Actuary

“ Equally extensive observations have been made as to the average number of persons of various ages who die yearly. It is always the number of the experiments which gives the law of the probability. It is on such observations that the actuary founds his estimates of the mortality that exists at any given period of life. The actuary tells you that he has been guided by the Laws of Mortality. Now the results must be very regular, to justify the actuary in speaking of Mortality as governed by Laws. ”

“ Let any actuary of life-insurance be asked his experience with heavy-weight risks, where the waist measures more than the chest, and the long-drawn face of the businessman, at memory of lost dollars, will make answer without need of words. ”

“ In death cases not more in the aggregate than four years' wages, and not to exceed in any case $3000. That schedule has the advantage of being definite and of being one which enables the insurance actuary without much difficulty to name a rate, and, needless to say, we got such rates from the insurance company's representatives before we finally decided on that schedule. ”

“ The actuaries, who are intelligent and accomplished gentlemen, must be propitiated, for they are in possession of a somewhat occult science, having justly the ear, the confidence, and the respect of their directors. And when it is borne in mind that these directors embrace, as a body, the first men in the city of London, that they possess a commercial, social, and, not seldom, a political consideration, it follows, that to conciliate them is as necessary to the well-being of any measure, as to conciliate the actuary is necessary to the co-operation of the directors. ”

“ But the severest lesson was the loss of Barrett's Method, [327] now the universal instrument of the actuary in his highest calculations. It was presented to the Royal Society, and refused admission into the Transactions: Francis Baily [328] printed it. ”

“ Let the directors take the utmost pains to be independent of great conflagrations and pestilences, their actuaries can tell them that, according to the doctrine of chances, the time must come, at last, when their losses will bring them to a stop. They may tide over such a crisis by extraordinary means, but then they will start again in a weakened state, and the same thing will happen again all the sooner. An actuary might be inclined to deny this, because he knows that the expectation of his company is large, or perhaps (neglecting the interest upon money) is infinite. ”

“ Roundhand, the actuary, who had been such a profound admirer of Mr. Brough and the West Diddlesex Association, suddenly quarrelled with both, and taking his money out of the concern, he disposed of his 5,000l. worth of shares to a pretty good profit, and went away, speaking everything that was evil both of the Company and the Director.
Mr. Highmore now became secretary and actuary, Mr. Abednego was first clerk, and your humble servant was second in the office at a salary of 250l. a year. ”

“ Amendment of ERISA- The last sentence of section 303 (g) (3) (B) of ERISA is amended to read as follows: `Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan's actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h) (2) (C) (iii) ) , as specified by the Secretary of the Treasury.'. ”

“ If the actuary of an insurance office infers from his tables that among a hundred persons now living, of a particular age, five on the average will attain the age of seventy, his inference is legitimate, not for the simple reason that this is the proportion who have lived till seventy in times past, but because the fact of their having so lived shows that this is the proportion existing, at that place and time, between the causes which prolong life to the age of seventy, and those tending to bring it to an earlier close. ”

“ There is no profession in which subordinates are so respectfully regarded, for the actuary is master of a science in which the director [273] is generally deficient; and knowledge, in this case, as in others, is essentially power. ”

“ An insurance actuary could take the Indian census tables and the government's snake tables and tell you within sixpence how much it would be worth to insure a man against death by snake-bite there. If I had a dollar for every person killed per year in India, I would rather have it than any other property, as it is the only property in the world not subject to shrinkage. ”

“ The certified societies were such as obtained a certificate to their tables by an actuary possessing a given qualification, who was required to set forth the data of sickness and mortality upon which he proceeded, and the rate of interest assumed in the calculations. All other societies were to be simply registered. ”

“ The assumptions of some of these new offices were audacious enough; one actuary asserting that a company might spend all their premiums and great part of their capital, and be perfectly [256] solvent. The first year’s business of a society which started at this period produced 3300l.; a large sum undoubtedly, but the first year’s expenses were 3000l. out of it. The business of the second year produced 2000l.; but all the money paid by the policy holders was spent, with 15 per cent. of the capital in addition. ”

“ But, though most business risks are not and cannot be a matter for premiums and policies, the principle, which the practice of insurance illustrates, applies none the less. In the light of their knowledge and experience, the promoters of a new undertaking must weigh up the chances of failure and success, though they will not do so by the precise methods of an actuary. They will require that any chances of serious loss should be balanced by such chances of exceptional gain, as would raise the expectation of profit well above the normal return on secure investments. ”

“ The agents, however, have not found opportunities enough in the orthodox forms. They have inspired the invention of numerous picturesque, contracts. Under their houndings the actuary's life has become a burden. In reality, there are only three forms of life insurance; the regular life policy, payable at death; endowment, payable to the beneficiary at death and to the insured provided he survives a stipulated period; and the term policy, which insures a man, not for life but for a certain period, ten, fifteen, or twenty years. ”

“ An actuary in a large insurance company is obliged to stop work at such times, finding that he makes so many mistakes which he is only conscious of later that his work is useless. In a large factory from ten to twenty per cent less work is brought out on damp days and days of threatening storm. ”

