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Practical Aspects of the Industrial Branch Valuation

Published online by Cambridge University Press:  11 August 2014

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Extract

In the opening sentence of his paper on the valuation of industrial assurance policies given to the Institute in February 1937, W. J. Fulford said that his subject was essentially a practical one. Certainly the underlying actuarial principles are in no way different from those of the ordinary branch. In fact, the use of continuous functions gives the various valuation formulae a deceptive appearance of simplicity. There are none of the adjustments to allow for incidence of premium income, the formulae for which are the bane of the student grappling with the valuation of ordinary branch policies. The practical aspects, however, are very different. Reference to the published accounts of the Ordinary Offices shows that the new business, even for the largest, amounts only to a few hundred policies each week. In contrast in one large Industrial Office no fewer than 6000 new proposals are received each week while the total ‘offs’ in 1952 amounted to nearly 400,000. Since the Industrial Offices have a pre-disposition to hold their annual general meetings in late March or early April the actuary responsible for the annual valuation is faced with a formidable task if his figures are to relate to business on the books the previous 31st December, bearing in mind that the final results with recommendations have to be considered by the Board, decisions taken, and accounts published all before the Annual Meeting.

Type
Research Article
Copyright
Copyright © Institute of Actuaries Students' Society 1954

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