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Risk and the Insurance Business in History

Editor(s):Pons, Jerònia
Pearson, Robin
Reviewer(s):Kingston, Chris

Published by EH.Net (May 2021)

Jerònia Pons and Robin Pearson, editors, Risk and the Insurance Business in History. Madrid: Fundación Mapfre, 2020. 290 pp. ISBN: 978-84-9844-753-8.

Reviewed for EH.Net by Chris Kingston, Department of Economics, Amherst College.


The history of insurance, as many authors have noted, has been relatively neglected by historians, including economic historians; but in recent years, with a steady growth of interest from scholars across a range of disciplines, the field has been expanding in geographic, historical and methodological scope.

In June 2019, two leading pioneers in the field, Jerònia Pons (University of Seville) and Robin Pearson (University of Hull) organized an international conference on “Risk and the Insurance Business in History” at the University of Seville. The conference brought together scholars of insurance and risk from a wide variety of academic and professional perspectives, with the explicit goal of creating a forum to encourage interdisciplinary dialogue. For insurance scholars, as this reviewer can attest, it was a rare and valuable opportunity to network, and a remarkably fertile, stimulating and enjoyable gathering. Hats off.

This collection of nine papers presented at the conference, edited by Pons and Pearson, is published with the support of the Mapfre Foundation, which also supported the conference itself. In a valuable and wide-ranging introduction, the editors weave together some of the disparate strands of the fragmented literatures on risk and insurance. Their survey takes in cultural theorists’ studies of how perceptions of risk, liability, and insurance vary across cultures; behavioral economists’ studies of the psychological anomalies that arise in decision-making under uncertainty; and sociologists and legal scholars’ approach to the insurance industry as a source of a kind of governance over risk-taking behavior among the insured. They also emphasize the omnipresent role of “the state” in multiple roles: as a provider of various kinds of insurance, as a source of risk through warfare, and as a fount of regulation that has the potential to constrain or encourage the development of insurance markets, organizations, and practices. The overarching point is to underscore the editors’ motivation for organizing the Seville conference: the diversity of approaches to the study of risk and insurance in history, and their belief in the potential for beneficial collaboration and cross-pollination.

While the quality of the contributions varies, and some might have benefited from more intensive editing, there are several very valuable papers in this collection that stretch the boundaries of the discipline and deserve to be widely read by those interested in insurance history and related fields.

Timothy Alborn tells the fascinating tale of how nineteenth-century British life insurers wrestled with the question of how to insure the lives of missionaries, soldiers and Victorian adventurers as they ventured to remote and frequently pestilential corners of the world and the Empire — areas about which the companies had only very scattered and incomplete information. These companies also made hesitant and frequently racially prejudiced forays into the business of insuring non-white colonial subjects of the Empire, even as it gradually became clear that the “civilized” locals often experienced better health and lower mortality in their native climes than did their European expatriate masters. In contrast, for the late nineteenth century American insurers whose efforts to expand into Latin America are adroitly described by Sharon Ann Murphy, the whole point was to insure the locals. Their efforts were however hampered by agency problems, ultimately collapsing as they abandoned the field to emergent domestic firms in the face of restrictive legislation, political uncertainty, and scandal.

Leonardo Caruana de las Cagigas and André Straus survey the legal development and the increasing role of state regulation of the insurance industry in France and Spain from the late eighteenth to the early twentieth century, as new forms of insurance and organizational innovations emerged. Development in Spain generally lagged behind France, enabling Spanish companies and regulators to take advantage of the lessons learned elsewhere, but divergent political histories ensured that paths of development remained distinct. Christofer Stadlin contrasts the development of employer accident and liability insurance as it was shaped by the regulatory environments in Germany and France in the late nineteenth century up until World War I, as seen through the eyes of the Zurich Insurance Company which was active in both markets.

José García-Ruiz presents a company history of the “bancassurance” relationship between the Spanish Banesto bank and Luyefe, Spain’s leading insurance company for much of the twentieth century, as the closely connected firms navigated a turbulent political landscape and ventured into new areas of business. Mikael Lönnborg, Peter Hedberg and Lars Karlsson describe how the Swedish insurance law of 1948 deliberately favored larger firms under the belief that the industry would become more efficient through economies of scale. Yet the resulting increase in concentration in the Swedish insurance industry failed to yield the hoped-for improvements in consumer welfare.

Other chapters consider the South African regulatory response to the 2008 global financial crisis (Greitjie Verhoef); the evolution of the legal and regulatory framework underpinning the development of fire insurance in nineteenth-century Canada, influenced by both French, British and American precedents (David Gilles and Sébastien Lanctôt); and how the valuation of American insurance companies’ assets was fudged, with the approval of the authorities, to enable them to satisfy solvency requirements during the financial crisis of the early 1930s (Luca Froelicher).

