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Actuaries

History

The term actuary was used for the first time in 1762 in the charter for the Equitable Society of London, which was the first life insurance company to use scientific data in figuring premiums. The basis of actuarial work was laid in early 17th-century France, when Blaise Pascal and Pierre de Fermat derived an important method of calculating actuarial probabilities, resulting in what is now termed the science of probability.

The first mortality table was produced in the late 17th century, when Edmund Halley noticed the regularity of various social phenomena, including the excess of male over female births. Halley, an English astronomer for whom Halley's Comet is named, is known as the father of life insurance. As more complex forms of insurance were developed in the 19th century, the need for actuaries grew.

In 1889, a small group of qualified actuaries formed the Actuarial Society of America. Two classes of members, fellows and associates, were created seven years later, and special examinations were developed to determine membership eligibility. Forms of these examinations are still used today. By 1909 the American Institute of Actuaries was created, and in 1949 these two groups consolidated into the present Society of Actuaries.

In 1911, the Casualty Actuary Society was formed in response to the development of workers' compensation laws. The compensation laws opened up many new fields of insurance, and the Casualty Actuarial Society has since moved into all aspects of property and liability insurance.

OASDI (Old Age, Survivors, and Disability Insurance), now known as Social Security, was created in 1935 and expanded the work of pension actuaries. The creation of this program greatly impacted the development, philosophy, and structure of private pension programs. The American Society of Pension Actuaries (now known as the American Society of Pension Professionals & Actuaries) was formed in 1966; its members provide services to over 30 percent of the qualified retirement plans in the United States.

The first actuaries were concerned primarily with statistical, mathematical, and financial calculations needed in the rapidly growing field. Today they deal with problems of investment, selection of risk factors for insurance, agents' compensation, social insurance, taxation, development of policy forms, and many other aspects of insurance. Once considered mathematicians, actuaries are now referred to as "financial architects" and "social mathematicians" because they use their unique combination of numerical, analytical, and business skills to solve a variety of social and financial problems.