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 I V- iiJ^yu 
 
MICROCOPY RESOIUTION TEST CHART 
 
 (ANSI ond ISO TEST CHART No, 2) 
 
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 = ^Jp^dik aic hf The Irmrart^Jh ^iif^ of Toronio 
 
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 1-M^^ 
 
 WeMsURANCE 'ORGANiZATlOft-p''^' 
 
 
 BY 
 
 
 :"-=;if: -feRADSJf AW, .::F.;i.>. ;.• :^'' 
 
 2nd Vl0B PR«rtNT AND ACTCAKV THE IMPERIAL LlFB 
 ASSUKARCK COMPANY^ OF; Can ADA 
 
 President of the Tristiiute 
 
 I 
 
 
 L o/fin/'/fiL'/ifs (}/ //ic .yin//i(i/\ 
 
 v'< 
 
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ESSENTIAL FEATURES IN 
 LIFE ASSURANCE ORGANIZATION 
 
 IIIK I'RKS II) i:\TS AI)l)Ki:SS 
 S !•". S S I ( ) N 1 90 J - I 90 ^ 
 
 T. BR ADS HAW, F.I.A. 
 
 No. I. Vi'i.. IV. 
 
•F.:.^ 
 
 » 
 
 s- . 11 
 
 
 M 
 
 f^ - ^' K H 
 
 ftm-'m 
 
 
 1. ■/:■,«: 
 
Essential Features in Life Assurance 
 Organization. 
 
 hK\i« I1KHIKK TiiK Ins: k*><"k 'shtiti n. "t TiihnNTo. 
 Urn N'..v.. MUM. 
 
 (iciitliiiHii. 1 mil deeply srdsihic of tliv lniiidi' \t>ii 
 iiiivc (•(Hill Tit (I iii«iii IMC, liy flcfliii^r mt' in the l*ri'si(lciii> 
 (if tlu' Iiisiiraiicf liis.uiitc of Toiunfo. niniiy of wIiohi- 
 iiiciiibt'rs arc eminently ln'tfii- i|iiiilifieil tluiii I for tliis 
 iliiportiiiit iiosiiiuii. !{( lyin^ >ip"ii tlie viihied siippuit 
 of Coiiricil iiiid Coiiiinittees. .\y v tuuii I lijive already 
 lieeii Lireatly helped ; , ii«i.ijr:»u.-d. will endeavor 
 to He.Mir(( to the lii'^' lite dun ■_' i> 
 continuation of th.ii prosperity w i 
 atle ide(l its di'velopnieiit a jtrosp. rii^ 
 ineasiire to the ability and earn, si . **' 
 decessors. As the least, may it he sa 
 election tho Insiitiite sn.l'eivil no r^i 
 Imposed upon the newly elected 
 liinvritten law of enstoin. is the task 
 introdii('t(.ry address. In eoiii|>lian<'c 
 will ask yo I to eoiisider' this cvenini.' 
 
 address to tlic Institute tie 
 Topic of i>nper. entitled " Kssential V ,\ 
 paper. Assurance Organization." 'I ^^ 
 
 it may fiirtiish siiyrtrestions and In 
 to those eii!ia!.'ed in tile several hraiielies of ins,, 
 heen prcpartMl (s|)e(ially for the henefit of 
 men who have either taken up 'ife assiiraiiei 
 maiieiit pi'ofessioii or who are ('(iiisiderinj: li 
 ahility of so doi'itr. 
 
 It has ht iiie a reeoiriii/ed feature of life a- 
 mana<rement in some .oiintries in Canada to a 
 extent to departmentalize the work, and in tli 
 I have end 'iv.ired to deliiie some of the deji 
 
 which I hclicvc every proj.M'cssive lit. 
 Scope of ance compiuiy should estahlish. imoi at>i 
 paper. its Imsiness warrants: the <pialitic !■ ns ot 
 
 the chief and his assistants in tho- depai'l 
 mctils: the duties which devolve upon th.iii: tin 
 
 • of ofliee « 
 
 has thn.s far 
 
 iiu' in no small 
 
 »s of niy pre- 
 
 ■ "hroiiuli my 
 
 !. ity the 
 
 nverinji an 
 
 this law I 
 
 ly (ipeninj: 
 
 din I of n 
 
 ;r ili Mfe 
 
 •' res. 
 
 'ir, 
 
 ^y^^^^ 
 
•{ K">.N II «i. Kk » 1 1 ic»- in 
 
 «.|i|M.riuiiili«> \\liiili •■xisl fur lli.ni; iiml 111'- 1m lU'tilH 
 whicli iKTiiii- lo the cninpaiiv tlimimli llu-ir lifiiij,' 
 |.ro|url,v .|iialiti.Ml. Miiiiy nf tin- i tVivinvs thro\i«liont 
 the |«i|'<i". wliil'- 'iil'iil'l'- "f K'-ii'Tiil applinition. an* 
 iiit.'iul.'d I" iil>|>l.\ ^p.-i-ially t.. lit'.- aHsiiraiH-.- as ••on- 
 (iiK-tril III Caiiaila. 
 
 'I'm; CiiiKK Ohm I u 
 
 III cvirv hiisiiioss tir ciiti'iiirisc tlu-i iist In- s<iiin> 
 
 (MIC t«> \i\U>- till- initiative, to look tu for onlcrs. to li.- n-s- 
 ptiiisihlf for sncccss or failiir.'. In lit'.' assiiraiicc tliat 
 person is (!i. rrcsidt'iit -ir .Manajfi-r. lit" nloni' is rt'spon 
 siblo to liis ilir.'j'tors for tlit- iips and downs associatfd 
 with file liiisiiicss. and all the <itlifr .Miiplox .'cs of t»i<' 
 <•( nipaiiy in tlit' otliicc and in ilif lifld an- nsponsihlc to 
 him. In Jln-af Britain tliis position is ainiosi iiivariuhl;. 
 tilled l>y one who has iieeii teehnieally trained for it 
 file actuary. In Canada and the I'liilcd States this is 
 jiot so freipicntly the case. In order to till die jiositiiin 
 of . hief otIHcer most etticieiitly in the ideal life-assuranci- 
 otlice, tlie occnpaiii shoulii have had Wotli technical 
 training' and experi.Mice. 
 
 In snpi)ort of tlie foretroiiiu view. I tri%e the opinion 
 of prohalily the most eminent livinjr iinthorit;,- in th«> 
 professi.in Dr. T M. Sprauue. F T .\. He said:- 
 
 "The on ii.iusion which my xperience has im- 
 pressed on me most for, ihly is that the prosperity of a 
 life oftic' depends principally on the charact; ■>. its 
 chief ntTicer: aii.l that, if he is nne.pml to iiis ork. 
 directors, a-ciii^. shareholders, and friends, however 
 iiiHuential. will lahoiir in vain to promote the permanent 
 prosperity of 'he office" (J.I.A. 2.V70). 
 
 •'The maiiairer should himself he a skilled actuary, in 
 order to discliar;r<' liis duties in a thoronfihly efficient 
 manner' (J.T.A. 18-41f.>. 
 
 •"The aim of the founders of the Institute (<)f 
 Actuaries^ -to raise the status of the actuary— is 
 siunmed up in tlie desire that the actuarv shoidd ho the 
 Mana-rer of his office. I think it is hetter. however, to 
 express tlie sam<- thiiiL: in a sliirhtly diiVerent way and to 
 
 •A-;,>''- 
 
I. IKK .\s!»iu»M>. (»K<. »>i/,>rii>s. a 
 
 S4ty lliiit mil dcsiri' i-,, llnit the MaiumiT ol' cviiy nflici- 
 Mh'iill I..' im .\<'tiinry." i.l.l.A. •i4--J-»-J. i 
 
 As infiiiiatfil. tin re is a sliarji (lisliiuMi<iM botwooii 
 tlu' iiosilioii tif tin- rliicl" actuary in a Hritisli oiVw*' iiiul 
 his positiiiii ill II I'liilt'il States ntlicf. In (ii-cat Hrituin 
 
 the cliii'f aftuary is iiiva>-'al>ly tlif principal 
 The orticiT, litililiiiir a position somrwliat anala- 
 
 Chief irons to that of Ihr.pri'sidcnt of a I'liitcd Stalt's 
 
 Actuary, conipaiiy. In tin- riiitcd Slatis the chiof 
 
 artiiary's (liilii-s an- nsnally conlini'd to 
 proMciiis rrlatinu' to lis own particular ti't-linical 
 hrancli of work. In Caiiatla. tlif cliicf aclnarv in 
 t'tiicrally citlifr tlif cliicf oniccr or (lit' sccoml in coin- 
 hiaixl. His st-rviiM's rn- usually liiirlily i("_'ar(lt'(l, not 
 mcri'ly on a<M'(nint of liis tt'chnical knowliMlirc Imt on 
 acconnt of tin- u'cnci-al inforniation wliicli In- possesses 
 upon all matters pertainlnu to life assuiaiiiM'. Onr 
 Canadian eompaiiies will, it is believed, lie all tlie lietler 
 for followinir the usually sound views of the aetnnry 
 who has heen deserihed as the pilot of life assnrain'o. 
 In tlie ideal eoinpany. I believe thai tlie system i 
 voffiie in (Ireat Hritain would be the preferable, and 
 that the <-hief otiieer, who is usually desisrnared as 
 manajrer. should be a qualified actuary. 
 
 TiiK A("r .\Ki.\i. Di:i-aktmi;nt. 
 
 The idea conveyed by the statement that th<' chief 
 tTicer should bi' a (pialified actuary does not jjivsuppose 
 that he sliould deal with all the actuarial ininutiiv; on 
 the contrary, he will or<rani/e an actuarial department, 
 at tlie liead of which he will have a duly tpialified 
 actuary. 
 
 The authority whom wp have already fiuoted says: 
 "When the ^lanatfer of a lar-rc (Office is an Actuary, 
 it will be impossible for him to take i)f>rsr:nal charpre of 
 the actuarial deparrment. and to supervise tlio ealcnla- 
 ti(ms that are made in it. He must thei'efore be 
 assisted by a coinpetei:t Actuary, who will ]>robably have 
 the title of Assistant Actuary; and under him. aixain, will 
 be a statV of skilled assistants, whose qualifications aro 
 
 
KusKMiAL Featikes is 
 
 :f^t-; ■ 
 
 MU'h that tliey ar<' cntitlod to he ciillcM Actiiaiics." 
 (J.I. A. 24-242.) 
 
 The quostioii now luitnially arises, wliat coustitutis 
 an actuary ? and aj^ain the opinion of l)i'. Spraffue is 
 
 worthy of bein<r qiioted : — 
 What "The rult- may l)o distinctly laid down 
 
 const!- hat an actuary is a Fellow of the Institute of 
 
 tutes an Actuaries, or a Fellow of the Faculty of Ac 
 Actuary, tuarics in Scolhtnd. and that n<i other person 
 can properly take to himself the title."" 
 (J. [.A. 2r)-Gr).) 
 
 Since the foregoing view was expressed the Actuarial 
 Society of America has come into existence, and I should 
 add to what Dr. Sprajrue has said. "A member of tin 
 Actuarial Society of America." 
 
 Mr. C D. lliffham. F.I. A., in his recent [(residential 
 address to the Institute of Actuaries iJ.I.A. :{.')-44.') i . 
 said in this connection : 
 
 "We want no "trade iiiiioii." nor that a man shall l><- 
 prevented from computing; and advisin<j if he finds 
 those who will trust him. but it ()^l^dlt not to bo a sriev- 
 ance that the ai)pella1i(tn in the Fnited Kiii<rdt)m should, 
 after a short interval, be exclusively reserved for Ibc 
 Fellows of this Institute iF.I.A.). and of the Faculty 
 ((f Act\iaries in Scotland (F.F.A.)." 
 
 The su^'gestion mad<' by Mr. Ifijrham will no doubt 
 become a reality in (he Fnited Kinedom. and in time, 
 with certain additions or mollifications, extend to the 
 Colonies. While the |)rofessi(m of an actuary has not 
 as yet in the Fniled Stares or Canada received that 
 recojinition that it has in (Ireat Britain, it is steadily 
 and surely risinpr in diirniry and importance. 
 
 There are two actuarial bodies, holdinsr examinations 
 annually in this country, which assist students to become 
 actuaries — the Institute of Actuaries of (ireat Britain, 
 incorporated by Koyal Charter 1S84. and founded in 
 1848. trenerally reco<.'ni/r'd as beinu'- the must important 
 institute of its character in the world, and the .Ketuai'inl 
 Society of America, fctunded in 188!l. 
 
 The course of study preseribed by the Institute of 
 Actuaries of Great Britain is a most lilieral one. and 
 
I.IFK Asm KAMK Ol;ii.\M/.ATI«)N. 
 
 Examination 
 of Institute, 
 of Actuaries. 
 
 L'lul. 
 
 it a. student is succossful in ail the four exaniiiiatious 
 lie is justly t'lititled to tlie d.-trivc F.I. A. —"Fellow of 
 the Institute of Actuaries." lie receives, liowever, after 
 successfully taking' the first two examinations, the de- 
 •rree A.I.A.—" Associate of tlie Institute of Actuaries." 
 The followint,' are the subjects of tlu; examination: - 
 1st. (1 I Arithmetic and Al^'cl)ra. 
 
 (2) The Theory and use of Logarithms. 
 i'.i] The Kiemeiits of the Theory of 
 
 Probaliilities. 
 (4) The P^Iemeiits of the Calculus of 
 Finite DitVerences. ineludinjr Inter- 
 polation and Siunnuition. 
 (li Compound Interest and Annuities-Certain. 
 (2) The application of the Theory of Probabili- 
 ties til Life Continjrencies. 
 i;{) The Theory of .\nnuities and Assurances on 
 
 liives and Survivorships. 
 1 4) The iirincii)les of the construction itf Mor 
 tality Tables (excludinLr irraduatiim) ; aiid the 
 construction of monetary and other Tables in- 
 volvin;jr the Contiiiirencies of Life. 
 (.">i The elemeiiiary application of the ('alculus 
 of Finite DitVerences and of the DitTerential 
 and Tntc<,-ral Caii-ulus to liife Contin<;encies 
 (1) The methods of const luct in-; and sraduatinj; 
 
 Mortality. Sickness and other Tables. 
 (2) The history and distinerive features of exist 
 
 injr Tables. 
 i:{» Tlu' Valuation of the Liabilities and .\.sset< 
 
 of Life Assurance Companies. 
 (4i The Distribution of Surplus. 
 (5 1 The Calculation of ( )tllice Hat.-s for .Assur- 
 ance, Annuity. Sickness and other risks. 
 Mil The i)ractical valuation of Life Interests and 
 Keversions, and of Policies for surrender or 
 j)urchase. 
 "(1) The Elements of the Law of Heal and Per- 
 sonal Property. 
 
 :b-d. 
 
 4th. 
 
K.SSENIIAI, KKATIKK.s is 
 
 (5) 
 
 (()) 
 
 (2) The Law ivlatinjj to l.itV Assurance Com- 
 panies and Life Assnranec Contracts. 
 
 (;{) The Constitution ami Valuation of Friendly 
 Societies and Pension Funds, and the Laws 
 relatinjr to sueii Institutions. 
 
 (4) Life Assurance liook-keepiufr: preparation of 
 Schedules, Statements and Reports. 
 
