Page 8 - M1_Insurance Introduction Notes

became void, and the remaining subscribers within the

age range received an increased share of the interest.

It was only later in the 18th century that life

insurance was put on a healthier footing. James

Dodson, a 45-year-old English mathematician, searched

for a mathematical solution in order to form a more

equitable base upon which to calculate premiums as a

percentage of life expectancy. On this basis, the

Welshman Richard Price later developed a cost and

accounting model. In 1774 he calculated profitability in

life insurance for the Equitable Life based on current

and expected mortality, so that the current state of

the operations could be assessed more precisely. From

then on, life insurance no longer relied on speculation.

The process of collecting different types of

institutional and personal information and using

underwriting to transform it into quantifiable costs

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