11 Feb Insurance Matters: A brief history of life (insurance)
By Bruce Sackrison
Like every great invention, life insurance has a history. I’ll highlight parts of that history I find interesting. Maybe you’ll find it interesting too.
The early Romans, plumbing and burial clubs
The Romans loved to perfect things they borrowed from others. Like plumbing. Many of the basics of modern plumbing date to the Romans’ love for a good hot bath.
The Romans loved life insurance too.
Roman burial clubs date to 100 years before Christ. They borrowed the idea from the early Greeks. If you were a member of the club, and you died, the other members of the club were obligated to care for your family.
It lasted for five centuries. But when Rome fell, so did life insurance. And plumbing.
The Brits and modern life insurance
Life insurance as we know it today was invented in London, England, in 1706. (There’s a piece of trivia for the next family get-together.)
A group of 2,000 people formed a company called the Amicable Society for a Perpetual Assurance Office. The name didn’t roll off the tongue, but it worked.
They each bought shares with a contribution every year. When someone died, the total amount collected was divided up among the families of those who had passed away that year. The amount the family received was determined by the number of shares they had purchased. It was an amicable solution to poverty caused by death.
Mathematics, actuaries and mortality tables
It didn’t take long for everyone to realize that they had to charge people of different ages different amounts for their shares. Which was fine, for a while, until James Dodson was refused admission to the Amicable Society because he was too old.
Dodson wouldn’t take that lying down.
So, in 1762, he and his disciple Edward Rowe Mores, founded the Society for Equitable Assurances on Lives and Survivorship. Another catchy name.
Mores coined the term “actuary” to mean the person who used mathematics to create mortality tables. These tables predicted someone’s likelihood of dying at a certain age. Actuarial tables became the basis of all modern life insurance.
America, ministers and Montgomery Ward
Life insurance soon jumped the pond.
In 1759, the Presbyterians created the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers (I love these long names!).
Not to be outdone, the Episcopalians did the same thing for their ministers 10 years later.
The life insurance industry grew, but it had a really rocky and unstable history through the 1800s.
Fortunately, by 1875, it had settled down and started being trusted by the “working man” because of the Widows and Orphans Friendly Society. You know them better by their later name… the Prudential.
In 1911, group life insurance had become all the rage, after the Equitable Life Assurance Society started insuring employees of large companies. One of the largest employers offering group life insurance was Montgomery Ward. For some of us, that name is a blast from the past!
The modern era
By 1930, more than 120 million life insurance policies were in force. You weren’t “with it” if you didn’t have a life policy.
Sadly, after the turn of our new century, we’ve seen the popularity of life insurance shrink. Fewer people carry life insurance now than in decades past.
The need is greater than ever. Families still need protection when a breadwinner passes away. Funding for college is more important than ever.
Talk to your local agent about life insurance soon. If you don’t have an agent, feel free to contact me with any questions.
Thanks for taking this stroll through history with me.
Bruce Sackrison is a Napa Valley Register columnist who will write about property and casualty insurance matters.
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