 The Princi|)les of Bankinjr and Finance, in- 
 dudiiif.' a knowledge of tlie Constitution and 
 Operations of the liank of Knj:land. and of the 
 Natiitnal and Local Debts oi llie I'nited King- 
 dom. 
 
 Tlie Investmeuts of Liie .Assurance Com- 
 panies. 
 
 The Institute has Iteeii considerate in arran^'in>,' that 
 the e.xaminatious Ite held in Canada, taking place in 
 April each year at Montreal. Ottawa and Toronto. The 
 same pai>ers are prepared for all st\idcn1s rakiny; the 
 s.ime examination. The jtapers for this colony are 
 t ansniitted to a sujiervisor at ihc centres named, under 
 covers which arc oi)encd in the presence of the students 
 on the day of the examination. The sheels containiuji 
 the answers arc enclosed liy the student in envelopes, 
 sealed hy him. and then haud<'d hack to the supervisor, 
 who transmits all U> the Institute authorities in Lon- 
 «lon. Kntrland. for examination. The ]>erceuta^'e of 
 successful candidates for the pasi five years will, no 
 <louht. j)rove of inlercst to in1endin<r studi'uts: — 
 
 Years. 
 
 I'art I. 
 
 I'art II. 
 
 Part III. 
 Sec. A. 
 
 
 Pa 
 
 St 
 
 •t HI. 
 
 c. B. 
 
 
 I'.r cent 
 
 Per celM. 
 
 Per cent. 
 
 
 Pel 
 
 ' cent. 
 
 lf)02 
 
 <;.") 
 
 28 
 
 44 
 
 
 
 50 
 
 1901 
 
 r.9 
 
 19 
 
 33 
 
 
 
 68 
 
 1900 
 
 47 
 
 33 
 
 23 
 
 
 
 30 
 
 1899 
 
 49 
 
 34 
 
 28 
 
 
 
 34 
 
 1898 
 
 ;")."> 
 
 28 
 
 4r. 
 
 
 
 32 
 
 The 
 
 examinations of the 
 
 Actuarial 
 
 S 
 
 ocie 
 
 ly of 
 
 America 
 
 ti-eat a 
 
 Imost entirely 
 
 with act 
 
 uai 
 
 iai 
 
 proh- 
 
 It-ms. Tl fsc examinations are but two in nuni- 
 bi-r. anil are thorouyrhly characteristic of the duties 
 
I.IKK AsfSlBANC'K OWiAMZATION. 
 
 of till- liiiitt'd Slates aetuaiy and liis st-ope oi work. 
 
 The student, if sueeessful in the first, 
 Examination of may be enrolled as an Associate, and 
 Actuarial Society if he snbse(|nently passes the second. 
 of America. he is admitted tu inctnbtrship in the 
 
 Society. The foliov.ui}-: arc the sub- 
 jects dealt with in the two examinations: — 
 Examination for enrollment as an As.sociate: ~ 
 
 (1) Arithmetic. Algebra and Plane (icometry. in- 
 cluding; the theory and use of IiO<rarithnis. 
 
 (2) The Principles of Double Entry Book-keeping,'; 
 the elements of Compoinid Tiuerest. includin<r Ainiuities- 
 Certain. 
 
 (3) The Ductrinc i<f Probabilities-, the elements of 
 Interpolation. 
 
 (4) The application cd" .Mathematics to Life Con- 
 tinjicncies, inclu<lin<r the theory and u^e of Conuiiuta- 
 tion Tables, the comf)\itation of Premiums for Term, 
 Ordinary and Limited Payment Life and Eodowment 
 F'olieies, and also for I'olicics with return of premimn. 
 and the ditVcrent methods of compntinj: Reserves; all 
 the abov<' for sin<;le and for joint lives. 
 
 ('■>) Practical exami)lcs in the forc^'oin^r subjects. 
 
 (()) (leneral nature of Life Insurance Contracts; 
 the outlines of the history of F..ife Insurance, aiul the 
 source and character of the jjrincipal Mortality Tables. 
 
 Examination for admission as a ^lember: — 
 
 (1) Methods of const met in jr and jrraduatinfjr Mor- 
 tality Tables ami the use of fornndas of Gompertz and 
 ^lakcham. 
 
 (2) Methods of loading' Premiums to provide for 
 Expenses and rontinjrencies. 
 
 (3) Valuation of the Liabilities and Assets of Life 
 Insurance Companies. 
 
 (4) The Assessment of Expenses and the Distribu- 
 tion of Surplus. 
 
 (5) Practical treatment of cases of Alteration or 
 Surrender of Life nsurance Contracts. 
 
 (6) Applicati(m <<f the Calculus of Finite DilYer 
 ences and of the Di retitial and Tntejrral Calculus to 
 Life Continirencies. 
 
IvssK.NTI \l, I'KMl I:K,s in 
 
 (' ) Laws of the United States and Canada rvlatinu 
 to Life Insurance. 
 
 (8) Insnranee of Under-Averaije liives and Kxtra 
 I'reniinnis for Speeial Hazards. 
 
 We have said that the iiead of the aetuarial depart- 
 ment should he a duly (lualified actuary, and have 
 indicated the steps usually taken nowadays to heconie 
 such. There is no department in a life jLssurauce 
 oi-jjanizution wliidi rerjuires "greater tech- 
 The responsi- nieal skill, combined with jrood business 
 bilities of judgment. If premium rates are faulty, 
 the Actuary, if valuations are ear lessly made, or 
 sound prineipies reiatini; tli'-reto i},'norei' : 
 if suri)lus is inefjuitably apportioned: if sin-render 
 values have not been calculated with a due ret?ard to 
 actual and prospective conditions, a <erious injury to 
 the whole orf;aiiiy.ation will undoui)tedl\ result, and 
 for these and uumy other conditions the actuary niu-U 
 be responsible. The work which the actuary has to 
 I)erform or direct deals with nuittei-s vitally essential 
 t<i the well beinj,' of the institution. 
 
 While he should be a jrood mathematician, he should 
 also be a nuui of practical ideas. There is 
 The practi- no I'ud to the number of schemes of assur- 
 cal Actuaries, ance that an actuary will be able to suirjrest. 
 l»ut numy will be found quite impracticable. 
 Me should be in sympathy with The memliers of the field 
 staft". in order that he may the better appreciate the 
 enquiries which they make rom rime to time, and the 
 competition they have to meet, thus bein^r in a position 
 to aid the ajreiit, thereby adding to the coni,)any"s ])res- 
 ti^e and success. A field training' of some months, or 
 an occasional visitation amon<r the agents will prove 
 invaluable to the actuary. He will sret many practical 
 and vahuible sujr^'csti ms from afzents — for it is a well 
 known fact that some of the most popular forms 
 of assurances of to-day orifrinated with the field 
 worker. The actuary should als be in touch 
 with the wants of the public, fo. by that means 
 ''e will be able to susjrest forms of policies, chaiifics 
 in eonti-acts. etc.. which will tend to make liis company 
 
Lin. Ahhikj>nce t'«*AMZATiON. 
 
 I»oi)ul}«i' and pw^rt'SNivo. Ilf shouhl liavc an aceurati' 
 kiiowlcdfro (if all st.-Mlard iiuirtality tahlts. that ho may 
 1)0 ub'o to dctt'iiiiinc wliicli tabU' is flio Ix'st for each 
 soparato nMpiin'iiictit. A inorlality talilo whiili iiiiiilit 
 he t'l'OiruHl suitahle for the (■(Uiiinitatioii of liff assur 
 anc- preniimiis iiii<rht not do at all for the dctoriniiiatioii 
 >f annuity rates. Conditions are eontinually elian<;inu 
 i.i life ass\iranee, antl tlif actuary siiould keep hiiiisi'lf 
 iniormed eoneerninjr them. As an e.xam|tlf, the " Uritish 
 Otflces liifr Tables" have recently been made public; 
 and it is tin- i'duary's place io determine whether In- 
 shall recommend ♦o liis chief officer that tlie new tables 
 lu- substituted for ht old in the calculatio!! of premiums, 
 reserves, ere. Another e.\amj)le is tile variation con- 
 stantly takinjr place in interest oarnin<rs, and this latter 
 I'ondition is cei-taiTiIy one whicli necessitates .iiidiciou«i 
 treatment. 
 
 The proper iraieinji of assistants is one of the most 
 
 important <liities of a competent actuary 
 Actuarial Every actuary slioubi have under him a 
 A8bl,ita staflF of assistants of such education and 
 
 attainments as to eniitle then to be called 
 aetuaries. or to enable them in due time to reach the 
 required standard. 1 think it should be laid down as a 
 principle by the actuary in charfire. il'.at each member 
 of his staflf must pursue the studies necessary to qualify 
 him as an actuary. Tiie etT'ect of this would be that 
 a firoiip of tlieroiiL'-hly ctTicii .;t men would always be 
 . ailable for important and resj onsihle positions in the 
 company. 
 
 The educational training which an assistant should 
 have previous to enterinfr an office, is a subject re^;ird- 
 ing which rhere are many opinions. I think it is quite 
 safe to say that as a miniinum he should have passed an 
 examination at least as ii..portant and as comju'eliensive 
 as the hcmcr matriculaion examination of say Toronto 
 TTniversity. Personally I should prefer to select an 
 assistant who had successfully tiiken up the first year's 
 work or the first two year."/ work in Arts in a university 
 trradcd about the same as Tcronfo University. T 
 think tliat .ii first or second vear university 
 
10 
 
 K.1SKNTIAL Kkatur*:!* in 
 
 stncK'iit will make a better and more efficient 
 }is!sistj.iit fluui a stmlent who lias taken the full Arts 
 course, unless the student ean have entered the luii- 
 versi^y suffieiently early to he still comparatively 
 younir when f.'>'»duated. if somewhat advanced in 
 asre. the jrraduate is more difficult to train, his lon^' 
 ;iiid severe course (if study upon set lines has a tendency 
 lo make him too theoretical. Iiis liusiness faculties havr 
 l>een undeveloped for too lonji a period, and the result 
 is that it becomes more ditTicidt for him to appreciate 
 the practical jjroblems with which he has to wrestle. 
 .\ yiiuM},' man fresh from eolley;e. havinjr matrieulated 
 as in(licate<l, or haviny: successfully i)assed his first or 
 first and second year's examinations, should, without 
 much reviewinjr. successfully write upon the first ex- 
 amination of I'.' Institute of Actuaries; w Idle his 
 previous academic trainin<r will render the work of siib- 
 se(|uent exauiinations less difficult. 
 
 The actuary and his assistant-; should cultivate the 
 hai)it of writing: on sub.jects pertainin«r 
 Suggestions to their j)rofession- -articles for. or letters 
 for Actuarial to the insuranct journals, or "litera- 
 Assistants. ture. " for their comi>any. It assists the 
 student ro express hin\self with <rreater 
 • •asc and freedom. i:ives him coiiHdence in himself, and 
 acts as a healthy stinndus to investisraf i. They should 
 be constant autl persistent ivaders of the transactions 
 of all insurance and actuarial societies, and of certain 
 re])resentative insiuNiuce periodicals. 
 
 Apart from tin- ordinary routine p(>rtainin«r to the 
 old busiiifss. tiicic are many duties whir-h the actuary 
 and his assistants will be called upon to perform — 
 the ealculatiou of new premi im rates, of rates for 
 special policies, of policy values, of annuity rates and 
 values, of surrender values, of the expected loss. etc. 
 etc. Orifriinil invest ij,' tions and tests will be instituted 
 from time to time. Tnvestifrations of the rate of mor- 
 tality aecordiuK to place, occupation, tnode of life, or 
 race, will be frequently undertaken by the actuary. The 
 proper, e(|uital)le and best way to determine how dis- 
 tinctions arisinir out of t^ese different conditions should 
 
Ia»-E ASSUBANCE (tllCASIZATION. 
 
 il 
 
 be made, is a i>r(ihltMn whirli is eoustuiitly demanding 
 soluti' ' 
 
 Thf aetuary and his iissistmiis should always be 
 alert to th.' i(M|iiir.'iiifMts of tlie p<ililic. Tin- 
 l»laeiiin lu'fon- the |»iil)li<- of a new plan of 
 assurance liaviiii: nieiit. tir of in old plan dressed 
 in a new -.'arlt. will sometimes assist in attract ini; 
 additional new business, stimulate the ay;eney staft", 
 and tend to make the eom|)any more po[)ular and 
 prosrressive. .Vssistants esi)eeially should be eiieoump'd 
 by tlieir chief to undertake work of tiiis eharacvr, 
 and they lliemselves shoid<l be sutHieiently inter 
 ested in their profession, and in their particular office 
 to make oritrinal NUiriresiions. Clunv-'es are constantly 
 l)ein<r tnaile in the |)olicy contract of assurance, the 
 modern tendency beinj.' to make the ])olic;, simple, and 
 more liberal in its ter-iis. The more simple and attrac- 
 sistent. >f course, with safety to the office, the more 
 easily will it be interpreted, and the more will it 
 connnend itself to those seekinjr insurance. The actuary's 
 training: nid studies should cultivate in him the use of 
 concise, direct and simple lanyuajrc; sui-h beins: the 
 ease, h^' should be able ro assist in remodellinu: the policy 
 
 forms of the company as reipiired. Th )mpany's 
 
 "eanvassiny: literature" also aff'ords a wide avenue for 
 the caj>abiliti(>s of the members of the actuarial staff'. 
 The aim of each member should be how ho can best 
 forward liis company's interests, and in the eft'orts made 
 to do rhis lie wil' elVectivoly forward his own. Every 
 efTort made strentrtheiis him to a more ( ffieient per- 
 formance t)f his next duty. <,'ives him added experience, 
 enables his chief to rely move implicitly upon him. and 
 thus brinjrs to him add<'d resiH.nsibilities. more imp(>- 
 tant dutids and sure |)romotioii. with corresponauiir 
 increase in emolument. 
 
 The field for actuarial w( rkers is liie'ted. Our 
 lar^rest companies have a staff' of not 
 more than nine, while in many offices three 
 or four as.sistants -ill Ite the maximniii. 
 Those who conlemplate embarkinjr upon the 
 actuarial profession, may and it somewhat 
 irjt a position i;» the .'ictuarial department of 
 
 Field for 
 Actuary's 
 Assistants. 
 
 difficult t(i 
 
I'i 
 
 KS!«KNTIAI. Vt..\l\ ICKM I.N 
 
 )i life (ifticf, 1)11 nccinmt of tW liriiiU-d staJV ivquiiTil 
 iitid the liiiiit('<l immln'r of cttnipanios in (Junad)'. 
 althoutrli f'H- our |»i>piilation tlic miiiilHi- is lar hoyond 
 what it shoulil !><'. It is tint iiccfssary for th(> staff of 
 an actuarial dci>arlniciit 1i> increase so rapidly as tin- 
 staffs in the other departments of a pro-^ressive otfice. 
 If a \o\iu<: nuin is fortujude in beiny properly located 
 in a well or'.'ainzed and etfieieiitly conducted actuarial 
 department of a i)rot.'ressive life assurance company. 
 and he «lisplays an aptittide for the theoretical and 
 practical development (d" the work, he is l)oiind to rise 
 
 TiiK .Mkdkai. DM'AKTMKNT. 
 
 The chief : ledical nd'eiee, as head <d' the medical 
 department, in the determination id" those lives which 
 are safely assurahle. performs one (d" the most impor- 
 tant duties involved in life assurance economics. 
 
