The Birth of Actuarial Science and Life Insurance, Pt. 2

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Jan 10, 2024

This podcast explores the challenges faced by early insurance companies in the 18th and 19th centuries. It also discusses the origin of actuarial science, the duties of early actuaries, and the contributions of William Morgan. Additionally, it addresses the publication of a more accurate mortality table and the challenges faced by the actuarial sciences and insurance industry in the 20th century.

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INSIGHT

How The Amicable Society Split Death Payouts

The Amicable Society (1706) pooled flat annual fees and split that year's fund among next of kin of deceased members.
Members paid £6 4s and membership was capped at 2,000 with ages limited to 12–45 to manage risk.

ANECDOTE

James Dodson Got Excluded And Changed Pricing

James Dodson was excluded from the Amicable Society at 46 and created premium tables in 1756 that let insurers include older people at higher rates.
Dodson published practical guides and tables updating Halley's data to price premiums more equitably.

INSIGHT

Dodson's Four Tables Built The Pricing Backbone

Dodson's four tables included decrements, annuity present values at 3% compound interest, single-payment premiums, and annual premiums for £100 policies.
Those tables formed the mathematical backbone for charter petitions and new companies.

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As life insurance and assurance became more common, companies that offered coverage ran into in problems in the 18th and 19th century. Part 2 also covers how Insurance has been used by gamblers as a grisly amusement.

Research:

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Eggen, Olin Jeuck. "Edmond Halley". Encyclopedia Britannica, 21 Dec. 2023, https://www.britannica.com/biography/Edmond-Halley
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Whittle, Matt. “How To Become An Actuary: Responsibilities, Practice Areas And Certifications.” Forbes. Nov. 29, 2022. https://www.forbes.com/advisor/education/become-an-actuary/

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