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But a deeper observation yet remains to be considered, and intimately related to the one last noticed. Does not the long duration of these Arabians, without any symptoms of decay, completely negative, at least the idea, that the human race is destined ultimately to Die out by the operation of natural causes, and independently of any influences which may be regarded as extraneous causes, such as the too great refrigeration or torrification of the planet, or its collision with another world, or its ignition by the too close contact of its gases with those of a comet? For the logic of analogy does not much more conclusively pronounce the inevitable death by natural decay of every social organism than of the whole human creation--the death of every nation, than the death of the whole human race, and all organic being. From the undoubted fact that every individual must die, by an established law of natural decay, the irresistible logic of analogy seems to lead us to the inevitable conclusion, that not only every particular social organism, but the whole hunan race, must eventually die, by an established law of natural decay. Nay, may we not still further say that, from the simple fact that the first germ cell of organic being was destined to perish, the irresistible logic of universal analogy seems to deduce the inevitable conclusion that the whole organic creation (at least as it now exists) is destined also to perish ?-thus verifying the grand postulate of Fourier, that "all things have a beginning, a middle, and an end, in the natural course of their existence--animals, vegetables, minerals, planets, suns, solar systems, universes, biniverses, triverses." But, it

may

well be asked, how stands this asseveration of the irresistible logic of universal analogy, in view of the stubborn fact glaring on us from the sandy wastes of Arabia, that there have flourished, for upwards of three thousand years, without any apparent symptoms of decay, a race of people who, as if to make their case still more remarkable, have intermixed with other races less perhaps than any other people, and who have, to a greater extent perhaps than any other people, intermar. ried within too close affinities, the only influence yet revealed by biological science which seems to contain the germ of the natural extinction of the human race? Perhaps the only reply that can be made to this question is, the one so common with those who encounter facts too tough to be digested by their theory, but who yet have the courage, like true philosophers, to swallow them down, to take in all the facts, however unpalatable—that the world is as yet too young to furnish a satisfactory answer to the gaestion.

At all events, a further reply to the question, or attempt at solution of the difficulty, will not be made here.* Nor is it perhaps of any great practical utility to consider it anywhere, since the physician or medical philosopher does not vary his treatment of a patient at all, nor any less zealously strive to preserve his life and health, because he knows that he must eventually die at any rate; nor should the social philosopher, or physician of the body politic, any less earnestly strive to prolong the existence and prosperity of a nation, merely because he has discovered the

* Those who may wish to see a further consideration of this question are respectfully referred to the writer's as yet unpublished work on the Fundamental Principles of Sociology, part sixth, in which the Original Cuses roliche determine the Social Condition will be considered, and among them the intluence of the national age on the social condition, which will incidentally involve a consideration of the influence of the age of the Race, or HUMAN GENUs, on the social condition of particular nations.

melancholy fact that it must, some time or other, inevitably die, and the whole human race beside.

What has been said must suffice for the observations to be obtained from a review of the Arabian civilization, which, according to the plan here adopted for regarding the whole course of human development, comprises the Medieval Epoch, or second day of human civilization, or, in more popular language still, the Arabian Day.

The day of Arabian civilization was, however, of brief duration, not much exceeding five centuries, and it is remarkable that the period of its greatest splendor corresponded with the midnight hour of European barbarism-a fact which would seem to indicate that the intellectual world, like the material, bas its antipodes, in which day and night respectively alternate-although all the facts of the case do not accord with the supposition, as grounded at least upon the idea that Europe and Arabia are antipodes, since we presently find them both involved, for a short period, in a common darkness.

With the fall of Bagdad, by the conquering arms of Hoolaku and his barbarous Mongols, on the 14th of February, A. D., 1258, we may consider the light of Arabian learning as extinguished. That may be regarded as the hour of sunset to the second CIVILIZATION, and from that hour, for at least two-and-a-half centuries, the anxious observer of human history may search the firmament in vain to find the sun, although the reddening horizon of Europe clearly indicates from what direction is to be expected the Coming Dar.

Art. II.-VALUATION OF LIFE INSURANCE POLICIES.

NUMBER III.

