Math & Economics
The pricing of insurance products is not straightforward because we can’t predict the future. We attempt to predict the probability of a risk event happening using mathematical and actuarial science models. The two fundamental models in insurance pricing are:

The Law of Large Numbers

As more people contribute to the insurance pool, the actual loss per policy will be as close as possible to the calculated loss per policy.

Weighted Probability

Predicts the expected revenue from every pool contributor based on the likelihood of a risk event to occur/not occur.
At Steady State, we use the European Insurance and Occupational Pensions Authority’s (EIOPA’s) Solvency II insurance capital model. It determines the minimum premium our platform must collect to operate to meet our claims obligations in one financial year.
Last modified 3mo ago