Actuarial Model (or Model)

Definition

A simplified representation of relationships among real world variables, entities, or events using statistical, financial, economic, mathematical, or scientific concepts and equations. Models are used to help explain a system, to study the effects of different parts of a system, and to derive estimates and guide decisions.

A model consists of three components: an information input component, which delivers assumptions, parameters and data to the model; a processing component, which transforms inputs into estimates; and an output component, which translates the estimates into useful business information. A model evolves through a life cycle as follows:

  1. a specification phase
  2. an implementation phase
  3. a production phase, that consists of one or more model runs.

Improve this page

Please let us know if you see an error or omission on this page.

Provide Feedback