The Practical Calculation of Office Premiums

Extract

The Actuarial Society of Edinburgh was formed more particularly for the benefit of students, to assist them in their studies of actuarial and mathematical subjects; and it is therefore unnecessary to make any apology for submitting a paper of an elementary character, which makes no pretence at originality of thought, but which is designed simply to bring together some of those practical questions which have been dealt with by Actuaries of ripe experience, and to place them before students in a compact form. Those questions which do not appear to have been discussed by others, are well known to Actuaries who have had any considerable experience in the practical calculation of office premiums; but yet the following notes may be of service to students who, in many cases, have little opportunity for gathering such information.

In order to deal clearly with the subject, it is desirable to state, in the first place, one or two of the fundamental principles which should regulate the calculation of office premiums. The premium payable by the policyholder forms the foundation upon which the whole structure of life assurance is built; and if the premiums be inadequate, as in the case of Assessment Companies, the structure must sooner or later collapse.