278 ESSAY ON PROBABILITIES. 



in constructing rules for their own guidance, they should 

 be careful not to fall into such errors on the safe side 

 as become errors on the wrong side when circum- 

 stances change. I hold an opinion which I think, from 

 his writings, was also that of the late Mr. Morgan ; 

 namely, that an insurance office must consider the last 

 half century as having been a period of circumstances 

 singularly favourable for the formation and growth of 

 such institutions, more so than it would be wise to expect 

 for the future. Perhaps from five to ten years is the 

 length of time for which the preceding average should 

 be computed. 



The valuations should, if possible, be made yearly. 

 No check which can be devised is so likely to be useful 

 as yearly valuation ; and it is absolutely necessary to any 

 system which gives the real amount of their premiums 

 to the insured. In a mutual insurance office, starting 

 without much capital, it would be madness to rest upon 

 any tables and to neglect valuations ; unless, as before 

 remarked, the returns made to the insured are meant to 

 be very much below their payments. And in conjunction 

 with yearly valuations should come yearly divisions of 

 profits, or something equivalent. There is, I believe, a 

 prejudice against frequent divisions in the minds of 

 many who have derived their ideas on the subject from 

 the former practice of offices. But surely, provided that 

 the proper amount of profit be divided yearly, and no 

 more, it matters nothing whether the apportionment be 

 made seven times in seven years, or once only, as far as 

 security is concerned. For it is to be remembered, that 

 yearly division of profits does not imply an annual expen- 

 diture, but only an annual distribution of future expen- 

 diture. In septennial divisions, one of two things always 

 takes place : either the profits are made contingent upon 

 a party surviving one or more periods of division, which 

 creates great inequalities between the lot of different 

 persons (the very thing an insurance office was intended 

 to avoid); or it declares beforehand, what the profits 

 shall be during periods of seven years. In the latter 



