.LIFE INSURANCE. 22a LIFE INSURANCE. the eighteenth century, one in Philadelphia in Insurance Department. The extrannlinar}- growth 1709 for the relief of widows and children of of the business since 1880 may be perceived from clergj-men of the Church of England in America, the following table, compiled from these reports: Life Insdrancb in the United States YEAR No. oJ Cos. No. of policies Insurance in force Assets Surplus 1880 1886 1890 lS9ot 1900 1901 30 29 30 35 40 38 608.681 814,691 1,272.895 1.877,808
- ),07I,25;i
3,458,464 $1,475,995,172 2,023,617,488 3,542,965,751 4.818,170,945 6,947,096.609 7,572.802,805 $417,951,009 523,664.678 753,228,759 1,142,419.926 1,723.737,723 1,879,624,564 $71,561,669 92,749,486 88,739,3G2- 159.750.174 158.277,942 3U8,U01.651t " The apparent decrease of surplus in 1890 was due to the change from the American Mortality Table at four and a half per cent, interest to the .Actuaries' Table with 4 per cent, interest. t In 1895 and later years assets and surplus of eoinpauiea transacting principall.y or solely industrial Insurance appear in the table. Number of policies and amount of insurance in force are exclusive uf industrial insurance. X The apparent increase in surplus in 1901 was due to including items amounting to $148, 28:!, 051 not before included. On the plan before used, the surplus would have been $159,718,603. the other in New Jersey in 1784. for the benefit of the Episcopal clergj- of that State. The first general life company, the Pennsylvania Company for Insurances upon Lives and Granting Annui- ties, was chartered in Philadelphia in 1812. In 1818 was organized the first Massachusetts com- pany, the Massachusetts Hospital Life Insurance Company. A number of other companies were chartered during the next twenty years, many of them combining the business of a trust company with that of an insurance company, but the amount of life insurance written was very small. It was not until the early forties that the move- ment really began to assume large proportions. Between 1840 and 18.50 several of the most promi- nent of existing life-insurance companies were es- tablished, including the Mutual Life of New York (1842), the State JIutual of Worcester (1844), the Nautilus Insurance Company, now the New York Life, of New York (1845). the Connecticut Mutual of Hartford (1840). and the Pennsylvania Mutual of Philadelphia (1847). After the war a large number of new com- panies entered the field, and a period of intense competition followed. The resulting laxity in the inspection of risks and great expenses of management led many of the newer and less con- servative, companies into financial difficulties. During the decade following 1870 a considerable number failed and manj' others reinsured their risks and retired from business. This aroused a hitherto unknown feeling of distrust in the minds of the people, and caused a falling oft' in the amount of business, from which the coni])anies vere fifteen years in recovering. • The serious- ness of this decline is shown by the following statistics of the insurance in force in companies reporting to the New York Insurance Depart- ment: 1870. .$2.02.3,000,000; 187.5, $1,922,000,000; 1880, .$1,. 524,000.000; 188.5, $2,02.3,000,000. Dur- ing the same years the number of companies re- ])orting fell from seventy-one to thirty. Since 1880 the growth of the business in the United States has been steady and rapid. The New York report for 1902 shows insurance in force Decem- .ber 31. 1901. amounting to .$7,572,000,000. of which $804,000,000 was foreign business, leav- ing $0,708,000,000 in force in the I'nited States. At the sama time there were industrial policies in force carrying $1,020,000,000 of insurance, and from five to six million members of fraternal beneficiary associations. A very large proportion of the life insurance in force in the United States is in the hands of companies making reports to the New York State Teciixiqle. The principles by which premium rates are determined in life insurance are few and simple, though the practical application of the principles involves elaborate mathematical calculations and formulae. The attempt here is to bring out clearly the nature of the funda- mental principles. Any one desiring to investi- gate the mathematical side of the subject will find abundant material in The Principles and Practice of Life Insurance (Otli ed., New York, 1892). The uncertain element in life insurance is th6 duration of the life of the insured. As it is impossible to determine the length of life of an individual by the closest examination to which he can be subjected, it becomes necessary to re- sort to the indirect method of determining prob- abilities by applying the laws of probability to the data of experience. The probabilities of the future are based on the experience of the past. So far as the duration of human life is con- cerned the results of past experience are sum- marized in life or mortality tables. Mortality Tables. The discussion of the gen- eral subject of mortality tables will be found in the article on Vital Statistics. We shall note only a few tables which have been in general use' among life-insurance companies. The earlj' policies were for short periods, and rates were based rather on guesswork than on any definite notion of the actual risk assumed. The |)remium rates were accordingly high and were independent of the age of the "insured. The Amicable of England, which worked on the assessment plan, continued as late as 1807 to make uniform asses.s- ments on all ages, partially jirolecting itself by admitting to membership only persons between twelve and forty-five inclusive, hen the more exact calculation of risks was attempted the early English companies relied chieMy on tables prepared by Halley (1093) and Siissmilch ( 1741). Afterwards the Northamjjton table came into general use. This was prei>ared by Dr. Thomas Price from the registers kept in the parish at Northampton for the years 1735 to 1785. The Northampton table was later sui>erseded by the Carlisle table. This was prepared by .Joshua
- Milne about 1815 on the basis of two classes of
statistics, enumerations of the jiopulation of two parishes of Carlisle in 1780 and 1787. and the records of deaths in the two parishes for the vears 1779 to 1787. Although the data on which the table was based were very scanty, the total number of deaths, for example, being only 1840, they were worked over with so much care that the
