James Dodson's 'First Lecture on Insurances', 1756
James Dodson's First Lecture on Insurances is a landmark original text that first set down the actuarial basis for a mutual life assurance company to operate demonstrating how a 'Corperation for Insuring Lives' could be created and sustain a profitable business that would deliver claim payments to beneficiaries of policyholders paying level premiums for the whole of life or for limited terms.
Premiums payable according to age were calculated mathematically from mortality experience and projections of future claims on the overall fund were demonstrated. The original text by Dodson, however, disappeared in the years after his death in November 1757 and our knowledge of it comes from two handwritten copies transcribed from the original for the Society for Equitable Assurances on Lives and Survivorships. The Archive holds both copies.
In an appendix to his history of the Society, Equitable Assurances (1962), Maurice Ogborn explains how James Dodson's original outlines were written out for the Society's use by arrangement through Dodson's executor, William Mountaine, who also advised the Society on mathematical questions. The lectures may have been written out by Dodson's son, also James Dodson or by John Edwards, both of whom were 'actuaries' to the Society. The 'Lecture' was the 'f'irst investigation into the principles of operation of a life assurance business' (M E Ogborn, 1962). 'Dodson indulges in a certain amount of sensitivity testing both the mortality rates and the investment assumptions ... A proposal for the distribution of surplus is included too. [Dodson's] insight into the workings of his projected life insurance office... is remarkable.' (S. Haberman and T A Sibbett (editors), History of Actuarial Science, 1995).
A transcription of James Dodson's manuscript 'lecture' with commentary is available by kind permission of Thomas G Kabele FSA: www.kabele.org/papers/dodsonms2.pdf