On Risk Premiums for Survivorship Assurances

Extract

Some months ago I had occasion to enquire of half-a-dozen offices what were their rates of single premium for a certain survivorship assurance. The highest rate quoted exceeded the lowest by 40 per-cent of the latter. This fact appears to me to afford a good illustration of the different estimates formed by actuaries of the value of the risk run under survivorship assurances. The discrepancy probably arises mainly from the use of different tables of mortality in calculating the risk premiums. It will be seen later on, that the differences in survivorship premiums as found from different mortality tables are in some instances very considerable. I am inclined to think, too, that some actuaries, through a feeling of uncertainty as to whether they have correctly estimated the risk premiums, load them very heavily in order to be on the safe side.