NATIONAL LIFE-INSURANCE TABLES.
Iris but recently that the genuine character of life-insurance, and of the other kinds of insurance which might be called branches of that, has become rightly appreciated ; and it is interesting to ob- serve, when once a principle is struck out, how soon its applica- tion to new forms starts to the mind, and how the general compre- hension of the subject assumes wholeness and distinctness. At first, life-assurance was devised as a means of taking security against failure in the payment of loans or advances ; and it is rather remarkable that this original purpose bas been so far for- gotten, that the granting of loans upon life-assurance has been popularly regarded as quite a modern improvement. The more usual purpose of the insurer is to effect that which is the best re- sult,—a special saving, with the largest ultimate produce, and with the least expenditure of means. This is the true purpose. For general saving without definite aim, there is no plan superior to that of laying by,—not "hoarding," but making such investment as permits the recall of the original capital. Most persons, how- ever, who are induced to save, do so with a particular object; and here the uncertainties of human existence suggest a mode of ef- fecting the object with economy. If it is to leave a sum of money to dependents, then various contingencies enter into the calcula- tion. The dependents may die, or the person who is to make the bequest may survive to a great age, or may be cut off before he has effected the accumulation of the sum in question. In the indi- vidual case, these chances may either defeat his purpose, or, to render it certain, he must bestow an amount of trouble and accom- plish an amount of saving beyond that which is absolutely neces- sary. By the association with many persons under similar cir- cumstances, he is enabled to equalize and correct these contin- gencies one against another ; and hence it follows, that with a given deposit annually, he may either secure a larger amount upon a certain contingency, or he may secure a fixed amount upon a certain contingency with a diminished annual deposit. The whole spirit of the transaction, however, involves two things—ex- emption from making a larger deposit than is actually necessary for the purpose, and securing the particular sum assured without chance of failure.
It is in order to effect this double object that insurance-tables have been constructed. There have been various tables in use— the Northampton Table, constructed by Dr. Price in the last cen- tury, about 1782; the Carlisle Table ; and a table compiled from the experience of several insurance companies, called the Ex- perience Table. When these tables were framed, however, the data for such purposes did not exist in the abundance secured since the establishment of the Registration Office. It was supposed, in the first instance, that insurance-offices would be burdened with lives of precarious duration ; as the sickly were expected to rush for security against the consequences of their own infirmity. Sub- sequent experience suggested the contrary extreme,—that the lives would all be of a superior cast, as self-selected from the more moral, more temperate, and therefore more healthy individuals. But this again proved to be a gross exaggeration, if not a total mis- take; the general tendency of larger experience being to show, that, setting one tendency against another, the lives with which insurance-offices are concerned assimilate to the chances observed throughout the entire community. The broader the data, the safer the conclusion—that appears to be the maxim nearest the truth. There are, therefore, no better data than those derived from the whole body of the population. This supposition has been confirmed in a remarkable manner by the examination of the general returns. Mr. Farr constructed a table which is called an "English table," on the data of 1841; but, subsequently, he constructed another English table, on the data of the seven years ending 1844; the conclusions of the latter table very closely approximating to the conclusions of the former. Both present much more regular and probable gradations as to the value of life than the older tables which have been in use; and they tend to correct the calculations upon which insurance-tables have generally been framed. The main results appear to be prin- cipally these,—that upon the whole, the premiums exacted have ix= higher, especially in the middle stages of life, than is neces- sary Zr the purpose; but, on the other hand, that the amount of
stock kept on hand by insurance-offices is probably not always sufficient for absolute safety; and thirdly, that the bonuses which some insurance-offices have divided have been derived too much from theoretical calculations on fitture profits. We are of course stating only in the most general terms the character of these con- clusions: for the details, which are highly interesting, we must refer to the volume in question.* Besides the much greater approximation to strict accuracy which would be secured by using a national table instead of one derived from partial data there are further advantages, scarcely if at all less important. hitherto. insurance-offices have been competing with each other in offering peculiar advantages : and there is no objection, commercially, to a competition which tends to find out the form of insurance most beneficial for the public. In point of fact, however, the public cannot attain greater advantages than full security at a minimum of premium sufficient for security ; and as those two conditions are strictly a matter of fact, to be ascer- tained by observation, the benefit of the public would be quite consistent with the formation of a table which should place all the offices on a footing of equality, and give to all the very best. While insurance remained an art and mys- tery, competition was not only fair but inevitable : as soon, how- ever, as its true data began to be known, it ceased to be a mys- tery, and competition is needless. No oboe can do better than to have the best table, although any other office should have the same. As soon as that fact should be generally admitted, the business would be a plain matter of investment and saving. At present the proportion of persons who insure, as compared with the entire population, is very small; partly, because the general public is not sufficiently informed on the subject; partly, for the very reason that the example is so limited; but partly also from the remaining doubts as te the accuracy of the data and the suffi- cient security. Remove these doubts, and the number of insurers would be enormously increased ; the example would be general instead of partial ; and although one office might not attract to it- self so large a proportion of business in comparison with others, the aggregate of business to be divided by all would be so much greater, that each one would benefit though there were not the peculiar competitive attraction which has hitherto been sought. The conduct of the insurance-offices has shown that heretofore they have not been quite alive to this view of the matter. When the Experience Table was constructed, a committee of actuaries met for the laudable purpose of endeavouring to ascertain more accurate calculations from broader data. The Equitable and the Amicable Life Offices had previously published their experience, and the Committee induced fifteen offices, out of a hundred then existing, to contribute their experience also ; but they were not permitted to publish the data—so anxiously did the insurance- offices keep to an art and mystery. How mistaken they were is perceived when we remember that, swindling projects apart, safety is as much the object of the office as of the public ; and that the true ground of safety, consists in certain facts which can be ascertained by observation and industry, and of which no mono- poly can be acquired, or could be beneficially preserved. While, however, insurance-offices thus compete in the character of their tables as well as in their other attractions, the public, whatever favour a particular clientela may show to this or that office, will continue to be perplexed with doubt. It would be quite other- wise if there were any general table to which the public, in com- mon with the insurance-offices and with the state at large, could refer for that which would be virtually an absolute certainty of data. Life-calculations must be the staple and basis of insurance; but the principle is capable of application to many other contin- gencies, such as the insurance for the education of a child. It needs but obsenation and industry to derive these other calcula- tions from the same data with the life table—from the register of the whole population. If the life table be right, there can be no very fundamental error in the other tables. It is a national life table alone which can make the insurer feel confident that he is not paying more premium than is required from him, and that he is paying enough for the certain attainment of his object. Thus assured, he knows that he is effecting a saving for a particular purpose with the greatest certainty and with the least expenditure of the present means ; or, with limited means at present, he is making the most of them for the future provision that they can purchase.
* "Twelfth Annual Report of the Registrar-General of Births, Deaths, and Marriages in England [1853]. Abstracts of 1849."
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