 The eand'id selection <tf lives lies at the? 
 threshold of successful life assurance. Lei 
 there lie laxity in this one fealure and all 
 must suffer — policy holders, shareholders, 
 ofHcci's and ay:<'nls. On the other hand, if 
 .■onspienous care is disj.layed it is at once -videnced in 
 the vearly acco'.;ntiny:s which are always analyzed and 
 criticized l.y friends and foes. Mr. J. W. Alexander. 
 President ' the H(|uilal)le Life Assurano- Society of 
 the United Slates, in a recent address, referrini.' to the 
 selection (d" risks said:- 
 
 "This side (d" the nKina«;ement of a life insurance 
 c<impany is of tlic first importance. . . . .\ half 
 million dollars in the death claims for one year in one 
 of the lariresr compaines may he sav(>d by the applica- 
 tion of wisely directed attentitm with far trf'^ater ease 
 than one hundred thousand dollars can be saved in 
 expenses. ' ' 
 
 It cainiot be sujiposed that the ordinary 
 local medical examiner will have mneh 
 more than a layman's knowled<re of life 
 assurance, but it is essential that the chief 
 of the medical depn; anent shall have a 
 clear compn'hension of the underlyinjr principles. In 
 
 Care in 
 selection 
 of lives. 
 
 Local 
 
 Medical 
 
 Examiners. 
 
I. UK AsSI'UA.NCK OlUlANUAtlUN. 
 
 i:i 
 
 suiiu' i-<iiii|i)niii's tilt' Iticiil iiii'ilicMl e\imiiinT is not even 
 .i>k(il whi'lhcr 111' n'f«)iiiiiu'ii«ls tlic appliuimt for iisHiir- 
 iiiiiM". All iluil is riM|iiinil ol' liiiii is to make the per- 
 sonal oxaininalioii as callcfl for iiy the blank, and obtain 
 l»y i'ii«|niry inforniation From the applifaiit, accordiuy 
 to •jiifslions |)i'()pos('(l, cniici'rnin"^' bis pcisomil and 
 tnmily history. Tlif medical nffrcc llu-n di'ti'rminos 
 
 tl iiuihility <il' the lifi'. In niosi of the medical ro- 
 
 l«(?t^. howi'Vir. the local i-.\amimr is askcil whether he 
 CI iisiiders the lil'e safely assnralile on the system pro- 
 posed, ami wliethi'r be re;.'ards the applicant as a first, 
 second or third class life. 'i"be misconcepiion which 
 local examiners have of the varions systems of assin'unt'c 
 have no doiild intbienced some companies not to seek 
 their reconnnendations. Init instead, to form an inde- 
 pendent opinion nf the life, liasi'd on the answeiN to 
 ipiestions pr( J) ised. 
 
 If companies were to adopt the, old 
 Advantage principle <d" reject inj: all lives which (hi 
 of ctuarial not come np tn a certain necessarily liiiii 
 knowledge standard, a eom|>aratively small knovvled!i?e 
 to Medical id" life assnianc; on the piii't of the medi- 
 Referee. cal referee w. .id snftice. lint to-day some 
 
 of the best companies here, in fireat 
 Britain and ni the I'liited States accept lives which 
 re((nire some special modification in the system of 
 assurance, in the amount of assurance, or in the pro- 
 iiiiiim. and it is pnrticnlarly in dealiiifj: with this ffradn- 
 ally iiicreasin'j: class, that the medical referee would 
 lind ir work miicli more intelliy^iliii'. and liimsolf 
 nnich more ccmfidi'iit if he pusvesscd aetnarial know- 
 ledge. Tile followim; are cases where some modification. 
 as referred to al'0vi\ wniijil become necessarv :-— 
 
 (ill Wbi're the hii/ard diminisbes wiih a^e. as in 
 the case of a >oiin<:' man whose family history is 
 fainted with phthisis. 
 
 ill) Where tlie ba/aid increases with aue. as in the 
 ease of a youiiji; man. a member id" whose family 
 lias dice' of apo|>le.xy. "jout. etc.. iliseases which 
 nsnallv threaten life onlv after middle afjo. 
 
14 
 
 EhHE.NTIAL Ft.ATlliEO IN 
 
 (f) Where the hazard w permanent lliroughoiit life, 
 as ill the ease of a person folliminu a «Janirerou» 
 oeeiipatioii 
 
 At the present ♦iiiie, when a life is below the 
 normal, the aetiiaiy is jreiierally eeiisiiited liy the 
 niedieal referee, in order to find out what method 
 should be adopt( il. if the life is io he aeeepted ut all. 
 to eoiiipeiisate the eompaiiy for its imperfect ions. The 
 medical referee indicates to the aetuar>' 
 Treatment the extent of these imperfect ions and their 
 of imperfect likely etVect upon the life of the applicant, 
 livei by The ad nary determines the iiumey value 
 
 Medical of the defects, and how best that money 
 
 Referee and value can be secured, whether by iiierea-sintr 
 Actuary. the iiormal premium, shorteiiins: the term 
 of th( assurance, o'- makiiij: Hie assurance 
 in the earl.v years small an<l <;i. dually inereasinjr it 
 from year to .vear until a niaximuni is reached. It will 
 thus be seen that uiiitecl action of the medical referee 
 and the actuary becomes indispensable. Hut the same 
 results could be reached if the medical referee were 
 himself an actuary, and in a much more sutisfaetor>- 
 manner, for it is dit^icult for the actuary to iret tin- nice 
 point of view of a case that the chief medical oliKcer has 
 from a careful study and analysis of the subject in the 
 liflht of his |)rofessioiial medical knowledtre. and it the 
 same time it is ditTicnlt for the medical referee to realize 
 the exact effect of the proposed modification, suggested 
 by the actuary, and whether it is the best in the par- 
 ticular ea.se. It would, therefore, appear that the ideal 
 medical referee should have actuarial knowledjre. as 
 with this knowledj,'e he would brinj: to bear in the dis- 
 char<re of his duties a more intelligent, a more skilful, 
 and a more .just .judgment. In this eonn«H'tion, however. 
 I am not insensible of the benefit to be derived from the 
 two independent .judgments, although T believe the 
 opinion of a thoroughly grounded actuarial-physician. 
 able 1 lew the ca.se from all jxiints. would be better 
 than combined judgment of a physician and an 
 
 actuary who have to explain to eaeli other their respect- 
 ive standpoints, when it must be exj)ected that soiik' 
 
I.IKI. AkHI KAMK OW.AM/A IH'V. 
 
 of thi' iiiiprisNiuns wliich huvf Ihcii iiitiitully in'i' 
 niiiniif In- convfytMl liy laii^'iingc. 
 
 Such an officer will have a just aitpnciatioii of i 
 life tahic upon which |>rciiiiuiiiM for whole life a«s 
 aiiee are based, and will not fall into the ei 
 which has iiiisletl more than one medical ri-f< 
 of aHNumin*: that because an applicant in 
 The life ,jud«nienl "is ^ood cnouyh for a>:e 70. In 
 table. lisk is a fir'st-elass one. A knnwii'dsje oi \h*' 
 
 constnietion of the Institute of Actn '-^ 
 (llmi life table wonhl indicate to him that the \:\- 
 vivinj: life assnied dies after a<:e 'M. and fbn' ach 
 individual life assuretl on the whole life systei m>uI< 
 have the jirospect of reachinjr that a>re. '11 nsuai 
 course for a nieilieal referee to follow in dealn _' with 
 a risk, is, after a full consideration of the facts in hand 
 to ask himself th' ipiestion. "To what approxinialt 
 limit of life will the applicant attain ,' "' After 
 settling this (|uestion he ad.jnsts the system of assur- 
 ance, the premium, or the sum assured at'cordinj^ly. 
 Without actuarial knowitdye. or actuarial advice, thi^ 
 would be im|>ossible. 
 
 I'nless the medical refeiee has an 
 Knowledge accurate kiiowlcd-re of the many systems 
 of systems of assurance he is placed at a serious dis- 
 of assurance advantage. The following: actual cases 
 indispensable, will serve as illustrations :- 
 
 1. An a|i|»licant applied for a whole 
 life assurance, with mortuary additions for 20 years, of 
 r)(i per cent, of each '_moss aiuiual jiremium. The risk 
 V ;is accepted s\d>.iect to a lien, runnintr otV y:raduall.v in 
 •J|! vears. The fact that the system i)ro\ ded for a 
 ^'r,..iually increasin<.' risk for 20 years was not app'v- 
 ciated — if it had been, the mortuary addition featurf 
 would have been eliminated. 
 
 2. An api>licant applied for a "20 year pure endow- 
 ment" fonu of policy — the ayreiit. throuf.'h oversijjht. 
 had the api^'icant examined. The family history was 
 defective. Fhe medical refei-ee re|)orte(l the risk de- 
 clined. Had he known that the poorer the life the more 
 aecoplable was such a risk to the company for this form 
 of policy, he would not have fallen into this error. 
 
u 
 
 KMHKMrlAL KCATIKI-.H tN 
 
 ! An iipplniiiil a|i|»li<Ml fur ii il<l.lMM> foiitnicl whii-li 
 (■•iiriliiiii'il I 111- .l.iririiK t.f niiliiwiiiiiil ii'»Miran<'f ami 
 aimiiil.v . Ill'' liniiiifial t'lVi'rt tif whii-li was that the rt'- 
 MTV- II' .111- till' contract at tin- fiitl »( l'> vt'iirs wux 
 nri-at«T than *1.iMHl. Yh.- life ili<l ii«>t fxhiliit siiriis uf 
 
 \itiilitv Im'.voiki a in-riod of 1"> yt'iiiM. 'I'lic i lii'iil if- 
 
 fcnc II r<iiiiiiii'ii(li<l the ill ptaiii'i- nf iIm' lisk mi tin- 
 
 1.') yviiv I'lnliiwiiii'iil assiiram-i- systi-in. not ri'ali/iiii.' tlial 
 
 IIk* HV-sti'iM apidifij for was inorc favniiihlf to tli mi- 
 
 jiany tluin llif sn:.'i,'fst('(l iiio<lilii<I oin-. 
 
 'I'lir i|iir^tion III" ociMipation also, is one which woiihl 
 ln' (Icait with moil' Ntroiiuiy hy a iintlical n-l't-nM- if hi' 
 
 wiTc cioiiiKJctl in thf thi'ory of lift ntini,'cn<Mi's. 
 
 ("i-rtain ■"•iiipatioi's aci' hi'iiitifiai to lii-alth 
 Occupa- .111(1 loimi'vity ; otiiris airaiii aii- (It'triiiH'iita! 
 tions. to iii-altli and ti-iid to slioiii-n lifi'. Hy this 
 
 il is not to l)f iiifi'ifi'il that then' slioiilil 
 III' ,1 spt'i-ial rati' \'<>v <-.\c\\ ilistiiict oci'iipatioii. '{'host' 
 ni'i'iipsitioiis haviiii; iiiortiili'y niti's i-losi'ly approxiniatiiii! 
 may I"- roiisiiiiTi'il iiinlrr oih' Itmail lirad. hii' in those 
 casi's in (vhii'li tin- mortality ' niati-rially L'ri'.itrr than 
 Ihf avi-raui'. il lifrcnii-s lu'i-i-s-ary to i-hai'L'i' an i-xtra pre- 
 miiiiii. For I'xanipli'. il is a wtII I'stalilishi'd fai-l Ihat 
 those iiiirau'i'il ill the liipior Inisiness are siihjeet to a 
 morlalilx very niiiterially ijreater tliaii that of the 
 ueiMiiil population. The reports of the reiristrar-ijeiieral 
 of Idrths. marriaiii's and deaths in Kntriaiid show tliat 
 this eNces-. am. Hints to no less than .")(! per cent., and 
 the Seottisli Aiiiieahle's rxin'rieiiee |)roved that liquor 
 sclli'i'^ iissiired in th.it otiiee I'-ifl a innrtality more than 
 TiO per eent. j^reater rhan that of its otiier nieiiilMTs. 
 
 I'nietieally the san mdition was found to exist whoii 
 
 analy/iiiir the experiences i>f the Standard I-ife. the 
 Law- Life, tiie Life Association of Scotland, and the 
 N'erth lirilish Mercantile Life. 
 
 There would appcMi' to he no oih' mre ahle t.i de- 
 tcritiiiic the prohahle etVect of occiipaiion upon thf 
 individiiid life than a physician, and wliile ordinarily, 
 he would not lie fully acipiainted with the true extont 
 of the increaserl risk of any particular hazardous clas,s. 
 vet if he possessed aetr "ial. as Well as inodicid skill. 
 
Lire Aiwu»ANCi: Ohmakuiatiom. 
 
 17 
 
 Medico- 
 Actuarial 
 investiga- 
 tions. 
 
 l... wuulil !»• .il.lo to .' Ilx- ni'.ii.-v valiu" ot the 
 
 i-xtra iiiiiiiality in* 
 
 IlliiHtrati.ins an not lackiiiu' wIi.t.' tin- int'dical 
 rrfcriM. and tla- a.-t«ia.y. \v,.rkini: jointly, liav.- pnaluci-d 
 most valiial>l<' coiiti-ilnitionN lo ni.'«linil litV assuruix-.v 
 In IHSH Dr. \. II. Sill., ami T. «i. .\<klaii(l. K.I. A.. 
 rlii.f m.MJinil ailvisfi- and a.-tuary. ivsp.-cliv.'iy. <if the 
 iinsliain liif.' AsHiirancc Sori.ty. piihlisht'd 
 th.-ir first .'diiioii. and in \S\)0 tli.-ir smiiid 
 .'dition of a In-atis.- "On th.' AsHiinin.-f of 
 Mv.'s Lialii.' to SiTviiM' in .Military and 
 Naval Opt-rations at I Ionic and Abroad. " 
 This work ha.- h'cn icc.-iv.'d with inarkod 
 favor liy tin' iirotVssion. 
 
 II. \V. .Maiiiv. F.I.A.. ai-tiiary. Miitiitil Lit".- Assiir- 
 an.-c So.M.-fy (KiM^landi. and Or. K. (Uov.t Lyon, one 
 of th.' medical olTiccrs of Ih.- same society, each con- 
 irihuted a jiaiier on (•onsiiinptioii at a nieetinji of 
 the Institute of Actuaries in Fehniary. 1892. Mr. 
 Manley"s paiier was entitled. "An attempt to measure 
 the c.Ktra risk iirisin-,' from a cotisiiiiiptive family his- 
 torv when the life proposed for assurance is physieully 
 smind and healthy." and Dr. Lyon look for his suh.iect. 
 "T{emarks on consiimi.tion in relation to life assuraiieo. 
 
