The Northampton Table has played such an important part in the life insurance transactions of this country, and is still used to such a considerable extent, that a short explanation of the method by which it was constructed, may not even at the present day be without interest to the actuarial profession. In many ways we are greatly indebted to Dr. Price, and in the writer's opinion anything emanating from him is well worthy of our consideration. It is to be hoped, therefore, that no further apology need be made for the following remarks on one of his most important works.

The values of the returns of past and future contributions on death before retirement, such contributions being accumulated to the date of death at rate j, are given respectively by

(TPC)xPCFx and (AC)xFCFx

where (TPC)x=total past contributions at age x accumulated with (compound) interest at rate j to the valuation date,

(AC)x = actual annual contributions payable at valuation age x.

The level of benefits paid to members of occupational superannuation schemes will depend on the level of contributions made by the employer and employee, the investment earnings received by the accumulated assets and the expenses incurred in the management of the scheme. However, this third factor has been ignored by previous studies into occupational superannuation, even though higher expense levels will naturally cause reduced benefits for a given level of contributions and investment return. In this respect, cost efficiency within the superannuation industry is an important criterion in assessing the efficacy of employer-sponsored occupational superannuation.

In the third of my papers entitled “Contributions to the History of Insurance and of the Theory of Life Contingencies” after treating upon the earliest examples which, after a somewhat tedious search, I could find of tontine associations practically carried out—examples confined, as it will be recollected, to some comparatively small projects of the Dutch municipalities of Kampen, Middelburg, and Groningen, employed for raising capital sums, by the grant of tontine life annuities, in 1670 and 1671—the circumstance was mentioned, that the credit of the invention was properly accorded to the Italians, or more particularly to the Italian Tonti, whose name has been so effectually incorporated into several languages through the word “tontine.”

An office transacting life assurance relies for its results on the law of averages as revealed by investigation into past experience. Statistics are compiled in order that an estimate of future mortality may be obtained, and i f each assurance accepted were for the same amount, the office could, if it wished, retain for its own account all its business. In practice proposals are received for amounts ranging from the smallest sum for which the company will issue a policy up to hundreds of thousands of pounds, and clearly as the bulk of the business is for small sums assured an office might experience violent fluctuations in financial results if it retained the whole of the large proposals, even if the mortality experience were according to expectations and consistent from year to year.

This quotation is from the first of that long series of letters addressed to the Registrar General on the Causes of Death in England. Dr Farr was in 1839 appointed ‘Compiler of Abstracts’ in the newly created General Register Office. The saving of 30,000 deaths a year represented about 10% of the current number of deaths. It took some forty years to make that reduction in the death rate, which coincided with Dr Farr's career with the General Register Office.

In the twenty-year period 1936–38 to 1956–58 the Standardized Mortality Ratio for England and Wales fell by 21 % for males and 31 % for females. Measured from a much lower rate of mortality, the rate of improvement has been from four to six times greater than in Farr's day. What of the future?

I have heard that a former distinguished President of this Institute once publicly stated that “Doctors rush in where Actuaries fear to tread.” It is also said that “at forty a man is either a physician or a fool”: but the presidential saying seems to suggest that a man may be both. With such a warning ringing in my ears, I yet venture to read before this learned Institute a paper on a thorny subject. I am doing so, first because that subject can be dealt with only by the united labour of actuaries and doctors; and second, because I am sure of the consideration and forbearance of the Fellows in any matters wherein I travel with halting gait.

When our mutual life companies began their business in 1843, they had noAmerican table of mortality to guide them in determining the premiums ofinsurance that ought to be charged at the different periods of life. Therewere no American statistics public or private, good, bad, or indifferent, towhich they could refer, except the mortuary reports of cities, and thesewere so imperfect and unreliable as to be utterly useless, except toencourage the opinion that the chances of long life were about the same hereas in the countries from which our people had emigrated. It was known thatthe numbers of the dying, as reported by our city registers, were below thereal deaths; that the ages were full of errors; that the boundaries of themortuary limits were constantly changing; that residents of the city wereoften buried in the country, and sometimes country people were interred intown; that the population was fluctuating; that the immigration from therural districts and from foreign countries was large and irregular; that thecensus of the population, whether taken by the United States, or by thestates, or by the cities themselves, was full of errors; that the ages ofthe living, both among males and females, were wrongly reported, sometimesintentionally, but always carelessly and thoughtlessly; and that theseerrors in the numbers and ages of the people and of the deaths were sonumerous that no confidence could be placed in the ratio of the living andthe dying at any particular age, while this ratio at all ages is anindispensable element in determining the proper premiums to be charged inany of the contracts made by our life companies.

Upon perusal of the Annual Reports of the Registrar-General, and of the valuable analyses by Dr. Farr that accompany them, we can scarcely fail to be struck with the alarming fatality which appears to prevail in this country from certain classes of diseases; and the inquiry naturally arises in our minds, whether we have any control over this excessive mortality: is, in fact, any proportion thereof preventable?

The first question that must be considered in connection with this subject is,—When is a Life Insurance Company insolvent? This question has recently acquired greater practical importance in consequence of the passing of the “Life Assurance Companies Act, 1870,” by which it is for the first time in effect enacted that an insolvent Life Office may be wound up, altho it has not committed any act of bankruptcy. Under the old law, even if such a Company were notoriously insolvent, it may be said that practically there was no means of putting a stop to its operations until it failed to pay an accrued claim. This has now been altered, and a Company that is proved to be insolvent can be wound up. The 21st section of the above Act provides that the Court of Chancery “may order “the winding up of any Company in accordance with the Companies “Act, 1862, on the application of one or more policyholders or “shareholders, upon its being proved to the satisfaction of the “Court that the Company is insolvent, and in determining whether “or not the Company is insolvent the Court shall take into account “its contingent or prospective liability under policies and annuity “and other existing contracts.”

Lord Kelvin many years ago expounded his oft-quoted dictum, ‘When you can measure what you are speaking of, and express it in numbers, you know that on which you are discoursing. But when you cannot measure it or express it in numbers, your knowledge is of a meagre and unsatisfactory kind.’ Operational Research is primarily concerned with measurement in management.

In 1947 the company with which the author is associated decided to institute an enquiry into the mortality of impaired lives. From the first the venture was both medical and actuarial, and a leading part in the planning of the investigation was undertaken by the company's Principal Medical Officer, T. W. Preston, M.D., who devised an impairment coding scheme and has since continued to supervise the coding of policies qualifying for inclusion in the data. While the present paper describes methods used in the statistical analysis of the results, the author wishes to place on record the major role played by Dr Preston in the carrying out of the investigation. The work has, in fact, involved the combination of medical and actuarial skills, and without the participation of the medical profession no actuarial investigation into the mortality of impaired lives would be practicable.

Continuing process of updating company classifications.

Ninety-six constituents deleted during 1990—many as a result of strengthened casualty rule. Only 74 replaced—reflecting difficulty in finding suitable new non-industrial constituents.

Agencies, Overseas Traders and Publishing & Printing groups discontinued at the end of the year, but Business Services, Electricity and Media introduced. Leisure renamed Hotels & Leisure.