Reply To: Actuarial Soundness
japjotsingh99
Actuarial Soundness means the Program is projected to have the funds needed to pay future obligations as determined by an actuary. The actuarial formula incorporates several factors, including estimated future tuition, projected inflation and investment returns.
Actuarial soundness is much easier to define in theory than to evaluate in practice. Actuaries must develop statistical estimates based on a variety of information including demographic and diagnostic information on the relevant population and assumptions or forecasts of how these factors may change over time. If complete and accurate information is unavailable, it might not turn out to be actuarially sound in practice.
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Is it same as Actuarial judgement?
So basically,
Suppose e day that we want to find whether a particular person has a disease or not. We could ask the experts what would be the features, and we can then then fit a statistical model on that data, trying to predict the outcome or classification. This approach is known as Actuarial Judgement.
So, coming to the question, I think that these are two purely different terms with soundness as whether the firm would be able to fulfill the actuadial risk or not.
Hope it helps
(I might be wrong. If you get something contradicting about two terms, just share it here.)
Sent from my SM-J700F using Actuarial Info mobile app
Sent from my SM-J700F using Actuarial Info mobile app