 Medical and actuarial sci.'iic." worked toijetluT ui a 
 most efficient and practical iii..Mner wh.'ii it produced 
 that iiivaliialile ..'iiide in the s.'l.'ction of risks. "Medi.'al 
 lland-lmok of Life Assuranc.-." the joint production of 
 Dr. .Tos. E. ToUock and Jas. ("hishi«lm, K.I. A.. K.K.A.. 
 physician and actuary of th.' Imperial Lif.-. Knj.'land. 
 Another puhlication which cl.arly hears the impr.'ss 
 of the joint labors of the actuary and the physician, is 
 "Causes of death amonj: the assured in the Scottish 
 Widows' KuJids Life Assurance Society. 1874-1804." 
 This work is well worthy the perusal of all students of 
 life a.ssuranc.>. and forms a most valuable contribution 
 to the science. Claude Muirhead. M.D.. K.R.C.P.E.. 
 medical officer of the society, the author, says i>i the 
 prciaee coneerninp certain elaborate tables:— "Thes»; 
 tables have been prepared by Mr. Turnliull (F.F.A.. 
 P.I. A.) and his assistants in the actuarial deparlment 
 
IS 
 
 EtiSEMIAL FEATUEES IN 
 
 of the otTHt'o, but more iminodiiitoly iindor the super- 
 intendence of IMiilip C. MeKcan, F.F.A., to whom I am 
 largely indebted for liberal assistance and valuable 
 advice in the preparation and revision of this report. " 
 
 Dr. Leslie O^nlvie. H.Sc. .M.U.Kd.. M.H.C'.P. Lon- 
 don (Trans. Act. Soc. Kd., IV.-fSH). .says: 
 Analysis of ~ ■•'The medical analysis of the staiistics 
 
 life assurance of Life Lisurance ("omi)ani(s is a tnat- 
 statistics. Icr of <rreat dirtictdty; Init 1 have (.ftcii 
 
 thought that the most valnahle iiiforma- 
 tion on the subject of Life Assurance is actually l)uric(i 
 in the safes of the Companies." If our medical referees 
 and their assistants had a coiiiprehensivc <rrasp of the 
 theory of life a.ssurance and the elements of statistics it 
 would not be lon<r before the mine of wealth which Dr. 
 Ogilvie refers to would be ijivintr forth its treasures. 
 But the fact is that, comparatively speakiu':. very litth' 
 use is made of this material, and i>rincii)ally. T believe, 
 iiecausu the actuary has nut sufticient medical skill to 
 deal with it. nor the physician sutTicient actimrial 
 knowledjje to enable him to reduce it to a u.seful j>rac- 
 tieal ba.sis. Dr. Ojrilvie adds in the same paju-r ( pay:c 
 OS): "Might not both i>ri)fessions (medical and 
 actuarial) be even more closely associated than at pre 
 sent, in a constant endeavor to incrfas<' by every avail- 
 able means our statistical knowicdiri- .'" 
 
 Along the same lines. ^Ir. (!c<>. M. Lou. F.I. A.. 
 F.F.A.. F.K.S.E.. says: 
 
 "What would be of the irrcatcst s.^rviee in the busi- 
 ness of life-assurance would be an eii<|uiry of the kiii'l 
 ilulstrated in Mr. Manly "s pajxr. but conducted "U a 
 basis sufficiently wide to give thoroughly reliable data. 
 and embracing not one branch of enquiry only, but all 
 those gvonps and classes of cases presenting extra risk 
 which most ordinarily occur in practice. Tt seems 
 liighly probable that the results would modify various 
 current views and theories — would show that in the 
 ireneral i>iactice of Otiices some jxtints receive tot> great 
 importance, and would bring into prominence others 
 that at present are too much overlooked. However that 
 might be, there can be no doubt as to the value that 
 would attach to reliable statistics showing even approxi- 
 
lait ASSLBA.NCE OBOAM/AlloN. 
 
 la 
 
 iiiatoly for dilViTfut <'lasses oi undfr-iivi'raKO risks, what 
 extra rate of mortality is really involved. There is 
 plenty of material in the Ofiiees for siieh an tiHiuiry. 
 It has fre»iuenfly been siifrj-'esteil, and, although as yet 
 the idea has not advaneed heynnd the sta^'e of su-rges- 
 tion, it may be hoped that some day the Oftiees will 
 awaken to its imi)ortanee, and that the inijiiiry will be 
 undertaken on a sutlieiently wide and eomprehensive 
 basis. It will be a work of great labour and it will (-all 
 for the joint exereise of medieal and actuarial skill 
 the medieal to group appropriately the various speeial 
 features in personal and family history to be dealt with, 
 and to refer individual eases to their proj)er groui)s. 
 and the actuarial to tabulate the results and bring them 
 into a foim suitable for practical use." i Trans. Act. 
 Soc. Kd.. IV.-121 i 
 
 .Mr. K. 1). Miller. F.F.A., in his very inteivsting 
 paper, entitled "A Confession of Faith." read befiu-e 
 the Insurance Institute of New South Wales in July, 
 
 19(»2. said: — 
 
 "In passing. 1 would like to say that there are many 
 l)hases in our business in which either the ])hysieian 
 or actuary alone is utterly useless: but when they join 
 their forces we have a powerful combination capable of 
 solving many a knotty problem." 
 
 As we have actuarial assistants to per- 
 Medical form the detail work of the actuarial dc- 
 Assistants. parlment. so we must have medical ii-ssis- 
 tants to assist the medieal referee in the 
 medical department. It is also essential that an as.sis- 
 tant in this department should be specially (pialified 
 for the position, and to say that lie should be posses-sed 
 of botli medical and actuarial skill is surely not setting 
 too high a standard. 
 
 The medical department, to one who takes a broad, 
 business-like and scientific interest in his work, is one 
 of the most interesting in lifi- assurance practice. Almost 
 every day eufjuiries are made to other 
 Some details offices relative to unfavorable action taken 
 of medical by them upon applications. Most absurd 
 department, replies have been received, indieatinir on 
 the part of the one answering the (Hiquiry 
 
10 EasKNTiAL Feautres ur 
 
 (l)e 111' oflii-iT nr clt'i-k ) entirt- iy^noraiu-f uf what hi' whs 
 rt'cordin^' If the t'ii(|uiry v iv answered hy a inedieal- 
 aetiiary as-istant. these ahsunlities woiild not occur, the 
 office jrivinjr the information woiikl hi- saved from ridi- 
 cule, and tlie office reeeivinj; it would - btaiu satisfaction. 
 It not infre(|uently happens that the defects of an appli- 
 cant, and the reasons why an extra premium, a modified 
 system of assurance, or a lien, is i)rnposed, have to Ite 
 explained in order to secure the applicant's consent to 
 the .su^'trested modification. The medical-act iniiy, or his 
 a.ssistant. will he the liest eipiipped person to do this. 
 In tho details as.sociated with the appointment of medi- 
 cal examiners — such as eiKpiirinj,' into their credentials, 
 c. the assistant in the medical department, who has 
 medical knowledjrc and a .just appreciation of the 
 (pialities whicli a medii-al examiner should pos.sess, will 
 he able to perioi-m th<> work inteiliyentiy. In the in- 
 vestifxation and examination id' death claims, actuarial 
 and medical knowlc(l<r<' arc almost always .■sscnti-d. and 
 the person haviii-r this duty in hand should he etpiipped 
 aceordinj^lv. The cori'cspoudence cnnducicd h.v the 
 medical department with the company's med .d exam- 
 iners and airents. will he all the more satisfav .>)ry if the 
 oflieer or his assistant has not oidy medical knowledpto. 
 hut also assurance knowled<re. 
 
 .Medico-assui-ance experience will assist materially 
 in the intellijrent and efficient keepinj: of the 
 Medico- reconls of the medical department. It is 
 assurance most important that the i-ause (d' death be 
 experience accurately noted, for future reference and 
 desirable, for statistical i)urposes. Tnlcss this is done 
 till' ex])erieuces which ma.v he taken out will 
 he faulty and unreliable. 
 
 ,\ii instance where 1 ' jxissession of medical 
 knowledire by the assistants i,. 'he medical department 
 was important, was the fiiruishinir recently of data by 
 the various companies to the .\ctuarial Society of 
 America for tbr purpose of brinirin? out tho specialized 
 mortalitv table. It was not to be expected that thp 
 medical "referee eonld co over the jrreat mass of material 
 from which the desired information was to be extracted. 
 
Mkk ANSI uan<k (»kii.\m/ation. 
 
 21 
 
 n'<|uiri!i'; iiKUillis «if eloso a|>plicalit>ii, ami it (H)uK1 
 hardly he deli'-iatod to t-lcrks having' ahsolutcly no medi- 
 cal kmiwledge. No doubt in some offices the work was 
 placed in the hands of stn-h clerks, in which event it 
 cannot but be intVrretl that the desired fads were not 
 recorded. The new method which has been adopted by 
 the United States life companies, and by some Canadian 
 life companies, of n'lxirtinjr defective risks, calls for more 
 thaii meiv clerical work— if this work is to be done 
 accurately and tborou'rhly. it nnist be performed by n 
 person possessing: medical knowled<,'e. 
 
 There are many other duties which mii,'lit be referred 
 to. re<iuirinj'' medical traininjr. but sufficient has 
 been said to iiulicate that our companies should sc" 
 that tb.'ir medical departments are e(inii)V>ed with youn« 
 men who are ii-aininj.' themselves scientifically for the 
 teclmical work in which they are eti'^ay-ed. and it be- 
 lli oves the yonufr men in the m«-dical dei)artments of 
 our companies, and those who desire to become leaders 
 in this branch of lif( assurance, to make the best of 
 their opportunity to aeipiire accurate actuarial and 
 medical ktiowledt:*'. 
 
 TlIK .VccorNTAMV DKI'AHTSIKNT. 
 
 The model oHice will, of course, have a stronu' 
 Hcccmntancy departmenl. and in this branch of life 
 i.ssnran(;e 'here is ample scope for ori<iinality to 
 men of capacity and clear conception. I do not 
 think the proposition will be questioned that the 
 chief accoinitant should not only be a practical 
 accountant. Imt that he should thorotijrhly unihM-stand 
 the underlyitiir principles of accountancy. Tn this pro- 
 vince we have an Insitute of Chartered Accoiuitants. 
 ami it would appear that the chief account- 
 Chief ant of a life assurance company, with head 
 Accountant, office in this province, should have demon- 
 strated his fitness for the position either 
 by ha villi,' successfully passed all of it^ laminations, or 
 in some other satisfa<-tory way. l\Toreover. it should be 
 the aim of every clerk in the accountancy department 
 to (jualify hiinself for the examinations of this body. 
 
2j K.ssKNTiAL Features in 
 
 and tlnis he in a position to secnre promotion when hw 
 time arrives. 
 
 Should t*^-* diief accountant of a life assurance com- 
 pany be an actuary ? There are many in- 
 Should Ac- stances of this actually bein«,' the ease, 
 countant be and it may be safely assumed that the 
 an Actuary, trained accountant who has passed say the 
 ♦irst two exaniiuations of the Institute of 
 .Xctuarit's of (ireat Britain, or the first examination of 
 rlie Faculty of A<-tuaries. or the first examination of the 
 .\etuai-ial Society of i\nit'riea, or the examinations of the 
 Federation of Insuninee Institutes, will be able to per- 
 form his duties in stron^'er, broader and more efficient 
 manner. I do not think that it is suf,'jrestin<,' too hi!»h 
 a standard to say that the as-sistants in the accountancy 
 deparrment should prepare themselves for the examina- 
 tions (if the Federation of Insurance Institutes. 
 
 The examinations can be taken up jrradually, and will 
 undoubtedly not only Ix'uefit the assistant and the otiice, 
 but will prove a most interestin<r and valuable st\uly, and 
 possibly lay the <.'roundwork for more important studies 
 in some of the other institutes. The 1raiuin<r which a 
 younp man receives by systematic study. 
 Benefit of and the stn-nirfh and self reliance which 
 examination t-onK- to him. liy virtue of havinpr to diir 
 and study, and delv alonjr the line of a parti;'ular 
 branch of knowledsre, are invaluable. If 
 suce.'ssful. as almost every younsr man will be, if he be 
 honest with himself in bis stu ' ' eveates enthusiasm 
 for his profession, -.nvcs him a 'V interest in it. and 
 
 enables liiiii 1o n'nd(>r bettcn- > v to bis oITk 
 
 Thf work of aecountancy in life nssnrance is not 
 alwavs aeeorde<l tli.> status which it risihtly deserves. 
 From a knowledj ■ of tlie system in vojrne in some offices. 
 I do not wonder that otiice work in them is uniuterestinc 
 and dull-in fact, it may be said to be stale and un- 
 profitable. The alert, bripht and up-to- 
 Life date life asstirance accountant will tell 
 
 assurance you that there is a constan: ehanffc Koint: 
 accountancy. i>ii in the treatment of office details, and 
 that he wclco .cs any ituiovation which is 
 .•aleuli.i<- tn ndtiee !::'"-r. 1o fncilil.ite the conduct of 
 
LnriC AS8'RANCE OllOANIZATlON. 
 
 23 
 
 tut work and to make it iiinic elTiciont. Mr. K. 1'. 
 Ihirdy, V.l.A., siiid in this e-oniu'ction (J. I. A., :i2-44:{). 
 "To frame a scIk-iuc of hooks iiiul forin^ that were at one- 
 analytical and inttrlockiny:. pivsciilintr at the same tiiiif 
 the maxinnnii of convcnu'iici' for the nwds of to-day. 
 .•rii'umhfrcd l)y th.' iiktc minimnm of what was indis- 
 jKn-ihlf for tin- fnu'r-rt-ncy wants of the futtnv. was in 
 itself a lihcral ami hi'_'liiy stimnh'lini; ochication.'' 
 
 The chief of an otilicc shoiild ciicoura<rc his assistants 
 to prcsciit any new method which they believe has merit. 
 Then is no otliee which has now or ever will have a 
 perfect syst.MO. lint it shonld he the aim of every oflice 
 to improve its system, to introdncc mo.-e 
 Improvement etVcctive checks, and a more perfect inter- 
 in system. lockinji of the records one with another. 
 Brietly. it may he said that: 
 
 1. The system shonld he analytical. 
 
 2. The system shonld he interlockiiif:. 
 
 .i. The system shonld he convenient and require a 
 mininnim of labor. 
 
 4. The svstem shonid be a checkinjx one. 
 
 f). The svst.'m shonld irive accnrate informatien. 
 
 t). The system shoidd be adapted to the reqnircmonts 
 (if the (lovernnient returns. 
 
 Mr. A. 1). T.indsay TnrnbnII. A. I. A.. K.F.A., says 
 alon- these lines: -■•As <-very ofTHce. or nearly every 
 otlice. is increasin-r its linsiness at a very rapid rate, and 
 i,s th.' I'nblie IS more and more f.eliim the necessity for 
 Life Assnranee. a decided 'iVort shonld be made by all 
 to still fnrtber simplifv. if possible, the practice of book 
 k.M-pinir. '■ Trans. .\i-\. S.ic. Kd.. lV.-t8S. i 
 
 And Mr. John .1. McLansblin. 
 
 Objects to be attained K.F.A.. says : "In considering the 
 
 by life assurance snb.ject it is ne.essary to keep 
 
 book-keeping. st<'adily in view the objects to be 
 
 attained by Life A.ssurance RooU- 
 
 Ueepin<:. These are: 
 
 "(1) To afford read- information as to the financial 
 transactions of the (^ice with every individnal with 
 whom it does bnsinos.^, providinj,' in the case of persons 
 with whom there are eontinnotis business transactions, 
 and periodical settlements, a reu'iilar account: 
 
24 
 
 KSMENTIAL KEATtTHns IJI 
 
 (2) To rocord fully the iiitromisRions of the officials 
 with the f>iii(ls of the Office; 
 
 {:{) To classify tiie various transactions of the Office 
 so as to produce" at the end of the year(a) a revenue 
 account and ( /> ) a halance sheet, in the forms i)rescnl)e(l 
 hy the Life Assurance Companies Act. 1870, with such 
 further details in the case of each as it nuiy he^desire.l to 
 place on record." (Trans. Act. Soc. Ed.. 11.-7.').) 
 
