#1019 1762 · Society for Equitable Assurances (James Dodson, William Morgan) · Life insurance
Dodson priced life insurance by age instead of refusing to insure age at all
问题
Insurers charged one flat premium regardless of age, which either bankrupted them or forced rejecting older applicants
背景
Early life insurers charged a flat annual premium to everyone, an approach that ignored the obvious fact that an 60-year-old is far more likely to die within the year than a 20-year-old. A flat rate high enough to cover older policyholders' risk overcharged the young; a rate low enough to attract the young left the insurer insolvent as soon as enough older members joined and started dying. When mathematician James Dodson applied for life insurance in 1756 and was refused for being over the maximum age of 45, he saw the industry's actual practice: rather than solve the pricing problem, insurers simply excluded the risk they couldn't price.
Dodson had access to something insurers weren't using — mortality data, tables recording death rates by age drawn from London parish records, the same kind of data Edmond Halley had analyzed decades earlier for annuities. Just refusing older applicants wasn't a pricing solution, it was an avoidance of one, and it meant an entire segment of demand went unserved because no insurer could confidently price the risk without that data.
换别人会怎么做
Insurers either charged one flat premium to everyone, which was unsustainable once enough high-risk members joined, or simply refused older applicants past a cutoff age, which was the industry's actual practice and left real demand permanently unmet.
他们看到了什么
Age exclusion wasn't a policy, it was a confession nobody had priced the risk. Mortality tables already existed to compute what an age cost to insure, so the fix was charging each age what its own data said.
那一手
Dodson worked out that a life insurer could accept any applicant at any age, provided the annual premium was set to actually match that age's death rate from mortality-table data rather than charged as one flat number for everyone. Applied at the Society for Equitable Assurances, founded in 1762, and refined by its first actuary William Morgan starting in 1775, the guaranteed sum assured was funded by premiums calibrated to age-specific mortality risk instead of guesswork or exclusion.
为什么管用
Tying the premium to age-specific mortality data meant every policyholder's payment matched their own actual risk instead of subsidizing or being subsidized by everyone else's, which let the insurer accept a much wider range of ages without threatening solvency. Because the pricing now tracked reality instead of guesswork, the business could grow into exactly the demand — older, longer-term applicants — that flat-rate insurers had been forced to turn away.
值了多少
Age-based pricing let Equitable Life insure older applicants no insurer had dared guarantee, while staying solvent for over two centuries.
什么时候会失灵
Age-based pricing only works with mortality data accurate and current enough to reflect the population actually being insured; stale or non-representative tables misprice risk just as badly as no data at all, and the approach depends on enough applicants at each age to pool risk reliably.
后来呢
Age-rated, mortality-table premiums became the foundational method of the entire life insurance industry and established actuarial science as a distinct mathematical profession still practiced the same way today.
资料来源
- [1]Equitable Life Assurance Society Archive 1762-1975Institute and Faculty of Actuaries, 2007actuaries.org.uk