Assumption (actuarial)

In actuarial mathematics, an assumption is a probability of a future payment flow, which is usually estimated using statistical methods . This can e.g. B. mortality probabilities, probabilities of occurrence of a storm , probabilities of exercising a certain option such as a termination ( cancellation probability ) or the probabilities of a certain capital market scenario. In some cases, however, assumptions are determined intuitively or arbitrarily due to a lack of statistical information . If probability distributions are used to determine the cash flows , the selected parameters of the distribution are also referred to as assumptions. In traditional actuarial mathematics , an assumption is also referred to as the basis of calculation .