History of The Actuarial Profession
History of The Actuarial Profession
History of The Actuarial Profession
The need for insurance and pension arrangements comes from personal risk and uncertainty.
If you go on a journey or voyage, there is the risk of losing any goods entrusted to you, or your own
possessions, or even your life. Your house may catch fire and leave you and your family without a roof
over your heads. If you are a breadwinner, you run the risk of dying too soon and leaving your family to
starve. You may be unable to get a loan, if the lender is worried about repayment in the event of your
death. Alternatively, you may live too long after retirement, so that your savings become exhausted.
Early history
These risks existed from the earliest times, when the usual method of relieving poverty was by charity.
Destitute people used to beg on the streets. Nearby monasteries might have provided them with leftover food and drink, or the monks' cast-off clothing. However, charity was never very satisfactory,
because it provided inadequate and uncertain relief, with a social stigma.
Hence people tried to protect themselves financially against the risks of life and death. They developed
elementary insurance-type arrangements, which often failed because of a lack of knowledge and
understanding. Pensions were granted even in ancient Greece, and burial societies were formed in
both Greece and Rome to meet members' funeral expenses. In England in the Middle Ages it was
sometimes possible to pay a lump sum to a monastery and receive board and lodging (known as a
corrody) there for the rest of your life. However, not all corrodians were compatible with the religious
life. An unsuitable person could breed much discontent, as when a lady residing at Langley priory had
twelve dogs who used to follow her into church and made a great uproar!
years, week by week, to warn wealthy householders when the plague was increasing, so that they
could leave London in time.
The Equitable
The first life assurance company to use premium rates which were calculated scientifically for longterm life policies was The Equitable, founded in 1762. The techniques used to calculate these
premiums were developed from Halley's method by James Dodson, a London mathematician. The
company still exists, though it has run into difficulties recently. Many other life assurance companies
and pension funds were created over the following 200 years.
Actuaries
It was The Equitable which first used the term 'actuary' for its chief executive officer in 1762. Previously
the use of the term had been restricted to an official who recorded the decisions, or acts, of
ecclesiastical courts!