With such a wide breadth in focus, scope, and methodology, it is debatable whether this collection amounts to more than the sum of its parts. Pearson and Pons, seeking for a unifying theme in their introductory essay, draw attention to the congruence in time periods (most contributions deal with the nineteenth and early twentieth centuries) and to the influence of state regulation on decision-making by insurance companies; and certainly “the state,” in one way or another, looms large in all of these pieces, as it must in any study of modern insurance. The real significance of the volume is as a milestone for a field of study that is progressing vigorously, and that holds the promise of important and potentially fruitful interdisciplinary research questions that have barely begun to be explored. In this regard at least, the vision of the conference organizers, the editors of this volume, is fully vindicated.


Chris Kingston is the Richard S. Volpert ’56 Professor of Economics at Amherst College. He has published several papers on the history of marine insurance in eighteenth-century Britain and America and is working on a book provisionally entitled In Peril on the Sea: Institutional Change in Marine Insurance, 1720-1844.

Copyright (c) 2021 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (May 2021). All EH.Net reviews are archived at

Subject(s):Business History
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Other People’s Money: How Banking Worked in the Early American Republic

Author(s):Murphy, Sharon Ann
Reviewer(s):Goodspeed, Tyler Beck

Published by EH.Net (January 2018)

Sharon Ann Murphy, Other People’s Money: How Banking Worked in the Early American Republic. Baltimore: Johns Hopkins University Press, 2017. xii + 192 pp. $20 (paperback), ISBN: 978-1-421-42175-9.

Reviewed for EH.Net by Tyler Beck Goodspeed, Council of Economic Advisers.


Covering, when all is said and done, over half a millennium of American monetary history in a readable, introductory text of under two hundred pages is no mean feat. Doing so while also satisfying specialists in a relatively niche field and period of financial history is an especially daunting task. In Other People’s Money: How Banking Worked in the Early American Republic, Sharon Ann Murphy (Department of History, Providence College) has managed to achieve both.

The Bank War between Jackson and Biddle — perhaps, as Murphy notes, many students’ only encounter with antebellum American banking — provides an appropriate opening to Murphy’s account, introducing the principal cast of characters and illustrating the extent to which issues of money and banking permeated early American society, as well as the gravity with which ordinary Americans accordingly considered monetary matters.

Having thus set the stage, Murphy then proceeds through a packed “how it worked” series. Starting with the arrival of Columbus, in chapter 1, “How Money Worked,” she races through commodity money, fiat money, inflation, debt, and financing the American Revolution, contextualizing the economic concepts within the specific historical setting. In chapter 2, “How Banks Worked,” Murphy similarly catalogs the various sources of credit in colonial America, the assets and liabilities — particularly private bank notes — of colonial and antebellum banks, the incentives to incorporate, and the (First) Bank of the United States.

In chapter 3, “How Panics Worked,” we are then provided an account of the causes and dynamics of banking panics of the antebellum period that is both concise and consistent with the latest academic research. We here learn also of bimetallism, the Second Bank of the United States, and both public and private responses to panics, including public liability insurance, free banking, and clearinghouses. Chapter 4, “Experiments in Money and Banking,” expands on some of these topics, describing in greater depth the motivations and public discourse behind the movement toward both free banking and regulation, acute anxieties about fractional reserve banking generally, as well as the growing diversity of formal banking institutions. The chapter culminates with a succinct but accurate discussion of the Panic of 1857, including mention of the role of bank branching in mitigating the severity of the crisis.

Finally, and, for this reader, most interestingly, chapter 5 offers a brief but again academically sound overview of the fiscal challenges faced by the Union and Confederate governments in financing the Civil War, and how responses to those challenges intertwined with money and banking. This is perhaps the most data-intensive of the chapters, though quantitative evidence is seamlessly woven into a predominantly qualitative account. The chapter concludes with a short summary of the contours of American banking in the wake of the Civil War and, in particular, the National Bank Act.

It is important to be clear what this book is, and what it is not. It is an excellent introduction to how money and banking worked, not only in the early American republic, but in the post-Civil War national banking era as well. As such, it will likely offer a valuable companion for students of American economic and financial history, and even of early American political history, as well as informed lay-readers. It is not, and does not purport to be, an academic monograph intended for research historians or economic historians. Accordingly, footnotes are kept to a minimum, which makes for a smoother read, though at the cost of ability to investigate further. Murphy does, however, provide an extensive summary of suggested further reading, which will again be helpful for undergraduate and graduate students just beginning to explore the subject.

