of deaths among the inhabitants is such, that the excess or diminution in any one year, above or below the average number, seldom exceeds a small fractional part of the whole; say, from one-thirteenth to one-fifteenth part-this deviation from the average will be less, in proportion as the aggregate multitude is greater; and if from this multitude be excluded the aged, the infants, and those portions of the population which are most exposed to the casual effects of disease and want, the variations from the mean number of deaths will be still less.

Thanks to long experience and attentive observation, it is now no longer a difficult problem to find the probability of the duration of human existence, at any given period of age; and hence to calculate what sum of money, paid annually, by a person of such an age, during life, will be equivalent to a certain sum to be assured to his executors after death. Various tables have been constructed to shew this, by inspection; but that which is formed from observations on the duration of human life among the inhabitants of Northampton, has for many years been the basis of the premiums taken by most of the Assurance Companies; some few of them have employed, with certain modifications, the observations on the mortality among the inhabitants of Carlisle; while others have constructed for themselves tables, of which it is difficult to say from what source they are taken. 'Many offices,' says Mr. Babbage, seem to have arbitrarily altered those of the Equitable (the Northampton) according to their own fancy. For several of these it would be difficult to find any table of mortality which should represent their premiums; but the University Assurance Society stand unrivalled in their ingenuity, and have succeeded in manufacturing tables which it is impossible to derive from any rates of mortality, real or imaginary.' This is not the only slur which Mr. Babbage has taken occasion to throw on this learned Assurance Company, which must necessarily boast, among its members, so many senior wranglers and optimists: but daily experience shews that, in conducting worldly affairs, mere abstract mathematicians are not among the wisest of mankind. The theorem of De Moivre, which makes the probability of human existence, at any given age, equal to half the complement of that age to 86, answers within a fraction to the Northampton table, excepting at the higher ages; and this simple rule is easy of application and well worthy of recollection.

Seeing, therefore, that the average mortality among a whole population will necessarily be much greater than that among a selection from it, composed of the middle and higher ranks of society, from which infancy, old age, poverty, and disease, are excluded (and such is the selection at all the Assurance Offices),

it follows, that the actual rate of mortality among assurers is much below that which appears by tables constructed for the whole population; and consequently, that the annual premiums required to be paid by the offices are very much higher than they ought to be in most of them the excess is about 30 per cent., or one-third nearly. It is from this overcharge,-from the calculations of the tables being made at three per cent., while the money received by the offices is lent out at four or five per cent.,from the interest derived from an accumulating capital,-forfeiture of policies, and some other petty sources, that the profits of some of the Assurance Companies have become so enormous as they are. How these profits are disposed of we shall presently see.

The Northampton tables,' says Mr. Babbage, are, of any which possess the slightest reputation, those least calculated to represent the probable rate of mortality among a body of insurers; they are tables which an experience of thirty years has proved to be (for this purpose) erroneous throughout a large part, in the proportion of two to one. Yet fourteen of the Assurance Offices use these tables, so highly favourable to their gains, and so much the reverse to the assurers. Mr. Babbage, in lieu of them, would recommend the substitution of a table, actually constructed from the deaths occurring among a large body of persons of a selected class, such as is above mentioned. He observes that the records of the Equitable Society, which has been established above sixty years, and the Amicable, which has existed above a century, might of themselves furnish authentic materials for such a table. We doubt, indeed, whether, if an honest table of this kind were constructed, any of the Societies would make use of it, though a body of men, as those of the legal, clerical, or medical professions, officers of the army or navy, &c., mutually assuring each other, might employ such a table to much advantage to themselves, by reason of the great diminution of the premiums that would in that case be required. By the following illustration, the immense difference may be seen between making an assurance by such a table and by those at present in use:

The system of a mutual assurance society, in one of its simplest forms, may be illustrated by supposing it to consist of one thousand persons, each aged twenty, and in good health, and with such certificates of a good constitution as the Equitable Society would admit. Each individual should pay 17. 9s. 6d. to receive 100l. on his death. The premiums at the end of the first year, increased by the interest on them, would amount to 1468/; and the payments to be made on account of six deaths being deducted, would leave 8681. At the commencement of the second year the 994 payments of 17. 9s. 6d. each, added to the 80s., would produce 2334/., which at the end of the year

would

would amount to 24041.; from this the claims due from the average number of deaths being substracted would leave 18041. The 988 payments of the next year added to this sum, would at the end of the third year, after deducting six claims, produce 27591. The capital of the society at the end of the first, second, and third years, would be as follows:'At the end of the 1st year 8681. after paying 6001, claims.