 Mr. Turnbull in his paper adds two others:— 
 
 •' (4) To cmihle the Directors, or at least the Manajier 
 to know, with full particulars, the total cost of New 
 Business and thi expense of carrying on Old Business. 
 
 {.')) To eiialtle the ("ciiipany 's Auditor, without ui- 
 eonvenieiice to his stalV or that of the Otlice. t() nmke a 
 tlioro>i<rh audit in a reasoiujhle time, and l)i'si(U's, the 
 system should he sudi that the clerks will not be apt to 
 nuike mistakes, and. when an error has been made, they 
 should be in a i)osilion to readily notice and fiuickly 
 
 locate it." 
 
 If the company is doin^' b\isiness outside of Canada, 
 as for example, iti the I'nited States or (ireat Britain, 
 the system should lend itself to producing' conven- 
 iently the statements re(|uired by the country in which 
 the office is transacting; business. 
 
 The followins.'. amoiif: other points, have 
 Points to be been suirireste<l as bein-i important for the 
 kept in mind, accountant and his a.ssistants to hear in 
 mind : — 
 
 (1) To determine the uses and object of each book, 
 and the circumstances under whicli the information 
 recorded will be re((uired. 
 
 (2) A thorousrh acquaintance with the underlyinfr 
 principles involved in the particular set of books used 
 in the office. 
 
 (.S) llow these princi|)les can be best applied to 
 new conditions. 
 
 (4) The etlect of tlie discontinuance of one or more 
 Ixioks, 
 
 (.'i) The introduction of better books or methods, 
 in order r.. obtain the desired results, keepinj; well in 
 mind that it is important to preserve an easily ac.ces- 
 
 i 
 
Life Amueahci Oiioah;zation. 
 
 i 
 
 f 
 
 o coiiiWint' tho 
 
 (nif yi-ar's re- 
 and aiialy/.inn 
 
 sible reconi of t-adi tninsaction. ari.i 
 results (if all the transactions. 
 
 (H) The impoi"! !'»<■♦' "' rt'i-oncilint: 
 ceipts with those «>l' the preceding year. 
 and aeeoiintiii!< for the ditVeroTiee. 
 
 (7) An analysis of rlie ..eeoiints of his own olliee, as 
 well as thos(> of "oti.er ortiees. as .liselosed in ilovennnent 
 returns. 
 
 In eonneetion with the f..rei:oin-r the tullowin-; n- 
 marks are appropriate: — 
 
 "To those who wish to <(ualify Ih.iuseives tor pro 
 motion to i)ositions of responsibility. 
 Eabit of independ- that they "annot betrin loo early to 
 ent thought. enltivate habits of indei>endent 
 
 thonjrl'* -fii'st of idl to enquire the 
 reason for everv i)reeaution Ihat they (ind is taken in 
 busin.'ss, and the reas.m of every rule that is laid down 
 f.,r their j^uidanee. ami siibse.iueiitly to consider whether 
 thf present eourv -f pmeeduiv eai. be in any respect 
 improved." Dr. T. I'.. Spra-iie , Trans. .\ci. S..c. hd.. 
 I.--JS7i. 
 
 I would also su«:tresl ihat the masterly w-U of 
 Dr. Sprau'iie. on •'hife Insurance Ace he 
 
 studied bv every life assurance aceoi, itaiil an. , insistent. 
 Althoufjh it does not api)ly to life assiiranc- aeeounts 
 as made up under the Dominion Insurance Act. it eon- 
 tains mauv valuable su<.'y:estions and helps. 
 
 Tn leavin-: this braneh of work I 
 Suggestions for would stron^jly ur<:e upon every younR 
 the Office man who is .'ii-xatred in what may be 
 
 Assistant. t.'i-med «renerai otTfice work, to observe 
 
 the followinfT: — 
 (ll To improve early edueation by such studies as 
 he may Cud himself most deficient in, and whieli will 
 most assist him in his present dutit>s. 
 
 (2) To prepare liimsdi for some examination in 
 aceonntanev— either the examinations of the Institute 
 of Charleivd Aceount..:.* '>f Ontario, or the examin- 
 ations of the Federation of Insurauee 1) tuutes of ^Ireat 
 Britain, the ob.ject beinjr to have some ^'oal in view and 
 to attain it. 
 
eti 
 
 Kmnkmial FE-^rimw in 
 
 (.'{) To eoijlimii' his sttulifs aloiiu actuarial lines, 
 iiiul prcpart' liimscif at Icii-st for the tii-st two fxaminu- 
 tions of the Institute of Actuaries, the first examination 
 of tlie Actuarial Society of Ameriea. or the advanced 
 txaininalion of the Federation of Insuraiu-e Institutes. 
 
 (4) To analyxe, compare and study the annual 
 reports of life assurance companies, as published by the 
 companies, and as contained in (ioverninent returns. 
 
 (5) To read carefully all criticisms and notices on 
 life assurance annual reports, as contained in the insur 
 ance and financial journals— published V^re, in CJreat 
 Hrituin, in Australia and in the I'nited States. 
 
 (♦)) To critically examine the financial stuteinenls 
 and reports of eonunercial and financial enwrprises. 
 
 (7) To tliorousihly adapt him-elf to the records of 
 his own office and always keep in view tli" idea of how 
 he can improve the existiu}.' system, remembering; that 
 the intricacies of life assurance demand special forms 
 of record, and eohse(|uently. atV«>t<l abundant scope for 
 originality. 
 
 "Chanjre of circumstam-es should be at once recof?- 
 ui/ed, and every mt.ilern invention that seems likely to 
 Ik- a real improvemi-nl. should l.e ado|)ted — not perhaps 
 itinnediately it is broiiirbt out. but immediately after 
 there is pood reason to think it will be an improvement." 
 {tv. Sprairuc. i Trans. Act. Soc. Kd.. I.-27<n. 
 
 I.NVKSTMKNT DkI'AKTM K.NT. 
 
 The model oflfiee will have an investment department, 
 controlled by an officer who is a specialist in finance; 
 and who will be responsible to the chief officer of the 
 comi)any. It may be advocated that the investment de 
 |)aHment of a life company should be under 
 the especial care of the chief officer of the company. 
 This department of a life company is one of the 
 
 most important, for if the funds of 
 The necessity of a company are injudiciously invested, 
 an Investment disaster will surely result, and thus 
 Department. it is that the investment of the funds 
 
 of a company demands such close 
 attenti(m, such special aptitude tliat it requires the tin- 
 
Lira Absuranck OBOAniZATio5. 
 
 ST 
 
 divided attontiini of somt' one ihtsoii, and this the chief 
 officer of a model office is uiial)lt' to ^'ivo. 
 
 Tlie two major sources of profit 
 Two major sources of an assurancf company arise 
 of profit. from care in the selection of 
 
 lives and the interest earned on the 
 accumulations iievond the rate of interest at which the 
 reserves are maintained. The ajrfiregate experience of 
 :!9 I'nited Slates companies for the year ending Decem- 
 ber Hist, inoi, a.H reported to the State of Connecticut, 
 showed that 48'; of the total profits arose from exces.«» 
 of interest earned over and al)ove that required to main- 
 tain reservt s. and 37' ', from favorable niortality. Mr 
 .\. 11. liailey. K.I. A., states that : -"Of the two main cb-- 
 ments on which all life as.suranee traiisaetitms depend- 
 the rate of mortality anil the rate of interest the latter, 
 i tbinU. atVords mniv scope for tbc exercise of judgment 
 and skill than the former. . . . There can b.' no 
 doubt that the iimount of interest realized on the assets 
 can be materially inlhieiieed by the dcLrree of judu'iiient 
 and knowled're brouirbt to bear upon the snltject." 
 '.I.I.A.. 1(1-14:?. t 
 
 The trainini: and experience uf the actuary es|»ecially 
 (jiialify him to deal with the investment of tb«' com- 
 pany's funds. The quest' ius to what 
 The Financial proportion of a company's ti. .<ls should 
 Actuary. be invested in certain clas.ses of si'curi- 
 
 ties is t)ne wbicb can best be determined 
 by the financial actuary. A certain mininnun rate of 
 interest, dependent upon the rate assmned in the 
 actuarial calculation of the otli.'c will re<piire to be 
 obtained. Airain. this officr slioul.l be careful to see 
 that the time for which investments are made has some 
 relation to the duration of the assurance c(mtracls 
 entered into, lie shoubl be able to advise what classes 
 of securities are most suitable for his particular office. 
 and what interest yield rate sliould be expected, iuas 
 much as the rate of interest is a co-efficient in all assin- 
 afe and annuity calculations. Of course, the final 
 decision regardini.' all investments will lie with the 
 directors, who are <re"erally men of prudence and 
 abilitv. 
 
M 
 
 EMBilTlAl <^BATUIU » 
 
 The st'U'ftion <if risks is iiiudc daily by oin- or more 
 traiiK'd tnon. ami iniisuiuch as fiic <;r.'at«'r part of a life 
 (tHiff's pntHls n'suits fnuii tlif jutlicious iiivostinciit "f 
 funds, the s.flcftion of scfuritics should also havo con 
 tiniioiis thoiij.di(. and In- in tlir hands »d" u thoroughly 
 trained man. havin-^ a .just appreciation of the subject 
 from a life assurance standpoint. hi discussing' tlie 
 sultjeet. "Money ami the Kutme iJate of Interest," Mr 
 A. <;. Smith said : 
 
 "In .verthinu' relatini: to the su<'ces.s of Insunince 
 (ttlices. a knowledire i>\' these values (value (d" money and 
 tlie future rate of interest i is likewise id" paramoun! 
 necessity, for. laiwever accurately your facts as to imn-- 
 talitv are stated, however skilfully your formulae arc 
 framed, if a mistake is made as to the valm" of money 
 or rate <d' interest, error will he the result." (Trans. 
 Act. So(. Kd.. I.-1.')T.) 
 
 The eiiief of the investment department will realize 
 that there are eert;iin classes of vccurities 
 Selection of which are hmked upon with special favor 
 Investment, hy his dire<tos; if these arc not avail- 
 alile in siitVicieiit amounts tu iitili/e all 
 <!ie surplus funds id' llic <M)iiiiiany. it will he his duty to 
 study and investi<:ate tlic (|iialities of other kinds ot 
 av iiahle .securities. lie should always he ahle to explain 
 in the minutest detail every feature of an inves'inent 
 which he may recommend, and he i>rcpared to answer 
 without hesitatien any <|ucsti(in which may he proposed 
 touehiu'..' it. 'I'lie faculty (d' marshallin<r expeditiously 
 the favorable and unfavo abb' fc' Mires in an investment 
 jtroposilion is one which shoiibl le cultivated in order 
 that no time may be lo'^r in comintr to a eonclusion 
 
 retrardinsr it. 
 
 It is (|uestionable if there is any i>ha-e of life assur- 
 ance which calls for more care and more skill than th< 
 
 invest inir and loaniu': of the accumu- 
 Effect of a Good latioiis. in order t.. secure the maxi- 
 Rate of Interest, mum returns compatible with absolute 
 
 safety. The maantcnance of a trond 
 rate of interest is on*' of the indiiations of successful 
 management. Mr. .1. J. W. D.ucltar. F.F.A.. F.T.A.. 
 stated :— 
 
I.in: A««i'«*Ncc OiioAHiZAnoif. •• 
 
 ••It ini.v snv I., iinli.ai.- Ww '-Mviit iiiiportaiu'o t.f 
 ol.liiiniiiv ii l'-xmI ivliini '-n tl.r inv.-stni.-nts, if il i* 
 rn.li/r.i that ut.r p.-r .•.■iit. of .i..r.'as.Ml iiit.-ivst on tlu- 
 fmi.ls ..»• a rumpaiiy will, m, tl..' av.-iai.-.'. I.;iv.. ,xs u'n-at an 
 .•ir.M-t as a saviiiu in .•xiM'ii.litiin- .'.|ual to U' pt'i- •••'H'. "H 
 „nlv rii.-liftli .f 1 l"'r .-..lit. xv.Mihl tn. IV tJiaii ni.'.-l al' tli.- 
 ,liv"i.l.iMls paid In shaivlal.l. MS l.y tli.sr .•..ini).mirs tliat 
 \i'ar. 
 
 An in.Mvas.. in tli.- av.-ra-.'.. int.T.». .•amines of all 
 
 Canailiiin lif.- assiiiiinc ..Mi|)iWii.-s f..r tli.' y.-ar 1!M)1 uf 
 
 tlu- pivhiinni in.M.nic. whil--. if ni. otVi. nl.l .-..uiit on 
 
 .vaii/.in--' •'• pfi' f.-nt int.'ivsl in |)lac.. ..f :?. it iniiriit iv.liic- 
 ,ts pivniiinns s.,n..- W \uv '••■nl.. -r .l.n.l.l.- its Imuhis. 
 I Trans. Ins. .\ct. Sue. <ilas.. 1st MTi.'s-:?:$t), ) 
 
 X.) nnill.T liuw .l.siral.ir a liii-'li latr of int.T.-st may 
 
 lu' til.' first cotisid.Talion in .-oni (ion with the invest- 
 
 „„'.nt of fniMls is th.- al.soliitr security of the capital 
 inv.-st.d. •IN'rtVct s...niily. as far as hnnnin .-irorts 
 ran attain to it, on-ht I.. U\ and is th.' first of th.-so 
 ..on.litions that is. .■xi..'.'tali. n ..f IH'oHts must he 
 snhonlinaf.'.i t.. saf.'ty.'" In .l.-t.'rmiidn>.' thf chara.-tnr 
 of inv.'siriM'iils availahli'. .'Vcry otVi.-.^ nuist 
 Security of !•.■ LMii.l.'.l l>y th.' p..w.'rs conf.'rn'.l upon 
 the Capital it hy I'arliani-nt. This n'stri.-li..n. ..f 
 Invested. .-..urs.'. narrows .lown -th.' nnnih.'r <.f 
 s.'curiti.'s. and il is a .h'hatalth' |)oint 
 
 wh.'tlu-r in Tana. -a our I'arlia nl sh.nil.l u..t follow 
 
 th.' Hritish praeti.-.' ami <.'iv.' lif.' assuran.-.- .'ompanu's 
 practically unlimitcl i...w.rs t.. s.'l.'.-t their securities. 
 Th.' su.'c.'ss whi.'h th.' British .-..inpani.'s have exp.'ri 
 •■nc.'d in the inv.'stm.'nt .d" th.'ir funds is alm..st pr.. 
 verl)ial: .>n.' auth..rity stat.'s that:- ••Th.' history ..f lif.' 
 insurance husin.'ss in th.- Tnit.'.! Kiu'-'.l.Mn alY.U'.ls 
 s.-ar.-.'ly a siiiirl.' .'sami.l.' .>f the failur.' .'f a .•omi)any 
 thi'o\ij.'h ha. I inv.'stment." 
 
