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Insurers use actuarial science to calculate the risks they assume. Actuarial science uses mathematics, particularly statistics and probability, which can be used to cover risks to estimate the claim at a later date with reliable accuracy.

For example, many people buy insurance policies for housing and then they pay a premium to the insurance company. When you lose a protected place, the insurer must pay claims. For some of the insured, the insurance benefits they receive are far greater than the money they had paid to the insurer. Others may not make a claim. If it is averaged from all policies sold, the total claims paid out was lower than the total premiums paid to the insured, with the only difference is in cost and profit.

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