Most significantly, the Archive of the Equitable Life Assurance Society contains the first evidence of the scientific practice of life insurance (on the basis of ‘actuarial’ analysis). The Society for Equitable Assurances on Lives and Survivorships first prospected for policy applicants with tables of level premiums calculated by age, it conducted the first actuarial valuation of liabilities (1776) and it pioneered the distribution of surplus in the first ‘reversionary bonus’ (1781) and ‘interim bonus’ (1809) among its members.
The term ‘actuary’ was first coined by the Society in its Deed of Settlement of 1762 and the role was later fulfilled in the modern sense with the appointment of a person skilled in probability and financial matters, most notably William Morgan from 1775.
Behind these landmarks in how life assurance has developed not only to protect against the contingencies of life but also as a vehicle for providential return in later life, there is the work of individual mathematical thinkers and practitioners. James Dodson (ca. 1705-1757) produced for the first time a level premium for each age of applicant for an increasing or varying risk but he died leaving others to see his proposals for an insurance society through to fruition. Edward Rowe Mores (1731-1778) and others then strove to establish the Society on sound administrative and mathematical principles. The Archive has original manuscript evidence of the mathematical advice of Richard Price (1723-1791) (dissenting minister and commentator at a time of momentous political changes) and principally of William Morgan (1750-1833), who served as Actuary from 1775 to 1830. William Morgan would be followed by his younger son Arthur and then by other illustrious names, among them Henry Manly (1844-1914) (who developed the theoretical background of staff pension funds, the Society selling pensions from 1913), George Lidstone (1870-1952) and Sir William Elderton (1877-1962) both of whom were awarded gold medals by the Faculty of Actuaries and Institute of Actuaries for contributions to the advance of actuarial science. william_morgan
The Archive presents an almost continuous record of how life insurance operated and endured over nearly 200 years as new companies entered an uncertain market in the eighteenth and nineteenth centuries. The Society’s first years as an early ‘mutual’ office were marked by contest between its first subscribers (seeking return on initial risk capital they had put in to help set up the Society) and the interests of new applicants the business sought to attract.
Debates continued about fair allocation of an accumulating surplus among qualifying members, whilst an actuarial perspective looked to ensure prudent levels of funding to meet the Society’s potential responsibilities for the next generations of policyholders.
There were external challenges too, to the Society’s apparent reliance on specific mortality tables (the experience of Northampton) over the long term and others advocated pooling this experience with wider sources for an improved forecast of life expectancy. With William Morgan (left) called upon by government to provide mortality assumptions for viable sales of annuities in the government’s borrowing for state revenue, and the Society leading by example in its practice of regular valuations, it might be said that he fullfilled the roles of professional model and government actuarial adviser in the Society’s first fifty years.
Nearing the end of his fifty years in office, Morgan would have his work challenged by John Finlaison, first Actuary to the government, among others. Although the Society’s actuaries would play little part in the establishment of the Institute of Actuaries, the first professional association in 1848 (John Finlaison was the Institute’s first President), the Society’s part in designing the framework for scientific insurance practice and development cannot be denied.