Page 7 - M1_Insurance Introduction Notes
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wanted to know what the chances were of rolling a six
in a certain sequence. The mathematicians Blaise
Pascal and Pierre de Fermat used an old pyramid of
numbers and eventually were able to prove that a
mathematical probability could be determined. This
triggered a revolution in the development of
probability theories and mathematicians all over
Europe cooperated and applied their findings to
calculate life expectancy.
Life insurance was slow to adopt the new science.
For some time “tontine” schemes, named after their
creator Lorenzo Tonti enjoyed great success.
Subscribers could buy a share in a kind of life annuity
based on the mortality of an appointed nominee. With
nominees grouped by age range, interest was shared
out and paid to subscribers annually. When a nominee
died, the associated subscriber’s share in the annuity
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