Fundamentals of Actuarial Pricing

“Insurance is the contribution of the few to the misfortune of the many” is a simple way to describe what insurance is. But it doesn’t say what the “contribution” should be, to be fair. In this chapter, we return to the fundamentals of pricing and risk sharing, and at the end we mention other models used in insurance (to predict future payments to be provisioned, to create a fraud score, etc.).