2d year 18041.
3d year 27591.
&c. &c.

For many years this capital would continue to increase, until the sum arising from the diminished number of contributors would exactly pay the number of the annual claimants. After this, the annual income arising from the premiums being insufficient to pay the annual claims, a portion of the accumulated capital must each year be taken to make up the sum required for that purpose, until after about eighty years; when the remains of this fund, together with the premium paid at the beginning of the last year, will be just sufficient to pay the last claim.'-pp. xxii-xxiv.

'If we now suppose that the sum annually paid by each of the thousand assurers had been one-third larger, or 1. 19s. 4d. each, which is less than many Assurance Companies at present charge, (the Equitable is 21. 3s. 7d.) then, besides the sums already mentioned, the society would possess

At the end of the 1st year

The annual payments, before the additional third was taken, were sufficient to form a fund which would exactly pay all the policies as they became claims, and itself be exhausted on the payment of the last. If, therefore, the deaths took place in the manner supposed, no further sum of money would be required to meet all the demands, and these additional sums would be really profit; and, unlike the former, they will continue to increase until the last claim is paid.

At the termination of this society of mutual assurers there will, therefore, remain a large unappropriated capital.'-pp. xxvii-xxviii.

With such premiums, therefore, as are now demanded, a large excess of capital beyond the amount of the claims must, necessarily, in a very few years, accrue; and the practice of most of the Companies is to distribute a certain portion, or the whole, of the surplus beyond what may be necessary to satisfy the claims, at certain periodical intervals, among the assurers. The portion thus distributed is usually called a bonus, a term which is well understood, from the Chancellor of the Exchequer to the broker of 'Changealley, to mean a good thing,-so very good, we suppose, that it has been thought entitled to the honour of appearing in the most worthy gender.' This bonus is, however, strictly speaking, a return

of

of the surplus premiums with interest derived from them, and therefore belongs of right to the assurers. If the assurer was always certain of getting his just proportion of this good thing, either to be added to the amount of his policy, or applied to the reduction of his annual premium, it would be a matter of little moment at what office he assured his life; but as this is very far from being the case, we might almost say in any of them, it is of some importance that he should be in possession of circumstances, on which he may found his judgment in the selection of an office, wherein to make his assurance on the most favourable terms.

The following are the Companies for the assurance for lives, and insurance against fires, losses by shipwreck, &c. enumerated by Mr. Babbage: but the list is not complete.

These Companies may be considered as constituted on three different plans. The first is, where all the assurers for the whole term of life are mutually responsible. They participate in the profits, and are subject to calls to replace any loss or deficiency in the funds. This responsibility, however, is merely nominal, as

a large

a large surplus fund must necessarily accumulate from the circumstances already noticed so highly favourable to the offices. A capital to commence with is wholly unnecessary, as the receipts continue to be annually paid in, and are placed at interest in the public securities, long before any large demands can take place, and there is no danger of losses occurring from bad debts. Of societies founded on this principle of mutual assurance, there are established in London

The Amicable

Equitable

The London Life Assurance and
Norwich Life

and in these the assurers are entitled to share in the profits; but they do not share in the whole of them, one-third being generally reserved.

The second principle on which Institutions of this kind are founded, is that of a number of persons forming a company, and raising a capital among themselves, as a guarantee for the payment of all contracts or policies which they may effect. Security to the assured, and freedom from responsibility, are the supposed advantages held out by this plan; in consideration of which the rates charged are generally as high as the preceding, though the exact sums only, named in the policies, are paid on the deaths of the parties, without additions or deductions. The offices which have adopted this plan are

The Albion

British Commercial
Eagle

Globe

London Assurance

The Pelican
Royal Exchange
Sun

West of England
Westminster.

Whatever advantages may be supposed to attach to these offices, the assurer most undoubtedly pays very high for a security, that is merely nominal, or at least unnecessary; but we suppose the greater number of the assurers are proprietors, and as such share in the profits of the concern.

The third principle consists of a combination of these two. The proprietors subscribe a capital, relieve the assured from all loss and responsibility, take one portion of the profits to pay the interest of the capital, and give the assured, at certain intervals, the remainder. The Rock, the Alliance, the Guardian, the Palladium, and some others, are founded on this principle, which is, perhaps, as good as any other, though it curtails the amount of the additions which would otherwise be made to those assurers who are not proprietors, or holders of shares.

From a table given by Mr. Morgan, the actuary of the Equitable, formed from above one hundred and fifty thousand instances, Mr. Babbage concludes that forty-seven is about the average age at which

persons