Actuarial Activity in General Insurance in the Northern Countries of Europe

Although actuaries have been connected with life insurance business for more than 100 years, it is only more recently that actuarial activities in the non-life branches have taken place.The problem of calculating level premiums for the steadily increasing risk in life insurance immediately calls for mathematical ability. The need for mathematically trained specialists is not so easily seen when the problem is to calculate premium rates for fire and casualty insurances. The premium rates in this field have to a great extent been fixed by persons with none or very little knowledge in mathematics and mathematical statistics. When the market conditions allow for considerable margins this arrangement works out very well. The statistical investigation needed later on for controlling the premium rates is not very complicated, and the premium rates can if necessary be changed on short notice. A mistake made in the premium stipulation, will generally not have a lasting effect. In life insurance on the other hand, the contracts often stretch over many years and a mistake in the premium stipulation cannot easily be corrected. These circumstances explain the reason why actuaries have been more often engaged in life insurance than in the fire and casualty branches.But a closer study shows that from a mathematical point of view, the proper fixing of premium rates is often more complicated in the fire and casualty branches than in life. In the fire and casualty field a steady changing of market conditions seems to take place. The competition grows keener and keener, and the margins are cut down. Sooner or later we reach a point where it is of vital importance to know as exactly as possible where we stand. This means that we have to study the risk premium, the security loading and the expense loading separately, and to estimate these quantities with the highest efficiency.