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Model Office Reserves for Endowment Assurances

Published online by Cambridge University Press:  18 August 2016

James Buchanan
Affiliation:
Institute of Actuaries Faculty of Actuaries

Extract

When Mr. Manly first put forward the idea of constructing a Model Office for whole of life policies, endowment assurance business was in its infancy. That idea was afterwards improved on by Mr. King, who substituted an actual experience of entrants and withdrawals for the assumptions which Mr. Manly, in the absence of data, was forced to make; and when, twenty-five years later, another Model Office was constructed on the basis of the new experience, the age distribution of the business was found to be so little altered, that it was possible to retain the older figures. In the meantime, however, endowment assurances had ceased to be a minor class; and their growth has been so rapid and continuous that they now form one of the most important sections of the business. It was probably the hope of many that Mr. King would have found time to extend his Model Office to endowment assurances, and it was only because he stated that his other duties would not permit him at present to do so, that I have undertaken to supply the extension.

Type
Research Article
Copyright
Copyright © Institute and Faculty of Actuaries 1907

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References

page 25 note * In the discussion which followed the reading of Mr. Chatham's paper, certain office statistics were quoted and were taken as showing that the higher rate of withdrawal in endowment assurances is due to discounted claims. The work of that investigation was carried out by the writer, and discounted claims were treated as maturities.

page 27 note * It seems probable that for 10-year endowment assurances, the proportion should be even greater than this. Thus, Mr. Hunter, has stated (J.I.A., xxxvi, 80)Google Scholar, that in one case he found the lapse rate under the 10-year endowment plan to be about one half that under the ordinary life plan. Lapses in America are more numerous than in this country, and leave room for wider fluctuations; and in any case the proportion of business effected for very short terms is not great.