When the word statistics is used in connexion with non-life insurance the first reaction of most of those concerned with the day-today requirements of the business is to think in terms of the relationship between premiums and claims. In my talk tonight I shall not be concerned with this aspect but will be concerned with the structure of the risk processes underlying the business. In order to try to bring out some of the essential characteristics I have used the minimum of mathematics, using numerical examples to illustrate the points. Furthermore, in order to limit my talk to a reasonable time and to make it ‘live’ I have deliberately omitted many of the finer points which arise in practice to which regard must be had in using mathematical or statistical models to describe the actual situation.

At rock bottom the insurance industry rests on the operation of laws of chance. A hazard is recognized as being liable to give rise to a potential pecuniary liability, and in no time at all someone is prepared to provide a policy against such liability. In devising the policy, and in assessing the rate of premium to be charged, it is necessary to define the event which must happen before a claim can be admitted under the policy and to be satisfied that the happening of the event is fortuitous as far as the proposer is concerned. In life insurance difficulty seldom arises under either count but in non-life insurance the position is frequently very troublesome.

At the Annual General Meeting of the Students' Society in 1961, a motion was passed that articles of a less serious nature than those normally published in the past be accepted by the Editors of J.S.S. It is in the spirit of this motion that this article is offered. It does not pretend to advance actuarial science in any way, and its only purpose is to introduce members of the profession to a technique which is interesting in that it is different from our normal techniques and to show that it has possibilities in the actuarial field by demonstrating its applications in other fields.

This is not the first time that the subject has been written about in an actuarial journal. Edmund C. Berkeley (1937) wrote a paper for the American Institute of Actuaries going into the subject in some detail, and it is from this paper that I have taken my examples of applications to life office practice.

This paper is concerned primarily with the principles underlying the planning of retirement and death benefits for the employees of an international organization. The development of pension systems throughout the world is so diverse that it would scarcely be practicable within the limits of digestibility to present a comprehensive factual survey and no attempt is made to do so. The paper is confined strictly to a consideration of benefits payable at normal retirement age or on death, and ancillary benefits such as invalidity pensions are not discussed, except for occasional references when survivor and invalidity benefits are closely linked.

This paper is intended to give a fairly complete picture of the actuary in Canada when read in conjunction with T. R. Suttie's paper, ‘The Actuary in Canada’ (J.S.S.13, 199). Suttie concentrated on the life insurance business in his paper, and with this in mind, I shall refer mainly to consulting actuarial work.

Consulting practice in Canada is very similar to that in Great Britain, where the major part of the actuary's time is devoted to pension funds. The main differences are that Canadian consulting firms may advertise, and may also include insurance brokerage as part of their business provided that they hold the necessary licences. The small amount of friendly society work in Canada is handled by actuaries who specialize in such work, and there is no market in reversions or life interests.