 This is a remarkable stateni.'id. ami on." which it will 
 he interi'stinir to hiok into hy end.-avorinir L' as.-ertain 
 the reast.tis that have made th.' liritish life assuranc.- 
 .....npani.'s so succssful in this r.'sp.M-t. Th.' f.>ll.>win<r. 
 amon<; others, are civen : — 
 
 "1. Tliat the itivestnient d.'partm.'iit is und.'r the 
 
ao 
 
 K^^jfA 1 1 M y* *•' •*►" '^ 
 
 Beasoni for Suc- 
 cess of British 
 Life Offices in 
 Investments. 
 
 perw>nal inuniipiii<-iil of tlio \\mn\ of Directors or ..i 
 a cojuniittw of ili.in. Tliis i^ aiiviiiita«oous. iniwinuch n* 
 
 tlu' jiuIk ut of Hfvcral i-xpffi.n I 
 
 pcrsoiiH is safer and more relial)!-- 
 than that of any one iiuUvithnil. 
 
 2. rs\uillv thf Hoard of Dii tors 
 
 is eoiiii)ose(l of p.-rsoiis enjfap'il in 
 • lifl'en-nf professions and pnrsnits 
 merehanfs. niani^aetnrers. soli.ilois, tinanrieix et.'. 
 ,i?i(l iv.iivipieiit'y. wlieii any transjietion is presented, iit 
 li-asi some tine dlt. «ior will have had ••xperienee in il- al- 
 invr wilh siniihir tiansaetioiis. 
 
 ■.\. Tliat those in eliarj.'e of the investment of ihe 
 fnnds have l.e.n men of ijn-at pnuhm-e and probity, 
 who. hefore hrinsrinj.' any transaetions before their board, 
 have .arefully invest i'rated its m<'rits and are prepared 
 to answer any qii.-stions wliieli may be proposed. One 
 writer says, '(iiv.-n the same hijrh qualities in the men 
 who are to jjnide and direct the investments in the future, 
 the outlook so far fn.m -rivin-.' "v .-ause for anxiety, 
 may l)e faeed with absolute eontid. nee." 
 
 4. The practieall; luirestrieled area from which the 
 Uritisli companies have tlie n'^hi to select their securities, 
 has been a most important factor in flieir -.uceess. It 
 has not only assisted to increase their interest earnings, 
 but. as is desirable, has increased the variety of suitable 
 seenrities. 
 
 :>. That a hij-'h rate of interest lias always been 
 made a seeon.lary consideration to the perfect safety 
 of the capital. 
 
 (;. The investments have been selected with a du« 
 retrard to tbe character of the business of life assurance. 
 Ai^surance comjiaiiies c«mtract to pay money at periods 
 more or less remote— tbey are not exposed, as are banks, 
 to siidden and extraordinary demands i- time of panic 
 or commercial depressi.m— and tbeir re(|uirements can 
 be predicted with prcat precision. Therefore, keeping 
 a small ])orti<m of their funds in readily-convertible 
 securities, rle ■• are able to invest the remainder in 
 securities tUi\ art> not readily convertible."" 
 
Lun Amkumanci: Uhuamization. 
 
 ili 
 
 The aMKiNtunt \vhi» is plai-od in ii fiivoruble position 
 to i>iipi(;e in the work of the iuvestmcnt 
 AMtttant in tifpurtiiu-nt will tinti the diiiios intorusting, 
 Inveitment iiistrnctivi' aii«i nlfaMiiiit, provided h<; taken 
 Department, a dft-p iiilfi'f>i in cvi-rMhiny; li inline; to 
 make his wotk intelliuible, and hiiuMelf 
 more proHeicnt and experieneod. 
 
 The first course he sliould pnrsne, by n-ason of his 
 assoeiation with the timince arisins,' out of the business 
 of life asMtiranee, is to prepare liimself for at '«jist the 
 associate examination of the Institute of Actuaries of 
 iJreat Mritain, the Faculty of Actuaries of Scotland, or 
 the Actuarial Society of America. Ills preparation for 
 the examinations of one of these bixlies will teach him 
 the valut! of accurate kuowledu'e. ^ive him a youd 
 t^roundiuu in the theory of finance, make him exact in 
 his statements, and correct in his analysis, while his 
 standint; in the profes.sion, if successful in his examina- 
 tions, is so nuich enhanced. He should also possess a 
 trood knowledge of book-keeping', so as to readily appre- 
 ciate any financial statement cominj^' under his attention. 
 The value of actuariiil tniii.intr to a clerk in the in 
 vi'sdiit-nt department, ciiiuiot be overesliiiijiti'd. When 
 (Iciii'Mlures are bcinj.' ti-inlcri'd for. 
 tabb's 111' values Mia.\' ni t br avail 
 able cnverini: the yield r.ilr t'cr the 
 transaction, or tlie periiul vi' liim- 
 for which tbc debentures arc to 
 run. This trainintr will enable biin 
 desired value accurately and eunfi- 
 dently from fiiNt principles. AVhen debentures anj 
 ii' uyht at a i>remi>nn <>r at a discduut. special calciila 
 hi.ns arc necessary tn determine the amounts wbicli 
 should each year be erediteil to principal and to interest. 
 Till' assistant who is !ic«|nainted with the theory of 
 intiTest and aniniities certain will be able to do tlii* 
 wor' with expedition an<l ease. Investments vJH li,. 
 presented in which it is stipulated that the prineipal is 
 to be re|)aid by eijual montlily or <|uarterly instalments, 
 or the interest payable monthly or qtiarterly. There 
 may n<it be prepared tables to determine the value of 
 
 Value of Actuarial 
 training to a Clerk 
 in the Investment 
 Department. 
 
 to determine the 
 

 32 
 
 K88EIITIAI. FkaTUWW Of 
 
 such inv.-stm.Mls. iiiid it iiiiiy. tli.'ivforo. U'corne .'sscii- 
 tial to (-..iisinict ii fonimla to ohlaiii the (U'siml inforina- 
 tiiiii Aimiiitios-c.rtiiiii. in.-ivasiiii: in arithmetical i>n.- 
 irivssioii. iuv not iiifiv.|ii.-ntly (.ffeiv.l to life assurance 
 coiiipauies for iMirchase or as security for a h)an. Honds 
 payahh- at irreL'uhir intervals and in irre<;iilar aruuunts, 
 carryinu one rate of interest, and otVer.'.! at a price to 
 yield auolher rate, will sometiines he met with. In 
 dealin" with thes.. eases mathematical kiiowlodne is 
 iudispensahl.'. Mr. (ieo. Kin- F.I.A.. at the conclu- 
 sion of Chai). IV. of his ••Theory of Finance, says that 
 circumstances mav render it necessary io modify the 
 .nanv formulas which he has n-t (h.wn. and that it may 
 freqiiontlv hai.p.M. that there is no fo.'mula -nen in his 
 work which will directly meet the case ui hand: hut he 
 .Mies on to sav that the i)rinciples enunciated will remain 
 constant aiul the actuary who has fully mastered the 
 principh-s will Hud no ditTiculty in adaptm- the formulas 
 to spociaJ conditions. While life interests and rever- 
 sions are not otTcred In Canadian life assuranc- com- 
 panies for purehas.. or loan hy any means as frequently 
 as to eomj.anies in <ireat Britain, the investment de- 
 partment will have presented to it fnm. time to tmu^ 
 favorable transactions of this d..s,Tii.ti.m. and m view 
 of the special fcatuivs ..nterin- into these purchases 
 and hnins. an actuary's sKill ami kimwledL-e hec.mie most 
 (h'siral)le. 
 
 There are manv oth.'r special investments in the con- 
 sideration and valuation of which, the .m.^ havin<: 
 ,H„arial knowlclye will pn.ve himself superior to one 
 witlmut this special trainin-. and T think it can he 
 safelv maintained that the man havin- actuarial tram- 
 i„.r is all the Letter .|ualified to d.'al with those invest- 
 uients of a life cmipaiiy whi.-h do not necessarily re- 
 • luire actuarial knowledge, for the rea.son that the 
 trainintr of the actuary has a tendency to make him 
 accurate in his knowledjre, analytical in his investiga- 
 tions, farseeimr in his conclusions, and sound in his 
 .iud<.'mcnt. 
 
Life Assubanoe Oboanizatioi*. ^'-^ 
 
 111 etiMiifi-tioii wiili tlic invest miMits of ('aiiiidiaii lilV 
 I'oiiipimii's. it will 111- interesting' tn noto 
 Investments tiie amonnl nf invested assets and tla- 
 of Canadian miinner ut' distriiintiun innoiiy thft various 
 Companies. ciassi's ot" availalile seeurities. At the 
 
 elose nf Decendiei'. liMtl, the total assets 
 of imr eii;liteen otfiei's anionnted to $•)•), 141. !)8U. Tlu' 
 ainoiml and pi-opoi'tion of tlie fnnds of all the wiiiipanies 
 invested in each separate elass, is uiveti in Die follov.iiitr 
 
 lahlo :— 
 
 I'er- 
 
 .\iiioiinl. centafie, 
 
 lieal estate $ .-).12S.l(tS 7.7 
 
 l^oans on real estate l!).or)!».Sl 1 28.8 
 
 Loans on collateral :{.>^fl().-_>-_>'J 5.9 
 
 F..(>aiis on policies, etc ti.4:{7.')(i:{ 0.7 
 
 Stocks, hoiids and deheiitures •J7.ti:!7.S()4 40.9 
 
 Casli l.OSO.Or)! l.fi 
 
 Agents' balances .')(i.479 .1 
 
 Interest and I'ents dne and accrued. I.it0:5.2.")() 1.5 
 
 Oiitstaiidine preiiiinni> ■_'.liS4.Sti'J :?.'! 
 
 Otlier ass.'ts i(;;{,8;{0 .:$ 
 
 lit). 141.980 100.0 
 
 In an analysis of the assets of the individual Canadian 
 c-oinpanies some most reiiiarkahle dilVei'eiices will bo re- 
 vealed. The (|nestioii may ver.v well he asked, why has 
 otii' company deemed it pi'oper to have 2'^ per cent, of its 
 assets in leal o t:de. wliile otlier-; have a much siiiaMer pro- 
 jiortiorr' \Vli\- has one orUce 74 per rent, of its a.ssets in 
 loans on real estate, while another lias lint lli per cent. ' 
 .And ae-ain. w h.\ do(>s on.' conipaiiy maintain Td percent, 
 of its assets in stci-ks. Iioiids and deheiitures. while another 
 has lint li per cent. .' ('pen in v<'st i'.:at it ii il ma\' he fonml 
 
 that tliere are vei'v eeud r<'asons for 
 Distribution of thesi' variations, and there is (irohahly 
 Investments. no one who is lu'ttei- ahle to deterniiiie 
 
 what the re(|nir(>mi'nts of a cotiii)any 
 .•ire as l<i tlie proportion of its fnnds that should he kept 
 in ])V- term investnienrs. short tei'in investments, or 
 
'■>'-ijir%i^*^: ;.:;k.-4>^^as 
 
 ;u 
 
 KsSK.MIAI. FKATI VKS I.N 
 
 liquid sofiiiilit's tliaii th»^ aptuary who has made a most 
 carefid investijratioii of his fompany's l)usiness. Mr. 
 D. Dom'har, F.I. A.. F.F.A.. has mado an interostiiitr 
 retVreiico in tliis coiiiicction : — "The prospective de- 
 mands on the funds of a life assui'anco company foi" 
 death claims, and even for surrenders, can be calculati'd 
 with considerable accui'acy: and in the ca.se of a pro- 
 gressive otTice. where the averajre a<re of the assui'rd is 
 U7ider ■')(•. and whei-e a fair proportion of new business 
 is done, it may bt> reckoned that for the next twenty, 
 twenty-tive or thirty yeai's. or perhaps ' ■ ^er. the in- 
 come from premimns and interest will e: ''c amount 
 of claims and expenses, and thus thai >!!! be no 
 inipi'oi)riety in tyin<r up a eonsidcralih pi-o|)ortion of 
 the funds for Iniijr periods."' 
 
 Aiiain. the trained actuarial investment man will be 
 the better able to determine the rates of interest which 
 the oftice should eiuleavoor to have its 'nuids 
 Rate of yield. This, of course, will be. to some extent. 
 Interest dependent upon the prevailiiifr rate of interest 
 on Funds and the class of securities invested in. But 
 Invested, the vahiation rate, or the rate of interest 
 at which the otTice (-alcnlates the reserves 
 under its contracts (d" as,suranec and aniniity, etc., 
 should bo an intlucnciny: factor. An office which is 
 maintaining the hulk of its reserves upon a i^-j P^r <'^^^- 
 basis will endeavor to invest its funds at a rare hiprher 
 than 4'/^. per cent., and conse(|uently may take securities 
 in which another ofTlice maintainini: its reserves upon a 
 3 per cent, or 31'^ per cent, interest rate would not care 
 to invest. It will tluis be seen that the basis ui)on which 
 the actuary calculates his reserves, influence ■ the rate 
 of interest which the investii>ent department rtill en- 
 deavor to have tlie assets of the company earn. The 
 following table, •riviu'r the averaere rate of interest 
 earned on the assets of Canadian companies for 1901, 
 and ^bo rate of interest at which reserves are maintained 
 will, tio doubt, prove interesting :— 
 
^'ty-t-e!.: 
 
 v.- 
 
 ^' 
 
 
 :'W^'t'- ^'- 
 
 I 
 
 I.IKK As^ifRANCE ORfiAMZATION. 
 
 IiitoifMt Bii»i*^ of Reserves. 
 
 3» 
 
 Avera-^'e Riite 
 Coni}miiy. of Interest earned' 
 
 in liHll. I ,Q,,| \^^,„..„„.e. -N,.« AsMirance. 
 
 
 I'er eent. 
 
 I'er it-nt. 
 
 I'ei- 11 111. 
 
 1 
 
 4.64 
 
 3 :. 
 
 3 
 
 •2 
 
 4 57 
 
 4 ."> 11 nd 3 .-. 
 
 3 
 
 3 
 
 4.2H 
 
 4..') 
 
 4 .■) 
 
 4 
 
 1.77 
 
 3..-. ; 
 
 3.-1 
 
 "i 
 
 .-..(•2 
 
 4 
 
 4 
 
 <i 
 
 5.36 
 
 4 5 
 
 4 .•. 
 
 
 4.97 
 
 4 5 iuxl 4 
 
 3 .-1 an.) 3 
 
 8 
 
 >,.43 
 
 •» 1 
 
 4 
 
 U 
 
 4.-2«) 
 
 3.-. ; 
 
 3..-1 
 
 1*> 
 
 .>.3!» 
 
 3 .-. ' 
 
 3 i-i 
 
 II 
 
 -1.60 
 
 4 1 
 
 4 
 
 |-> 
 
 t.Ts 
 
 4..-i 1 
 
 4..^ 
 
 13 
 
 4 !»i 
 
 4 
 
 4 
 
 14 
 
 3 3!» 
 
 3 :. 
 
 3 -1 
 
 l"» 
 
 4 (il 
 
 4.r> anil 4 
 
 3 .-1 
 
 1«> 
 
 •11 
 
 4 .■> 
 
 4.r> 
 
 17 
 
 3 «tl 
 
 4 .'• 
 
 4..'> 
 
 IS 
 
 .-> IJ 
 
 1 4.-. 
 
 3 .'• 
 
 * "Old assurance" refers t<i [lolicies issued (iricir to .January 1st. 
 IIMK), " New a.ssurance" to |)oli<.-ies written sul>se<iuent to tliat date. 
 
 Suggestions 
 for those in- 
 terested in the 
 Investment 
 Department. 
 
