Opportunities in Insurance for the Mathematically Trained
Harwood Rosser · Mathematics Magazine · 1952
It is a common assumption that anyone working for an insurance company is a salesman. This is understandable, since insurance employees not in the selling end have relatively little contact with the public. To the average policyholder, the agent is not merely a representative of the Company; he is the Company. The Company encourages this attitude, even to the extent of arranging for him to deliver claim checks. This is good psychology on both sides. The salesman is a feature I almost said necessary evil of the insurance business, especially life insurance. It takes skill and persistence to persuade a man that he needs an insurance policy more than he does a new car, a television set, or some golf clubs. The history of savings bank life insurance, which is over-thecounter insurance, purchased on the initiative of the insured, is a sad commentary on human nature. For life insurance is the only form of insurance where a man will not suffer personally, as a result of being insufficiently insured, if the event insured against occurs. We in the Home Office have our family quarrels with the agents. Yet we realize that we are all' on the same team, even if they carry the ball most of the time. I doubt that I could carry it as well. However, my purpose is not to sell you an insurance policy, nor to proselyte you into selling insurance. Nor do the future salesmen in your classes need much mathematical background, except perhaps to figure their income tax returns. Insurance of any kind is a risk-spreading device. It is not something for nothing. Some will get more than they paid in; others will get less, either directly, or through forfeited investment opportunities. Many people do not realize that life insurance shares this fundamental aspect of all insurance, and unjust complaints sometimes ensue. The respect in which life insurance differs from all other forms is its long-term nature. Fire, automobile, and other casualty insurance policies are usually written for periods of one to three years. At 'the end of that time, the Company may change its rates, or refuse outright to renew. But it never has this opportunity on a life policy, once it is issued, if you keep up the payments, no matter what the state of your health. This means that the guarantees in a life policy are not for a few years, but sometimes for as much as a century. They customarily cover the lifetimes of the insured and his ultimate beneficiary, who may not be born for another fifty years. To make estimates in advance over such a long period, discounting for interest, and taking account