On the whole, Murphy has written what this financial historian considers a sound and reliable introductory or companion text to early American banking that is both engaging and easy-to-read, and at the same time broadly consistent with recent economic research on the topics covered. While students of economic and financial history generally would likely find it a useful text, my sense is that it might be of particular use to those more on the history side of economic history, than on the economic side of economic history.

My one idiosyncratic lament, which in any event may lie outside the scope of the book, is that I felt myself yearning for a more provocative embedded theme. As Murphy correctly notes throughout, many of the issues of, for example, note issuance and deposit insurance and branching and regulation may seem banal to the contemporary reader, but were intensely debated at the time. While the author addresses the political nature of these issues and responses to them, a stronger sense of the political contingency of the development of American banking would, I think, plant important questions in students’ minds. The path to 1913, or 1933, or, for that matter, 2008, was not at all linear, and a better sense of the alternative possible histories of American banking, and what may or may not have amplified the relative fragility of American banking system, would have been welcome.

Regardless, it is a fine text, made all the better by a fitting nod to Supreme Court Justice Louis Brandeis’ 1914 book by the same title, and a fascinating epilogue on the changing faces of the $20 bill.

Tyler Beck Goodspeed is a Senior Economist at the Council of Economic Advisers. He recently published Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772, and Famine and Finance: Credit and the Great Famine of Ireland.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (January 2018). All EH.Net reviews are archived at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):North America
Time Period(s):18th Century
19th Century

Advisory Board Members and Consulting Editors

Advisory Board Members

  • Gareth Austin, London School of Economics
  • Mansel Blackford, Ohio State University
  • Stephen Broadberry, Warwick University (UK)
  • Hank Gemery, Colby College
  • John Komlos, University of Munich
  • Anne McCants, Massachusetts Institute of Technology
  • Roger Middleton, University of Bristol
  • Douglass North, Washington University
  • Lawrence Officer, University of Illinois – Chicago
  • Martha Olney, University of California at Berkeley
  • Sevket Pamuk, Bogacizi University (Turkey)
  • Leandro Prados, Unversidad Carlos III de Madrid
  • Philip Scranton, Rutgers University
  • Richard Sylla, New York University
  • Peter Temin, Massachusetts Institute of Technology
  • Gavin Wright, Stanford University
  • Mira Wilkins, Florida International University
  • Jeffrey Williamson, Harvard University

Consulting Editors

  • Jeremy Atack, Vanderbilt University
  • Jim Bessen, Research on Innovation
  • Howard Bodenhorn, Lafayette College
  • William Childs, Ohio State University
  • Albert Churella, Southern Polytechnic State University
  • Gregory Clark, University of California – Davis
  • William Collins, Vanderbilt University
  • Dora Costa, MIT
  • Lee Craig, North Carolina State University
  • George Davis, Miami University of Ohio
  • Lynne Pierson Doti, Chapman University
  • Bernard Elbaum, Univeresity of California – Santa Cruz
  • Ross Emmett, Michigan State University
  • Stanley Engerman, University of Rochester
  • Ann Harper Fender, Gettysburg College
  • Price Fishback, University of Arizona
  • Donald Frey, Wake Forest University
  • Craig Gallet, California State University – Sacramento
  • S.M. Ghazanfar, University of Idaho
  • Claudia Goldin, Harvard University
  • Robert Greenfield, Fairleigh Dickinson University
  • Wayne Grove, LeMoyne College
  • Farley Grubb, University of Delaware
  • Mark Harrison, University of Warwick
  • Paul Hohenberg, Rensselaer Polytechnic Institute
  • Jane Humphries, Oxford University
  • Dan Jacoby, University of Washington – Bothell
  • John James, University of Virginia
  • Richard Keehn, University of Wisconsin – Parkside
  • John Komlos, University of Munich
  • Gary Libecap, University of Arizona
  • Mary MacKinnon, McGill University
  • Gail Makinen, Congressional Research Service
  • Robert Margo, Vanderbilt University
  • Stephen Margolis, North Carolina State University
  • Joseph Mason, Drexel University
  • Anne McCants, Massachusetts Institute of Technology
  • John McCusker, Trinity University
  • Ian McLean, University of Adelaide
  • Ronald Michener, University of Virginia
  • David Mitch, University of Maryland-Baltimore County
  • Carolyn Moehling, Yale University
  • Jon Moen, University of Mississippi
  • Andrew Morriss, Case Western Reserve University
  • John Munro, University of Toronto
  • Sharon Murphy, University of Virginia
  • John Murray, University of Toledo
  • Jerry Mushin, Victoria University of Wellington
  • Anthony O’Brien, Lehigh University
  • Kerry Odell, Scripps College
  • Lawrence Officer, University of Illinois – Chicago
  • Edwin Perkins, University of Southern California
  • Roger Ransom, University of California – Riverside
  • Angela Redish, University of British Columbia
  • Paul Rhode, University of North Carolina
  • Gary Richardson, University of California – Irvine
  • Hugh Rockoff, Rutgers University
  • Richard Salvucci, Trinity College
  • Joseph Santos, South Dakota State University
  • James Shepherd, Whitman College
  • Joanna Short, Augustana College
  • W. Gene Smiley, Marquette University
  • Fred Smith, Davidson College
  • Michael Smitka, Washington and Lee University
  • David St. Clair, California State University – Hayward
  • Richard Sullivan, Federal Reserve Bank of Kansas City
  • Richard Sylla, New York University
  • Peter Temin, MIT
  • Mark Thornton, Columbus State University
  • Pierre van der Eng, Austrailian National University
  • Simon Ville, University of Wollongong
  • Jennifer Wahl, Carleton College
  • David Wheelock, Federal Reserve Bank of St. Louis
  • Eugene White, Rutgers University
  • Lawrence White, New York University
  • Elmus Wicker, Indiana University
  • John Wood, Wake Forest University
  • Robert Wright, New York University
  • Bruce Yandle, Clemson University

