The aim of this paper is to illustrate the background of Industrial Assurance. The paper therefore contains as little technical detail as possible. Industrial Assurance is fundamentally similar to Ordinary Assurance, but the organization and administration of Industrial business varies from that of Ordinary business partly as a result of special legislation applicable to Industrial Assurance and partly as a result of the frequent collection of premiums at the home of the policyholder.

The technical and legal side of the business has been dealt with in various papers given before the Institute and the Students' Society. Little has been written of a descriptive character, and it is thought that an appreciation of the nature and day-to-day conduct of the business might help the student to get the technical side more easily into perspective. A problem in Industrial Assurance cannot be tackled from the point of view of Ordinary Assurance.

In the opening sentence of his paper on the valuation of industrial assurance policies given to the Institute in February 1937, W. J. Fulford said that his subject was essentially a practical one. Certainly the underlying actuarial principles are in no way different from those of the ordinary branch. In fact, the use of continuous functions gives the various valuation formulae a deceptive appearance of simplicity. There are none of the adjustments to allow for incidence of premium income, the formulae for which are the bane of the student grappling with the valuation of ordinary branch policies. The practical aspects, however, are very different. Reference to the published accounts of the Ordinary Offices shows that the new business, even for the largest, amounts only to a few hundred policies each week. In contrast in one large Industrial Office no fewer than 6000 new proposals are received each week while the total ‘offs’ in 1952 amounted to nearly 400,000. Since the Industrial Offices have a pre-disposition to hold their annual general meetings in late March or early April the actuary responsible for the annual valuation is faced with a formidable task if his figures are to relate to business on the books the previous 31st December, bearing in mind that the final results with recommendations have to be considered by the Board, decisions taken, and accounts published all before the Annual Meeting.

The following note was written in 1949 as a supplement to the official course of reading for students preparing to take Part IA of the Institute's examinations and is issued in duplicated form to students by the Actuarial Tuition Service. The editors feel that the note may be of interest to many who, like themselves, did not have the opportunity of reading it in the course of their studies; those more recent students who have read the note may like to refresh their memories.

Mr Perks has kindly given permission for publication, and wishes to express his thanks to H. W. Haycocks and G. V. Bayley for the helpful criticisms and suggestions that he received from them.