What are actuarial tables used for in insurance?

Actuarial tables are crucial tools used in the insurance industry primarily for assessing risk and determining premium pricing. These tables provide statistical data that reflect the likelihood of certain events occurring, such as death, illness, or property damage, based on various factors like age, gender, occupation, and health status.

When insurers analyze this data, they can estimate the expected frequency and severity of claims that they might receive from policyholders. This understanding allows them to set premiums at a level that not only covers potential liabilities but also ensures the company's profitability.

By employing actuarial tables, insurance companies can create a balance between capturing sufficient revenue through premiums and managing their risk exposure effectively. This process is vital because it ensures that the pricing reflects the actual risk involved with different policies, which ultimately leads to a more sustainable insurance model.