“ If entered at forty, by the actuary's table, at four per cent., its net single premium would be $511.15 for $1,000. At the age of forty, the natural net premium to insure $1,000 for one year is $9.96. This, at four per cent., will amount at the end of the year to $10.36, so that the company, exclusive of the party himself, by insuring $1,000, runs the risk of losing $989.64 if he dies, and of gaining $10.36, if he does not. There is in this case no reserve at the end of the year, and no occasion to use the term "self-insurance." ”

“ Griffith Davies, the actuary of the Guardian Office, show that for a risk, for which, if the Northampton tables were taken as the basis of the assurance, that in the large society at Preston, where an annual premium of 3s. 9d. would be taken for one risk by an assurance office, 7s. 10d. is taken from the contributors by the club. The General Friendly Society, for a risk for which 3s. 9d. would suffice on the Northampton table, receives 11s. 5d. Instead of an average premium of 5s. 2d., the “Friendly Society” takes 11s. ”

“ The actuary is forced to observe that the interest factor in his calculations is much less definitely fixed by known facts than the mortality factor. The longer a contract has to run, the greater the effect of the difference in rate. The value of a payment to be made in thirty years is greater by above one-half with interest taken at 3% than at 41/2%, and one to be made in thirty-six years is more than twice as great. Hence the most careful study of the forces determining for long periods the average rate of interest is fundamental in life insurance. ”

“ To this end the German insurance company will hand over to the allied or associated Government concerned, the proportion of its assets attributable to the policies so canceled and will be relieved from all liability in respect of such policies. The assets to be handed over shall be determined by an actuary appointed by the Mixed Arbitral Tribunal. ”

“ Part I. is theoretical. The tables of mortality are given, and we are shown how from these are obtained the expectation of life, and—assuming a given rate of interest the net premium and the reserve—or, as the author prefers to call it, the trust-fund deposit. The theory of annuities is discussed in a series of problems; and the mechanism of the commutation tables—those working-tools of the actuary—is explained.
Part II. is devoted to the discussion of such practical considerations as: the general management of companies; stock and mutual rates; the various plans of insurance ”

“ The determinations under the preceding sentence shall be made by an independent actuary using actuarial methods and assumptions (not inconsistent with the regulations prescribed under section 192 (c) (1) (A) ) each of which is reasonable and which are reasonable in the aggregate. (D) For purposes of this paragraph: (i) The term “Black Lung Acts” means part C of title IV of the Federal Mine Safety and Health Act of 1977, and any State law providing compensation for disability or death due to that pneumoconiosis. ”

“ Now the recognition of an ascertainable uniformity in human mortality has become part of the general stock of thought. But actuarial science, which originated in Great Britain, was long the peculiar and almost exclusive possession of British students, and even till now has been practised most fruitfully in its first home, mainly by the actuaries of life insurance institutions, but with important contributions from other inquirers, especially those in the service of the registrar-general. ”

“ In recognition of the fact that a large proportion of the first year’s premiums is in most offices absorbed by the expense of obtaining new business, it has been proposed by some actuaries to treat the first premium in each case as applicable entirely to the risk and expenses of the first year. ”

“ In 1898 a committee of French actuaries published a new set of tables drawn from the experience of four of the principal offices in France, and these are now accepted as the best basis for life insurance practice by similar companies there. Schools of actuarial science have been opened in both Germany and France, and the professional actuaries of these countries, and of Austria and Belgium, have formed associations for the promotion of their pursuits. ”

“ It is only since the middle of the 19th century that actuarial science has rapidly advanced in other countries, chiefly under the stimulus of the extending practice of life insurance. Both in America and upon the continent of Europe the small business transacted by the pioneer companies was largely conducted on empirical and conjectural methods from year to year, English custom being consulted as a guide in fixing premiums. ”

“ Every such insurer or agent shall, within ten days after written demand therefor, furnish to any person, upon whose property or risk a rate has been made by said insurer, or to his authorized representative, full information as to such rate, and if such property or risk be rated by schedule applying particularly to each risk, a copy of such schedule, and shall provide such means as may be approved by the Commissioner of Banking and Insurance were by any person or persons affected by such rate may be heard on an application for a change in such rate. ”

“ Assuming, therefore, the necessary statistics to be attainable, the computation of suitable rates of contribution to be paid by the members of a society in return for certain allowances during sickness, or upon attaining a certain age, or upon death, can be readily made by an actuarial expert. Accordingly, to furnish these statistics, the act of 1875, in continuation of an enactment which first appeared in a statute passed in 1829, required every registered society to make quinquennial returns of the sickness and mortality experienced by its members. ”

“ There are people called by insurance actuaries, 'accident prone.' Most of these are involved in accidents through their own negligence, or through some psychological quirk which causes them to defy the world, or to demand attention, by getting hurt. ”

“ The Invalid and Medical Life Assurance Company first began, and was successful; and the Gresham, lately established, has proved that the class for which it is specially intended is numerous. Much may depend upon the judgment of the medical officer; but so great is the anxiety to insure, that the premium is of less importance to the insured than in ordinary cases, and the office is able to protect its interest. The idea has been supported and approved by actuaries generally. The success of the Gresham is a proof of its merit. Every man of feeling must cordially agree in the principle ”