Stuff You Missed in History Class
The Birth of Actuarial Science and Life Insurance, Pt. 1
Jan 8, 2024
Learn about the birth of actuarial science and life insurance, including the development of population tables, the origins of one-year term life insurance, and the advancements in the insurance field. Discover the role of data analysis in studying population trends, explore the laws of probability in insurance, and uncover interesting tidbits like recipes for frozen Roo and gazpacho.
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Quick takeaways
- Sir Edmund Halley's population table in 1693 provided a scientific basis for life insurance by calculating survival odds and chances of survival at different ages.
- Early forms of life assurance focused on guaranteeing financial support for dependents in case of the policyholder's death, and the issuance of the first life insurance policy in 1583 marked an important milestone in its development.
Deep dives
Halley's Table: A Breakthrough in Actuarial Science
Sir Edmund Halley's population table, published in 1693, marked a significant step in actuarial science. Using data from the city of Breslau, Germany, Halley compiled a table showing the numbers of people alive at each age. This table allowed for the calculation of survival odds and chances of survival at different ages. Halley suggested that life insurance could be regulated based on these statistics, providing a more scientific basis for the industry. His table became a foundation for the work of assurance societies, such as the Society of Assurance for Widows and Orphans, which used the table to assess mortality rates and potential expenses. Halley's table remains significant and has been analyzed and written about for centuries.
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