 I will concliult' my roniarks under this licadiiif^' l>.v 
 milking' soiin' su^<!;estions wliich tiiiiy 
 assist tlif y(Hiii<: men who an- interested 
 in the investment hfaneh of a life assur- 
 ance eompany. and wlio may di'sirc to 
 make tln'iiisi'lves valuable to tlu-ir 
 offiee ; — 
 
 (1) The examinations of one of tlie 
 
 actuarial bodies previously referred *!! should bo rakeii. 
 
 (2) At least one of the importan'., financial .iournals 
 
 of Canada, of Hreat Hritain and oi the United S^tates 
 
 slinidd be resrtdarly and carefully read. 
 
 {'■]) The investment powers of all Canadian life as- 
 surance companies should be studied, and the invcst- 
 tnents authorized by the charter of tlie company with 
 which he is connected, as well as those authorized by 
 the General Insurance Act as amended, should be thoi-- 
 ousrhlv familiar to the student. 
 
;^ iM>}/^ffk2MBi.Mi m^j^ 
 
 •»■> 
 
 KSHENTIAL FEATUBES U* 
 
 (4 I 'I'lic uuvi'iiiiriciit r.'|H.its, uliicli set out ill iiiucli 
 (Ict.iil till' iiivcslinciits iif liff assiii-imcc (•oiin):iiiit's. 
 slimild III- iiivi'sti<;iiti'(l \n iiM-i'i-hiiii iIh- invi'stmciits lu-iiin 
 iii;i(li' liy tlic (lilViM-i'iit coiiipaiiii's. 
 
 '.")) 'IMh' liiiiiiiciiil statciiM'iits cit' all lln' iiistitiitii)iis 
 in wliicli liis coiniiaiiy lias iiiiiiii'> iiivi'stcd, slioitkl In- 
 ra refill ly I'xaiiiiiii-d from pi-riud \n jn-ridd lo deti'i'iuiiif 
 tin- di'sirability of rctaiiiiiiir. addiiiir to or sclliriji tliesi; 
 sceurilii's. Tlic staliMiiciits of tlio>i" iiislitiitioiis in whosf 
 sfcuriti's the coiiipaiiy lias power to iii\est should lie 
 similarly ixaiiiiiied. so that wluMi an investment is pro- 
 l>nsed in any one of them the student will have some 
 idea as to its desirahility. This aiijilies especially to the 
 lialance sheets of hanks, loan eompanies. inist eoiii- 
 paniis. ijas companies, street railway companies, elwtrie 
 liuht '■!■ power companies, teleu'rajih companies, tele 
 ph.KH- eoiii|)anies. steam railway companies, etc. 
 
 (tij The movements on the stock exehani,'e of thost> 
 stocks in which life companits can invest, should ht» 
 <'arefnlly followed, roirether with such selected nows 
 ciineerninv the moiicy market and the price> of securities 
 as can he ii'encrall.v relied upon. 
 
 (7) lie should aci|uaint himself with the terms and 
 eonditioiis niidiM- which compinies are promoted, and 
 otVerini^s ( r additidiial eapit.il in old companies made, 
 under which c( nveisieiis in -reorilies are proposed, and 
 liends and deiienturo; teiidi'i-ed. 
 
 tS) Ascertain, from year to year, what |iroportion 
 
 of thi' ditVereiit lifi assurai uiipaiiies' funds is 
 
 iiives1((i in the ditVer'Ut classes of seeuiMiies. and en- 
 deavor io <ieterminc ,he reasons which influence the 
 companies in invest iiit: as tln-y ilo. .Vnal.v'e tlie averairo 
 rale of interest eai'iKMl on the fumls. 
 
 (!)} En<leav<ir to ohiain accurate knowledire of land 
 and projierty values. This will he ditTieull. and the 
 student will nevei- ^ei throuirh addiiii: to Ids inforiiuition 
 alone these lines. Study carefully the reports of 
 ap]>niisers endeavor to eulrivate the accpiaintaiiee of 
 profr-ssional valuators, jio out with them when inakiu<i 
 inspections. a:.d endeavor to ii^eertfiin their reasons for 
 |,!;>(.in(r \]u. valnes which th'^'- do up(!!i the pr".>perty 
 
Like Assiikanck Obganization. 
 
 37 
 
 l(M'iilitit'-i 
 
 nndiT considcfatidii. ('oiiditidiis in (litVciriii 
 slioiild be sliulii'il fis oupnrt unity MtVcrs. 
 
 (10 1 A kiiowlcd'.'c (if tlic .'I.Miifiits t.f 111'- law of 
 rontracts and of nal and piTM.nal i.iu|H-i'1y will hr. 
 
 iH'Iptlli. 
 
 (11) Opptii'tiinilics fnr making satisfafturv invcsi- 
 Micnts from tlio standpoint of liutli scciirily an<l intorost, 
 siiduld always \>v if.-o-iniz.'d and attention called n> 
 thcni. and in this ediuiei-tion it is well tn riMii-mhiT tin 
 six cardinal caiuins wliicli liavt- liccn laid dnwM i the List 
 tiv.- (.1" tii.-iii by Mr. A. II. Uailcy. F.l. \.i for the invest 
 lliellt of life assni:Mlce funds: 
 
 ( i. I Tlie i)i-ii ly necessity of seeiirinii ilie safety ot 
 the eapiial. 
 ■• (ii.) That the irmliest practi.-able rate of interesi 
 consistent with such security should be obtained. 
 (iii.) That the smaller proportion of the funds be 
 lield in readily cnnvertible securities, to provide 
 for current detiiands, 
 (iv.) That the larger proportion may safi-ly be in 
 
 vested in securities not readily convortihlo. 
 (V.) That as far as practicable, the capital r.hnuld 
 be employed to aid the life assurance l)iisini>-s. 
 (vi.) That the investments tie characterized by 
 
 variety. 
 (12) A careful review of every investment of the 
 company at lea.st once a year will prove most instructive 
 and k(M'p the assistant in dose actual touch with each se 
 cnrity. If a loan be in arrears, prompt action has invari- 
 ably proved to be the wisest coui-se. A dilatory policy 
 in dealintr with borrowers, has frc(piently prejudiced a 
 company's jiosition. and increa>-od its holdin?_'s of for.' 
 closed projiertics. In connection with properties which 
 have fallen into a comjiany's hands thron«,'h fore- 
 clos\n-es. one institiition at least, to my knowk-dse, has 
 made it a practi<'c to dispose of tlie hoUlings at tlie 
 earliest possilile opportunity, even at a loss when com- 
 pared with the orifrinal principal advanced and accunin- 
 lation of arrears. This policy, which the institution 
 believes has been iinqnestionahly the wisest and best, 
 has been followed by it for many years. 
 
.^m^jm^^' { 
 
 "^^.mi- 
 
 ^iH 
 
 KssKMIAI. KKATIKKS I.V 
 
 Necessity 
 for a Legal 
 Department. 
 
 (l:<) The fivcniy^c nito of interest earned on each 
 class ol' a life assuraiiee i-oiiipaiiy's investments, shonhl 
 he worked out eaeli year. Some important and far 
 naehinfr results may aeerue from this investigation. an<l 
 sdini- praetieal and usefid information he obtained. 
 
 TlIK lilKiAI. DkI'AKTMKNT. 
 
 it is <iuit<' si<j:nitii'aiit that many of tiie chief ortieers 
 of life assurance cnmi)anies in the Tnited States have 
 cither heeii lawyei-s. or have had a le<ral traininjr. Life 
 assurance involves so many interests, has so many ditVer- 
 cnt i)hases. and is so constantly chanjrinu: that it pre- 
 sents an interestintr ticlil for those who have had a pro- 
 fessional and Itusiness educr.tion. 
 
 While all our life as,suranee companies must, of 
 necessity, have their firm of solicitors. I do not know of 
 more than one ottiee ( i)ossil)ly two) 
 e()ui|)ped with a lc<ral department, with a 
 jn'ofessional harrister and solicitor as its 
 chief. It is to he wondered that such is 
 the ca.se. in view t>f the constant service 
 which such a department mi-rht render to the ecmipany. 
 ll may he oh.jeete.l that many of the didies which I may 
 class as proixM-ly helon-riny: to th.- le«ral department 
 should he left in tile hands of the solicitor of the com- 
 pand. hut can we not say. with -Mr. Thos. Marr, F.I..\.: 
 --■'it is all very well to say that solicitors shoidd jmide 
 you. hut it WKulti never do. and would indeed he imprae- 
 ticahle. to refer evei'y (piestiou to a solicitor." (Trans. 
 .\.-1. Soc. Kd.. T.-l:?tU 
 
 Alonjr the line of what Mr. Marr has said. Mr. .\. 
 K. Barrand. F.T.A. (2():^■^■^ .,.\..\.). says:— 
 
 "The time has <rone hy. if indeed it ever existed, 
 when the ordiimry le?al incidents arising in connection 
 with life assurance husiness were submitted to the com- 
 jiauy's solicitors for advii-e and direction." He goes on 
 to say that "it would he imi)ossihle. in practice, to sub- 
 mit every (|Uestion as to title, in the ease of claims and 
 surrenders, to a soli<'itor. c.n account of the expense and 
 delay thereby occasioned," and further that it would be 
 impracticable" to saddle the applicant with such legal 
 -expenses as miL'ht l)e ineurri-d." (.J.I..\., 33-205.) 
 
l.ItK A.SSIIBANCE OBOANIZATION. 
 
 39 
 
 As in SOI if tilt' otluT tlt'i)artnn'nts nf a life nssur- 
 
 aiice office, the chief aii<i the as.sistaiits 
 Those in Legal of the le<;al departineiit >houl<l ae((iure 
 Department intimate know ledL'e of the theory of life 
 
 should have assnianee. and as ainady pointed out. 
 Actuarial this can best he done l>y followini.' tin 
 
 Knowledge. conise of stndy prescribed by one of the 
 several actuarial bodies which have 
 luidertakcn. liy lectures and examinations, the important 
 work of life assui-ance education. 
 
 What service could a le<ral de|)artment render'.' 
 (1) The apiilicalion form and policy contract are 
 constantly reipiiriue; revision in the liiiht 
 Some Duties of new conditions and recent lejral deci- 
 of the Legal sions. .\'ew forms of jiolicy contracts are 
 Department. re(|uired for new plans of assurance. Here 
 the tei-hnical skill of the solicitor, combined 
 with his ])ractical life assurance knowled^ie. will he 
 utilized. Less than two years airo. application for life 
 assurance was made at the same time and l)y the same 
 person to two comi)anies. \otes were ^iven for the first 
 |)reinium in each case. The notes were not paid, and 
 death ensued some months after their mahirity. There 
 was a i)rovision in each contrai-t. thar upon non-pay- 
 ment of a note when due the policy ceased to he in force. 
 In the one company's contract. liowevtM-. this provision 
 was faulty, and in conse(|uence. the company was com- 
 pelled to pay the full amount, less the outstanding: note. 
 The contract of the other comi)any as drawn up cor- 
 rectly, and althotifih suit was threait .ed. it was never 
 proceeded with, and the company thus saved $1,000 
 from an iui.just claim. 
 
 (2) In view of the comparatively lar^'e amo\uits 
 involved in connection with claims arising; under policies 
 by way of deaths, maturity of endowments, etc.. it be- 
 comes most essential thar a valid and effective disehar<re 
 he obtained. It will he within the recollection of all 
 that one of our offices was compelled tti ])ay a policy 
 claim twice, throu<rh failure to pay it in the first instance 
 to the persons lefrally entitled to receive it. The offline 
 .acted on its supposed lettal knowledsre, instead of eon 
 
4(1 
 
 K88rNTIAL FEATTBT.S IW 
 
 siiltiiijr il> soliciitirs. Iliid il liiul an iiisido legnl dn- 
 [)iirliri('nt. it is aliimst ciitjiiii tli.it il would have born 
 s;iv(>d this 'iiMililf liidiility. 
 
 (:{) Kvcry ofTic- ri'ccivi's iilihnst dail\. a.ssiyniiioiits 
 and iidfitTs nf as>it;miiiiits, »{' its jMilicii's id' assuraiKM'. 
 and whilr it is the custom, when arkno\vlod«:ing such, t<> 
 disclaim any fcsponsiliility Inr the validity or clToct 
 th<'n'<d'. or to make any comiii.iit thereon, experience 
 has proved that ii is better, in tiie loii;.' run at least, to 
 call attention to any palpable mistake. If this is not 
 done, the purpose iiitemled mii:ht be defeated, or serious 
 ditHicully reiKlered to ilie parties in interest, and i)ossibly 
 at some subse pient period to the company. A life 
 assurance company is dependent ui>oii the public for 
 support, and the more thorou-rhly il studies llie 
 interests of it> clients, and the more fre. it is from 
 h'lral entantrleiiients, whether as phiinlitV of defen<laut. 
 the more jxipular will that comi>aiiy become. The treat- 
 ment of assijrnments is one which properly belongs ro 
 the le^'al <lepartment. 
 
 (4) Almost each one of the seven proviiu'cs has dis- 
 tinctive assurance laws, a condition which a company 
 has to reirard in the conduct of its business in these 
 <litfereiii province-, Their statutes are beiuir constantly 
 amended and icitealed. and these clianires no company 
 I'an atVord to ignore or treat with inditVereiice. It is 
 almo.st impossible for tin chief otticer to ^nve due atten- 
 tion to matters (d" this nature, which a well orffunized 
 Iciral departmeni would be in a much better position t<v 
 handle. 
 
 (."») While till' title lo property owned by. or mort- 
 <:ai,'ed to the company is passed and certified to hy the 
 company's resrular firm of solicitors, it has been found 
 profitable and desirable to have a competent person 
 check over their work. In fact, there arc many features 
 in connection with the coMi])any"s investments whicli 
 can be best attended to by a solicitor sueli as should 
 be at tlie hi-ad of a leiral department. 
 
 (()) There are often very nice lefral points to be 
 determined in connection with the surrender of policies 
 for cash, or for jiaid-uj) assurance, and in refrard to 
 
v'i^>.*\i*'%'^'>:.%.iiiit 
 
 ICJ*. 
 
 I.IFK As.sMlAMt. (IIM..\\I/MH>N. 
 
 11 
 
 !i)aiiN iipiiii |i(tlicics. Soiiit'tiiiu's (•a^sll surrender values 
 mid loans tire iipplitMl for which ii company has not 
 power to Krani. for the reason that uio axsurcd lius 
 ilesi;rnated as payee one who is unnliie to fjive a snlli- 
 eient dischary^e or transfer. 
 
 (7) There are always arisiny important mailers 
 iilatinj: to the provisions of the policy contract -modi - 
 
 lieaiions t( <'t special casns. permits, special clavises 
 
 to cover unusual risks, such as the engaRing in certain 
 hazardous occupations, or the residing in parts i)ro- 
 hihited l)y the terms of the policy. It is important that 
 thesi' l»e dealt with in a way to preserve the company's 
 riu'hts. Those trained in law ae(|uire a ureal proficiency 
 in all maiters pertaininir to eoiitiaet riu'lits. and it woidd 
 ap|ii ar tliat tin- inside so!i<'il(.r would lie invaluahle in 
 this connection. 
 
 (Sj In these days of expansion, several of our native 
 c(niipanies have alread.v Itranched out into other fields. 
 Inasmuch as each lountiy has its own special asMiir- 
 auce laws, or ordinances, it is essential f<ir the com- 
 pany, when enterini? a new Meld, to lieeome familiar 
 with the terms u|)on which business may he prosecuted 
 therein, file oliliyatioi.s imimsed upon tlie companies, as 
 well as the riirhls of ihe assured and llie heiieticiary. 
 
