WEBVTT

00:00:22.989 --> 00:00:27.449
But at its core, insurance is really quite simple.

00:00:27.890 --> 00:00:31.480
Insurance companies collect premiums today. so

00:00:31.480 --> 00:00:35.880
they can pay claims sometime in the future. Now

00:00:35.880 --> 00:00:39.399
think about this. A healthy 22 -year -old woman

00:00:39.399 --> 00:00:44.140
can purchase a 10 -year, $1 million term life

00:00:44.140 --> 00:00:50.439
insurance policy for around $15 a month. So over

00:00:50.439 --> 00:00:53.920
the entire 10 years, she might pay only about

00:00:53.920 --> 00:00:59.479
$1 ,800 for a policy that could pay out $1 million.

00:01:00.909 --> 00:01:05.189
So how can an insurance company confidently make

00:01:05.189 --> 00:01:08.989
that promise? Well, the answer is mathematics.

00:01:10.189 --> 00:01:12.810
Insurance companies do not know what will happen

00:01:12.810 --> 00:01:16.650
to any one individual. They cannot predict exactly

00:01:16.650 --> 00:01:19.670
who will file a claim or when that claim will

00:01:19.670 --> 00:01:24.049
occur. But by combining mathematical models with

00:01:24.049 --> 00:01:27.870
high -quality data, they can make remarkably

00:01:27.870 --> 00:01:31.569
accurate predictions. about large groups of people.

00:01:32.489 --> 00:01:36.569
And this is the work of actuaries. Actuaries

00:01:36.569 --> 00:01:39.849
use probability and statistics and financial

00:01:39.849 --> 00:01:42.950
mathematics to look into an uncertain future

00:01:42.950 --> 00:01:46.310
and help companies make promises that they can

00:01:46.310 --> 00:01:49.870
keep. Their models allow insurance companies

00:01:49.870 --> 00:01:53.230
to offer affordable premiums while remaining

00:01:53.230 --> 00:01:56.349
financially strong enough to pay claims when

00:01:56.349 --> 00:02:00.590
they occur. And this predictive power extends

00:02:00.590 --> 00:02:05.049
far beyond insurance. Meteorologists estimate

00:02:05.049 --> 00:02:07.510
the probability of rain several days in advance.

00:02:08.189 --> 00:02:11.310
Engineers use mathematical models to design aircraft

00:02:11.310 --> 00:02:15.110
and spacecraft that travel hundreds or thousands

00:02:15.110 --> 00:02:19.310
of miles and return safely. Economists forecast

00:02:19.310 --> 00:02:22.150
trends. Doctors evaluate medical treatments.

00:02:22.650 --> 00:02:25.509
Businesses use data to make better decisions.

00:02:25.789 --> 00:02:29.639
And the list goes on. Notice the common theme.

00:02:30.520 --> 00:02:34.120
Mathematics does not remove uncertainty, but

00:02:34.120 --> 00:02:38.180
it does help us to understand it. As our world

00:02:38.180 --> 00:02:42.340
becomes increasingly driven by data, the ability

00:02:42.340 --> 00:02:46.159
to build and interpret mathematical models will

00:02:46.159 --> 00:02:49.879
become even more valuable. The more data we collect,

00:02:50.080 --> 00:02:54.120
the more important mathematics becomes in turning

00:02:54.120 --> 00:02:58.400
that data into meaningful predictions. And that

00:02:58.400 --> 00:03:01.039
is one of the greatest powers math gives us.

00:03:01.460 --> 00:03:04.020
We will never know the future with certainty,

00:03:04.199 --> 00:03:07.360
but mathematics helps us to make wiser decisions

00:03:07.360 --> 00:03:08.520
about it today.