The method adopted by the Massachusetts Commissioners to determine the liabilities of life insurance offices, when applied to our American companies, has developed, in every case, a larger or a smaller surplus. In some the excess is considerable ; in a few it is so small that any extraordinary losses, or any additional requirements of the commissioners, would have converted their surplus into a deficiency. We have insisted, in the last number of this Magazine, that every cent of profit already earned is exhibited by the Massachusetts calculations, so that if any company cannot stand this test it is already insolvent. We now propose to inquire if this mode of calculation does not give the earnings too large.

Our companies are mostly mutual, and it is the duty of the directors to distribute exact justice between the present and the future members. What has been really earned belongs to the existing insurers, and ought to be distributed among them without delay. What is not earned belongs to the future members, and no rivalry with other companies, no desire for larger business, no craving for the praise of successful manarement, should impel larger dividends than have been earned ; and, on the other hand, no timid fear of the failure, no unreasonable anticipation of future disasters, should lead to the hoarding up for possible demands what has been really earned already, and what, therefore, belongs to the present

members. None of these feelings, or any other like them, should be permitted to outweigh, on either side, the sentiment of justice.

The whole object of the calculation is to find out what part of the past receipts has been paid for future purposes; the balance on band is all that can be appropriated for dividends. If the company is mutual this exact balancemno more and no less-should be divided, in scrip, in cash, or in credits, to the present members. If less is paid them, they do not receive their proper share of the profits; if more, the safety of the company is endangered. Should there be any leaning to either side, it will be better to favor the future members than the present, since the ultimate security of the company is more important than a correct adjustment of the dividends. But after the company has been fairly and securely established, exact justice should be rendered to the old and the new members. It is much the same with a stock company as with a mutual. If they anticipate future profits which may or may not be made; if they umit, in their estimate of future hazards, any contingency which was provided for in the original contract, the large dividends or expenses which they may think themselves authorized to make will soon consume their capital and leave them unable to meet their liabilities. So also in determining the solvency of any company.

The funds pro vided in the original contracts for future hazards or necessities that have not yet occurred must be kept unimpaired. If they are anticipated and wasted the company becomes bankrupt. If the contracts were very favorable ; if the premiums agreed upon were higher than was needed to meet all the future hazards, so as to furnish some profit, all the gains from this source as they may come in hand may be divided; but no future expectation of profit should be discounted and appropriated for present dividends. A present or past profit is a reality, but a future one ought not to be anticipated and divided. A private individual does not so estimate his means, nor should an association do it. The future is too uncertain to be made the support of present expenditures. The possibilities of failure in future expectations of profits are so numerous, and the proneness to overestimate them is so great, that it is unwise to count them as already in hand. So great has been the competition in life insurance that they are probably small, and it is so easy to make the grossest mistakes in counting them, that it is best to leave them to the future. From the day that the milk maid anticipated her future brood of chickens, the expectation of future gains bas been deemed a subject of ridicule, and the expenditure or use of anticipated profits a subject of censure.

Whatever, therefore, be the object of valuing the life policies--whether it be the distribution of profits in a mutual or in a stock company, or the determination of the solvency of the office-past earnings are all that can be counted for present use, and if more is thus appropriated the safety of the company is at once endangered, and it becomes the State to sound the alarm, that its citizens be not deceived and ruined.

This being laid down as the proper basis of calculation, let us consider the elements of a whole life premium. Part of it is for the risk during the first year, part for the risk during all subsequent years, and part for expenses and contingencies. The last, which constitutes the loading, ranges from thirty to forty per cent of the first two. Now, though the first year's expenses may be, in a well managed company, twelve or fifteen per cent; the subsequent years can seldom be as large as ten, unless the

company is very small. Expenses of every kind can, therefore, seldom or never absorb one-balf the loading. Of the contingencies for which the other part is needed, the most important is a fluctuation in the mortality, and the possibility of a general advance in this over the tabular rate that may have been adopted. The Carlisle table, which is used by most of our companies, gives a very small mortality, and the probability of an advance on this in every company's experience is very great. But even if the table that has been selected should represent perfectly that class of which the insurers are composed, considerable Auctuations in this may be expected among the small numbers of which any company is made up. The deaths among them may average ten, fifteen, or twenty per cent above the tabular predictions. This excess may continue for many years, and without the loading it might ruin the company. Seven is the average number that may be expected to be thrown by a pair of dice after many throws; but if two throws are made there is more chance of counting ten per cent over fourteen than there is of having thirteen, fourteen, or fifteen. With three, or with several throws, a considerable variation from the average will be highly probable. And if this be true of dice, much more will it be true of human life, where epidemics and unknown but active diseases may increase the mortality of the few members insured to a large percentage above the average. This liability to excessive mortality and to fluctuations above the average, as well as other future contingencies, explain why so large a loading as thirty or forty per cent is added to the net premium, and as twelve, or fifteen, or twenty is abundant for expenses, the balance is for a risk not yet fully incurred at the end of the first year of insurance, and a portion of it belongs to the reserve.

