How a 1583 London wager grew into the mathematics of modern life insurance
On 18 June 1583, at London's Royal Exchange, Richard Martin paid thirteen merchants 30 pounds. If William Gybbons died within a year, Martin would collect 400. It is the earliest known life insurance policy, and it took almost two more centuries before anyone could price such bets with real mathematics.
The impulse is much older. Roman burial clubs pooled dues to pay for members' funerals and help their families. A tablet dug up in Egypt in 1816 even records the rules and fees of one such society founded at Lanuvium in Italy around 133 AD, during Hadrian's reign. What those groups lacked was a way to connect age to risk.
Edmund Halley produced the first life table in 1693, but the statistical tools needed for proper pricing only matured in the 1750s. London's first life insurer, the Amicable Society, founded in 1706, charged members aged twelve to fifty-five the same per share. When the mathematician James Dodson tried to join, he was turned away for being too old, and he set out to build a fairer company. He never won a government charter, but in 1762 his follower Edward Rowe Mores launched the company Dodson had envisioned, known as the Equitable.
The Equitable was the world's first mutual insurer and set premiums according to age-based mortality rates, the model later schemes followed. Mores also coined the title actuary for the chief official. William Morgan, the first modern actuary, held the post from 1775 to 1830, and in 1776 the society completed the first actuarial valuation of its liabilities.
Across the Atlantic, sales began in the 1760s, after Presbyterian synods in Philadelphia and New York set up a fund for ministers' widows and children in 1759. It was a risky trade: of more than two dozen American life insurers started between 1787 and 1837, fewer than half a dozen survived. The core logic hasn't changed. Premiums still rise with age, drawn from mortality tables, though automated underwriting can now issue some policies in minutes rather than months.
Source: Life insurance
