On the Practice of the Eagle Company with regard to the Assurance of Lives classed as Unsound, and on the Rates of Mortality prevailing amongst the Lives so classed, assured during the Sixty-three Years ending 30 June 1871. By GEORGE HUMPHREYS, M.A., Actuary to the Company. [Read before the Institute, 30 March 1874.] MANY years having elapsed since the Eagle Insurance Company first undertook to issue policies of assurance upon unsound lives, and some doubts having arisen as to the way in which the funds of the Society had been affected by such transactions, the Directors decided that a thorough investigation should be made into the business connected therewith, with the view of obtaining not only a record of the past, but also, if possible, of establishing a guide for the future, and I now have the pleasure, with their permission, of making public the results of that investigation. Assurances upon unsound lives, in the full acceptation of the term, do not appear to have been effected in the early years of the Society's existence, only eight cases, and those of persons liable to Gout, having been accepted during the period from 1808 to 1813. In the last-named year a policy was effected on the life of a person afflicted with Hernia, and from that time to the year 1824, when the subject had attracted more serious attention, but few assurances on unsound lives, other than those suffering from Gout and Hernia, were carried out. For some years past, however, the principle, as is well known, of assuring unsound lives at an increased rate of premium, has been more and more recognized and acted upon, and risks of that class now form a not unimportant section of the business of many Life Assurance Companies. The total number of assurances upon unhealthy lives from the year 1813 up to the end of June 1871, effected in the Eagle and in the several companies which have been amalgamated with it, amounted, exclusive of lapsed, surrendered and term-expired policies, to 2,094, of which number I may remark en passant that only 723 had become claims. Having had a full account of all these cases extracted from the records of the Office, and having also, with the kind assistance of one of our medical advisers (Dr. Ogle), arranged the different Causes of addition under the following seven heads, viz., GOUT, AFFECTIONS OF THE ORGANS OF CIRCULATION, OBESITY, INTEMPERATE HABITS, FAMILY HISTORY, OR GENERAL WANT OF ROBUSTNESS, I proceeded to classify the cases accordingly for every decade of life, with regard to each cause of addition as well as for the same Periods combining all the causes. It will be observed that I have also added an eighth section, entitled Miscellaneous Affections. This arose in consequence of the causes of addition which could not be included under any of the above heads, being rather numerous, and the number of cases appertaining to each being far too few to allow of their being grouped under separate heads with any real advantage, and also from the reasons of the addition having been, in very many of the earlier instances-particularly in the Amalgamated Companies omitted from the records. These last were accordingly classed under the head of " No Information"; and they, together with the other cases referred to, were collected under the above title of Miscellaneous Affections; and, although they could not be of immediate service with regard to any special class of disease, yet as their number would affect the general result, it was quite necessary that they should be taken into account in the inquiry. Having made a financial investigation with respect to the 2,094 cases alone, I found that, on the whole, the ordinary surplus had been realized, and this result might, perhaps, of itself have been considered sufficient to warrant, without further research, a continuance of the practice hitherto pursued by the Company, supported as it is by the length of time over which that practice has extended; but as the safety of such a course could not upon that investigation alone be properly asserted, I have thought it advisable to pursue the subject still further, and by the construction of the usual mortality table, to ascertain with technical precision to what extent the results already obtained might be trusted as a guide for future reference. In order accurately to show the past working of the Office, I also had extracts made of the particulars of all the policies on these lives which either had been allowed to lapse, or had been surrendered, or the term of which had expired, and then combining these results with those previously obtained I drew up Table A, which represents the conditions as regards provision against extra risk upon which unsound lives are at present assured in the Eagle. I have given the number of cases under each head, in order that the value of the additions may be rightly appreciated, the total number of the cases being 3,147. In the construction of the mortality table marked B, in which, as it will be seen, account has been taken of all lapsed, surrendered, and term-expired policies, I have availed myself of the formulæ employed by Mr. Jellicoe in obtaining the rates of mortality prevailing amongst the lives assured in the Eagle Company during the forty-four years ending December 1851, the manner of using which is fully explained by Mr. Jellicoe in his paper on the subject, published in the year 1854, in the fourth volume of the "Journal of the Institute of Actuaries". Having thus deduced the rate of mortality, as shown in Table B, I proceeded to the construction of Table C, in which is shown the expectation or average duration of after-life at each age. It will be observed that I have made use of the Office ages in this investigation. I did this, considering that by such a course it would be more readily shown whether the several additions which had been made to the true ages were sufficient for the purpose, seeing that, if that were the case, the "expectations deduced therefrom would in all material respects fairly bear comparison with those obtained from other tables of mortality. وو These "expectations" are, as it will be seen, unadjusted, but they are so nearly equal to the "Experience" expectations, as shown in Table D, that I have not deemed it necessary to enter upon the process of adjustment. It is a matter of considerable satisfaction that the result obtained from this more precise and exhaustive investigation has quite corroborated the financial conclusions previously deduced; and considering the great uncertainty which has prevailed up to a late period as to the effect of specific diseases on the duration of human life, it is not a little remarkable that the purely empirical practice resorted to by the Company should have so closely met the exigencies of the case. It will be seen by Table D how nearly the additions made have placed the sound and unsound lives on the like footing, and an examination of the curves shown I have thus endeavoured briefly to describe the practice of the TABLE A.—Average additions which have been made to the true ages in cases of assurlives classed as unsound. From 1808 to 30th June 1871. ances upon |