When four or five years have elapsed after the issue of a policy, the future risk is provided for from two sources: the one, the future premiums, and the other, a part of the past premiums. The loading on the future premiums will pay for their part of the future expenses and contingencies, and the other share must be supplied by the loading on the previous payments. A part, therefore, of the loading on the past premiums is yet unearned.

Now, the net premium mode of calculation merely appropriates for the future that portion of the past payments which suffices to meet the future average risk, counting nothing for excessive mortality and other contingencies. The whole of the loading in past payinents, after meeting past expenses, is counted as profits, whereas only a part was charged for expenses, the other part being for the chance of an excessive mortality and other contingencies in the years that have elapsed and in the years that are yet to come. A part of the hazard for wbich the loading is provided being yet future, it is necessary to reserve more than is provided for in the net premium mode of calculation.

A reference to the premiums usually charged for one year, and for whole life policies, will show this more plainly. At the age of thirty the average charge for a one-year policy by the New York Life, the Mutual of New York, and the New England Mutual, is $120 43 for an insurance of $10,000. For the whole life, it is $231 40. Now, the average expenses of these companies, counting all of it on preiniums alone, is about thirteen per cent, and their interest six. These two premiums, therefore, net them at the end of the year $112 and $215 20. Now, what

ever be the object of the increased charge on the whole life policywhether it be for the future mortality alone, or for this and other future contingencies, or for future profits, or for all of these-it is evident that the difference-$103 20—is for the future. The excess in the second charge is the measure of what is paid by the second insurer for the risk not incurred by the first, and is, therefore, a payment made for a hazard after the expiration of the first year. Now, the net premium mode of calculation only gives $83 21 as the portion on hand at the end of the first year belonging to the future risk. The average charges of these companies show that about $103 20 is the

proper

allowance. If the premiums for a seven years' policy were treated in the same manner the excess would be fully as large a percentage over the method of net premiums. If the rate of expenses were taken as high as twenty per cent, and the interest as low as four, the excess would be $97 65, which is still eighteen per cent above the $83 21.

But, if any actuary should hesitate about the general appropriateness of an addition to the reinsurance fund beyond the net cost of the future risk, he should not hesitate a moment for any American company. The deaths among our insured will be sure to exceed those of the English life offices. Our climate is so variable, our seasons so liable to sudden changes, the extremes of heat and cold and dryness and moisture are so excessive, our cities pay so little attention to sanitary laws, our police regulations are so neglectful of those salutary restraints that have been adopted in older countries, our people are so prone to remove to places where they are not habituated to the climate-- where they are ignorant of its peculiarities, or, if informed, very ready to neglect them—our devotion to business is so steady and laborious, our love of gain so untiring and harrassing, our indifference to comfort and health so marked and universal, and our recklessness of human life so general in every part of the country, that the mortality of assured lives here will probably be greater than the experience of the English life offices. Already the published experience of the Mutual Life of New York, and the Mutual Benefit of New Jersey, gives a mortality for the earlier ages above the Carlisle or the actuaries' tables, and although the general result at all ages is below these tables, there is nothing to render it probable that this will continue, if we remember that these insured persons have only lived, on an average, four or five years since they were first admitted into the company and pronounced to be in perfect health.

It is difficult to say how much of the loading ought to be counted as a payment for future contingencies : one-third or one-half of it, that is, ten or fifteen per cent of the net premiums is not too much. And ten ought surely to be the minimum.

A mathematical formula, expressing this mode of calculation, is

(1 +*m++) {"m+o.)

where a is the value of an annuity, m the age of insurance, x the age of the policy, and p the net premiums, increased by ten per cent. The formula is precisely the same for the net premium method, except that p is here ten per cent greater.

This method is used by some of our American companies, but fifteen

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