 (in The (|ues|ion of taxation on life a.ssurance is 
 liecomini: a serious and tryinir one. and w ill undouhtedl.v 
 at no distant date demand the iniiled attention of .he 
 
 lifi' assuranc )mpanies. Here is a subject which a 
 
 s.iliciim", haviim a technical knowledsic of life assiwi. ice. 
 should he able to handle intelli-rently and thorou'rhly. 
 The life assurance eom|ianies in their endeavors to have 
 wronji rectified, and imi)i'oper jiroposed legislation sub- 
 verted. hav(> felt that their hands would have been verv 
 materiall,v strengthened if they had been able to obtain 
 a stroiiLi lejial man, with a thorouo:h Unowled-ie of the 
 theory and practice of life asstirance. Sucli not ]»eiu'_' 
 available, the chief otfieers themselves have boon com 
 pelled to deal with Ihe dilTiculty. 
 
 (10) The investigation of doubtful claims, and the 
 as.sistinff of the company's regular solicitor in the worl<- 
 ing up of ea.ses in which the company is involved as 
 
"^^s 
 
 ^■'* mr 
 
 4S K^wr-xTiAi. Featib** in 
 
 pliimtitV or (icfiiiilaiil. is iiiiotlur illiixliaiion nt" wluTi- 
 the [icrsiiM liiiviiitf lc;r!il-iictiirial kin>\vlc(l;rf winild Ix-- 
 coiiii' invaliiablf to a coiniiaiiy. 
 
 (11) The fraiiiiri-: of iinpiitaiit i-csolutions or l>y- 
 laws fn'(|iitiitlv n-(|iiin's both jictiiaiial ami liual litt 
 assuraiuM' kiio\vK'< !>:<•. 
 
 ( 12 ) Life orticc, an- <'oiixtaiiily callid upon to rcplaw 
 
 poli«-ic- whicli liav.- 1 ii lost. Tli.' .ssiiin;; of duplicati's 
 
 or copies is oin' wliitli rt'i|iiircs mor( than tin- ordinai'V 
 cotisidiTatioii : and thr coiM'sr to lie piirsui'd wlioii the 
 life fails, under such circnnistancc>, calls for <,'icat can- 
 and caution, t'ascs have ar-scn ".here a policy has been 
 deelarcfl lost, a duplicate issii.-d. and at a suhscipieiit 
 period the ori«;iiial has tnrnecl up in the hands of an 
 assi<;n('(\ 
 
 (i:{) If the chief and stall' .d' the Icjial departni.-nt 
 have actuarial knowledu'c. they will he able to deal most 
 clVcctively with anial^annitions. re-insnraiices and re- 
 or<rani/.auons. While there have not been nniny such in 
 Canada, they ar.' bound to come, and the c<imi)any that 
 is best e«piipped lo treat with them, from a strong husi- 
 .less stan(l|)oint. will be the company rhal will have the 
 opportunities to do so. 
 
 (14") It would also be llic place of the lei;al dep.i.-l- 
 ment of a life assurance company to be constantly 
 watchiuf.' life assurance le<rislation, with the object of 
 endeavorinj: to intlueiice in every way possible all legis- 
 lati«m that will have a beneticial ctVect upon the business. 
 In this connection, life assurance officials both here and 
 in (Jn-at Britain have heretofore rendered material 
 benefit lo the assured, to Ibe state, ami to life assurance 
 frenerally. 
 
 Sutlii-ienI has been said to imlicate how intimately 
 H.ssociated law is with life 'issurance, and how essential 
 it is thai a life assurance company 
 should have a le>;al de|)artnient. with a 
 duly (pialiti.'d ctlicient lawyer at its 
 lu-ad. well versed in the theory and 
 practice of life assurance. At the same 
 time, let it be distinctly iniderstood that 
 \\i' advocate no interference by su> i department witlr 
 
 Company's 
 Regular 
 Solicitors 
 Indispensable. 
 
I. IKK .\nMKA\(K <»Rl.AM/ArH>V. 
 
 4.1 
 
 Legal Depart- 
 ment Valuable 
 in making Com- 
 pany Popular. 
 
 jiri' (•oiisliiiillv 
 
 thiisf iiiipoHaiit iiiid css.nt uil l.'u'iil iliilns wln.-li aloiir 
 
 fHii aiitl slitiiild III' |)i rfdiiiiid l>y tli miiiaiiy s >*. lii-itois. 
 
 All i|iii'Hli<tnH lit' title ti> iini|>4'ity. dpiiiiuiis as tn th«' 
 
 Valillity i)f issue t>( IkHhIs. ilelielltllles, etc.. suits, ete.. 
 
 aii<l many ottiei- uf the imixirtaiit matters wliieii are 
 constantly ai'isini:. slmnld always lie passed nvei- ti> the 
 eompany H solieitors. 
 
 Not only for llu' imipose nl" properly sat'eirnatdin;; 
 th.- alVairs of the otliee, is it desiralile that a leyal de- 
 pai-tmeiit should he instituted in every life assnranee 
 organization, hnl it is desirahle. I helieve. simply from 
 the stan<lpoiMt of the valnal)le assist- 
 aiiee rendered ill proiiiol iiii: new hiisi 
 Mess, and in makini: the eompany 
 popnlar an important consideration 
 in these days cd' keen rivalry and 
 
 iipetition. Trivial h'L'al (piestions 
 
 arisinir ahont which the otlliee would 
 ordinarily advis.- policy holders to consult their solici- 
 tors. Take tin case of a man h<il<linir policies in two 
 ditVercid compaines and hcintr desirous of elVe<'liii«j: it 
 reapportioiunent <d" the lieiietits ii hoth contracts if 
 one onice took up the matter and disposed id" it promptly 
 and etVecfively itself, wliile the other indi<'ated that it 
 
 would I sseutial for the policy htildcr to consult his 
 
 lawyer, thus causinj: him delay ainl e.\|)i'nse. it does 
 not rccpiire much consideration to determine the attitude 
 rlio policy holder would eidertaiu towards the respective 
 comi)aines. It will also he realized that a satistieiT 
 policy holder is a constant advertisement for his com- 
 pany, vhile a dissatisfied one can often nullify thc^ 
 efforts of an ajreiit. 
 
 The (pialifications lA' th<- chief of the leyal depart- 
 ment of a company have already heen rcferi-ed to. hut 
 what ahont the assistants? Tt iinist he 
 realized that it is impossihlc for a 
 vouni.' man to secure a full aiMuarial 
 trainine such as is re(|uired t> ol>- 
 tain the de-rree of F.I. A., and also 
 to (pialify as a solicitor: at the 
 same time, everv assistant sliotild realize the advis- 
 
 Qualifications 
 of Assistants 
 in Legal 
 Department. 
 
aliility of jM-i'piirini.' hmisrll' Im llif liii;l.''>i <>•> 
 
 III liis (Irpiiiiiiitiit. If lit' <ltM-s iKil tittiiin 'I ii wii 
 
 utliii- lit' limy lifiv.- tlic opportiinity ii. • nllu..' offlcf. 
 It ap|>.iirs III iiif tlial carli assiHtaiit in i.is <|fpartiiu'iit 
 sh.iiild first aim at ipialifyiiii; for the associate iloyrr.- 
 oi the Itistitiitf of Acliiarit's, ..r Famlty of Aftiuiries, 
 ..!• Acniarial Society of Aiif 'ica. Alter securing' thi" 
 iji-rrcc he nIioiiIiI then take up the study of law, which 
 Ih' c'ouUl <lo and still retain his position in the otlico as 
 all articled clerk to the solicitor who would be the chief 
 of the deparniieiil. The acpiisitidii uf his associate 
 dejjrec, and the ciiipletion of his law «'oursc, slionid 
 • liialify him. all other conditions heiiiy satisfa lory, for 
 the very resptnisiliic pnsition nf chief of the let;Hl dc 
 purtment. It may lie. Imwevir. thai snme will he cmi 
 tent with the actuarial de'_'rec. and aci|iiire a- best they 
 can the principles of law. This class of assistant may 
 no doubt prove valuable. Mr. .1. A. \\ . Deiichai, F.F.A.. 
 I-M.A., refers to this feature as follows: •'While much 
 IcL'al iiifiirmation may be acquired within a hife office 
 
 (particularly if it has a distinct Law depart rit ! by a 
 
 careful and assiduous use of all one's opportunities, no 
 tilastrow studeiil of Life Assurance should rest satisfied 
 with this, bill should take advantaue of the very e.\- 
 cellent Law classes atVorded by our riiiversity. Th.> 
 ciiiveniciit. though somewhat .-arly, hour of thes<' classes 
 (b to !) a.m. I places them within the reach of all 
 Assurance clerks." i Trans. Ins. & Act. Soe. of (ilas.. 1st 
 series-:i'_'4. I 
 
 There are other braiieh.-s of the work of life as.sur- 
 
 aiice which miu'ht be dealt with, but this 
 Agency paper has exteixled far beyond what was 
 
 Department, intended. The ayvucy deparfnu'iit— one 
 
 of rhe most imjiortant in the whol.- 
 organization— is one which has immense possibilities 
 
 for yoiintr men. 
 
 Then there is the adveitisini; and "literature" de- 
 partment. afVordiii'.' abundant scope for 
 
 Advertising oiitiinalitv and u'oi-d jiidtriiient a depart- 
 
 Department. meiit which every Canadian company 
 could atYord to maintain with ureal profit 
 
 and advantaae. 
 
I.rit A-.-»iK\\ii < till, \\i/. M K'v 
 
 >■> 
 
 Kv.Mi the juniors of tlif otTiro immiUI Ik- t.i%'uniz<<i 
 into .1 <l.'partinoiit and thcn-lty n-n.l.Tcd nioif ffTitrient, 
 wliilo such junior ilcparlnM-nt \voul(| s«>nv 
 Junio'- as ii i)roparatory school for ttic traininj; 
 
 Department, of assistants for the liiulicr (hpartimiifs 
 The foMowinu ipiotation coiiccrninu' th-' 
 juni«ir. is appropriate :- 
 
 "A junior, althou^rh eniphtycd in the thud«cry of 
 (ifKicc work, can find that post sometimes most interesting. 
 "His cnrliesl duties will lie the tiling' away and « opy- 
 inu of letters. Here he can yet a most valualile insight 
 to the liusiness he has chosen for he should not he 
 eontcni with simply perforniinjr the nu'chanical worl , 
 hut he should thorouyhly trrasp the contents. Not only 
 will this he valuahle from the standpoint of heconiing 
 ac<piainted witli the various styles of composition, hut 
 ho hecoim^ of immediate assistance to his superior hy 
 heinn ahle to ^ive the information which the letter 
 contains. 
 
 "That comiiany is indeed fortuiuitc whose employees 
 from the hijrhest to the lowest re-rard its interests as if 
 they were their own. and who are cncouraired to do so." 
 An ohjectiuii may li-' raised hy some that the depnrt- 
 montalizinjr of the work of a modeiatris si/ed lite 
 assuraiH'c company, as simirested. would entail undm- 
 exiieir^e. To this I would answer, thai 
 experience has demonstrated over and 
 (iver auain that the liusiness that is 
 projierly systemali/ed and ettieieiitly 
 eonducted in every detail, is the liusiness 
 that has done host for tlm^^e in interest. Tt can he 
 attirmod that a life company so or<;aTii/.ed will make aiwl 
 save in its investment department aloiii' many times the 
 salarioi-; and other oxiienscs attendant u])on the ennduel 
 i>f that dopartieent. 
 
 Tt may alsn lie ohjrcted that many of the dutUN 
 which have hceii assitrned herein to the heads of the 
 din'erent dei.artnients should he dealt with hy the chief 
 .iftieer of the coinjiany AUhotiirh it may he admitted 
 liiai aii the deparl iiieiiT , should he Lroverned to a vvr- 
 lain extejit hv the ehi' . ■ "'icer. yet no one department 
 
 Advantage 
 of Depart- 
 mentalization. 
 
4(i KSSK-N riAI. l-KAll MS I.N 
 
 slit)ulil 1)1- Ml (K'pciuUMit ii|)<>Ji liiin that it reciuiivs ex- 
 traordiiiaiy (ivcisi'rht on his j)art. Should it not he his 
 iiiin to oitrani/c )iis ottico so Ihoroujihiy and efficiontiy 
 that he will hi- relieved of ))raetically all details, in order 
 that he may he afi'orded sutTieient freedom to superintend 
 the eompany's enlire operations' 
 
 In evei-y part of life assurance work, the one impor- 
 tant thin<r for the officers and their assistants to realize 
 is the advantajre of technical assurance education; and 
 if I may venture the opinion, I do not think this can 
 he too forcihly impressed \ipon the staff hy the ehief 
 officers and tiie heads of departments, nor can it he 
 taken hold of at too early an ajre hy the jiuiiors. 
 
 Technical assurance education is the essential to 
 success in these days of severe comi)etition — our husi- 
 ness conditions demand it. the discerninj.' puhlic are 
 quick to \])pi-eciate it. and are not slow to notice the 
 lack of it — our husiness associates take 
 Technical notice of it and jrive preferment to those 
 Assurance who jxissess it — m<ireover. the jrreat trust 
 Education, reposed in us is worthy of any sacrifice we 
 may make to secure it. The system of 
 technical education which has heen in vo<rue in the 
 Institute of Aetuai'ies of (ireat Rritain. the Faculty of 
 .Vctuaries of Scotland, the Actuarial Society of America, 
 etc.. has heen. without douht. the irreat factor in makin«r 
 for sound life assurance. 
 
 The life company that lays down the principle that 
 the chief of each one of its various departments shall 
 lie a thoroufrlily trained life assurance man, will have 
 the srrouirest. hest equipped and most in- 
 All Officers tellijrcnt cori)s of otTicers. In each depart- 
 should be ment of a life assurance company the officer 
 Actuaries, at its head would he a man infinitely hetter 
 fitted for dealing: with all its working's if 
 he had passed the examinations of one of the actuarial 
 hodies heretofore referred to; and T would, therefore, 
 lay it down as a most desirahle feature that all the 
 officers should he actuaries, and further, that it should 
 he the aim nf the office to develop younqr men in its 
 
I.IFK AsslKANt'K OKCAM/VTIOS. 
 
 47 
 
 aetuariiil (Icpartiiicnt. tliat they iiiiiy nccupy th<' iiiUKtr- 
 lant positions in tlu' company. 
 
 In one ortii'c aloin- in Enf.'ian(l there aiv at least 
 twenty-five Fellows antl Associates of tlie Institute of 
 Actuaries lioldintj responsible positions, and in several 
 of them there are as many as twelve, ten. nine, eipht, etc. 
 
 The followinir slatement of .Mr. John flrahaui, 
 president of Ins\irance and Actuarial Society, (ilas^row. 
 not only a|)plies to (ireat Britain, Ihe country to which 
 he refers, hut also most forcibly 1o this continent: — 
 
 "IIow important, then, is technical training and a 
 thoroup;h knowlcd^re of actuarial science here: for in 
 the majority of instances whei-e disast(>r has overtaken 
 life companies, it has been not so much through fraud, 
 but in consequence of sheer incapacity on the part of 
 those in charge."