Abstract
Abstract The statistic that is obviously appropriate for calculating the premium to be charged for sickness indemnity insurance is the so-called “sickness rate”, namely the age-specific average number of days of covered sickness per person per annum. In fact most sickness experiences since early in the nineteenth century have been limited to the calculation of sickness rates for various covered durations of sickness. However if one is interested in the probability distribution of the length of sickness, as one would be if one wished to calculate the risk reserve required on a given portfolio of sickness indemnity contracts, it is necessary to measure both the probability of becoming sick in a specified interval and that of remaining sick for various periods thereafter. An early example of the calculation of these two different types of probability is the Leipzig sickness society's publication of its data on the first 34 weeks of sickness collected in the period 1887-1905. 1
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