Actuarial mathematics—the book’s subject—is a thing of beauty, says Victoria statistics professor Estate Khmaladze.
Statistical Methods with Applications to Demography and Life Insurance, Estate’s first book, started as a hobby project 10 years ago.
It was launched at a national workshop in Wellington, bringing together for the first time about 60 industry experts, government officials and students with an interest in actuarial mathematics.
Actuarial mathematics provides methods to assess risk in banking, insurance and finance. It is commonly used to set industry prices, using predictions about what is likely to happen to the population and the economy at some point in the future.
“Probability theory and mathematical statistics, which form the basis of actuarial maths, are deep, immensely interesting and often counterintuitive, as good science should be,” says Estate.
“Although it is sometimes seen as formal and technical, if properly taught, the subject can both inspire and connect you to the real-world problems found in the finance and actuarial industries. To me, it demonstrates the important role mathematics plays in our lives.”
Estate’s book is intended as a course of study for teaching postgraduate students. The text brings diverse themes of modern statistics to bear on real-life scenarios, such as the problem of non-homogeneous samples, incomplete or truncated data, and analyses of extremes in insurance claims or very long survival times.
“I’m hoping it will help inspire others to see actuarial maths as something they can have fun with, be challenged by and enjoy.”
Estate runs a world-class Master’s programme in actuarial mathematics at Victoria. Called Stochastic Processes in Finance and Insurance, it is, so far, the only programme of its kind in New Zealand.