Elsewhere Classified:
- Authors, Artists, and Related Technical Services, Independent
- Record Production
- Scientific and Related Consulting Services
- Music Publishing
- Actuarial Consulting
- All Other Information Providers
- Environmental Consultants
Insurance For Actuaries - The Bottom Line
To find out more about the types of insurance for actuaries policies you'll need and how much coverage you should carry along with costs - consult with a reputable broker that is experienced in business insurance.
Additional Resources For Professional Services Insurance
Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.
- Answering Service
- Armored Car
- Attorney Lawyer
- Background Music Services
- Business Consulting
- Chemical Engineers
- Civil Engineers
- Claims Adjuster
- Commercial Laundries
- Commodity Broker
- Corporate Wellness
- Court Reporter
- Credit Bureaus
- Debt Collection Agency
- Detective Agency
- Diaper Services
- Electrical Engineering
- Environmental Consultant
- Executive, Career & Life Coaching
- Executive Search Firm
- Expert Witness
- Financial Planner
- Financial Services
- Funeral Directors
- HR Consultant
- Inspection Bureaus
- Insurance Agents & Brokers Insurance
- Mediator - Arbitrator
- Medical Billing
- Music, Drama & Dance Therapy
- Office Machine Repair & Maintenance
- Piano Tuners
- Project Management
- Safety Consultants
- Speakers Bureaus
- Tax Preparer
- Temporary Staffing
- Title Abstractors
- Valet Parking
- Specialty Consultants
- Specialty Service Business
The professional services industry, which includes occupations such as lawyers, doctors, accountants, and architects, often deals with sensitive and complex issues that carry a high risk of liability. These professionals are expected to provide their clients with expert advice and guidance, and any mistakes or oversights can result in significant financial consequences for both the client and the professional. This is where insurance comes into play.
Business insurance provides protection against the financial repercussions of potential mistakes or accidents that may occur while providing professional services. For example, a lawyer may make an error in their legal representation that leads to a financial loss for their client. Without insurance, the lawyer would be personally responsible for covering the cost of this loss. Insurance helps to protect professionals from these types of financial burdens and allows them to focus on providing high-quality services to their clients.
In addition to protecting against financial losses, commercial insurance can also provide legal defense for professionals facing legal action as a result of their work. This can be especially important for professionals in high-stress or high-risk fields, such as doctors or architects, who may be at a higher risk of being sued for professional negligence.
Overall, the professional services industry needs insurance to protect against financial losses and legal action, ensuring that professionals can continue to provide high-quality services to their clients without the added stress and burden of potential financial consequences.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.