Life Insurance in the United States through World War I

Sharon Ann Murphy

The first American life insurance enterprises can be traced back to the late colonial period. The Presbyterian Synods in Philadelphia and New York set up the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers in 1759; the Episcopalian ministers organized a similar fund in 1769. In the half century from 1787 to 1837, twenty-six companies offering life insurance to the general public opened their doors, but they rarely survived more than a couple of years and sold few policies [Figures 1 and 2]. The only early companies to experience much success in this line of business were the Pennsylvania Company for Insurances on Lives and Granting Annuities (chartered 1812), the Massachusetts Hospital Life Insurance Company (1818), the Baltimore Life Insurance Company (1830), the New York Life Insurance and Trust Company (1830), and the Girard Life Insurance, Annuity and Trust Company of Pennsylvania (1836). [See Table 1.]

Despite this tentative start, the life insurance industry did make some significant strides beginning in the 1830s [Figure 2]. Life insurance in force (the total death benefit payable on all existing policies) grew steadily from about $600,000 in 1830 to just under $5 million a decade later, with New York Life and Trust policies accounting for more than half of this latter amount. Over the next five years insurance in force almost tripled to $14.5 million before surging by 1850 to just under $100 million of life insurance spread among 48 companies. The top three companies – the Mutual Life Insurance Company of New York (1842), the Mutual Benefit Life Insurance Company of New Jersey (1845), and the Connecticut Mutual Life Insurance Company (1846) – accounted for more than half of this amount. The sudden success of life insurance during the 1840s can be attributed to two main developments – changes in legislation impacting life insurance and a shift in the corporate structure of companies towards mutualization.

Married Women’s Acts

Life insurance companies targeted women and children as the main beneficiaries of insurance, despite the fact that the majority of women were prevented by law from gaining the protection offered in the unfortunate event of their husband’s death. The first problem was that companies strictly adhered to the common law idea of insurable interest which required that any person taking out insurance on the life of another have a specific monetary interest in that person’s continued life; “affection” (i.e. the relationship of husband and wife or parent and child) was not considered adequate evidence of insurable interest. Additionally, married women could not enter into contracts on their own and therefore could not take out life insurance policies either on themselves (for the benefit of their children or husband) or directly on their husbands (for their own benefit). One way around this problem was for the husband to take out the policy on his own life and assign his wife or children as the beneficiaries. This arrangement proved to be flawed, however, since the policy was considered part of the husband’s estate and therefore could be claimed by any creditors of the insured.

New York’s 1840 Law

This dilemma did not pass unnoticed by promoters of life insurance who viewed it as one of the main stumbling blocks to the growth of the industry. The New York Life and Trust stood at the forefront of a campaign to pass a state law enabling women to procure life insurance policies protected from the claims of creditors. The law, which passed the New York state legislature on April 1, 1840, accomplished four important tasks. First, it established the right of a woman to enter into a contract of insurance on the life of her husband “by herself and in her name, or in the name of any third person, with his assent, as her trustee.” Second, that insurance would be “free from the claims of the representatives of her husband, or of any of his creditors” unless the annual premiums on the policy exceeded $300 (approximately the premium required to take out the maximum $10,000 policy on the life of a 40 year old). Third, in the event of the wife predeceasing the husband, the policy reverted to the children who were granted the same protection from creditors. Finally, as the law was interpreted by both companies and the courts, wives were not required to prove their monetary interest in the life of the insured, establishing for the first time an instance of insurable interest independent of pecuniary interest in the life of another.

By December of 1840, Maryland had enacted an identical law – copied word for word from the New York statute. The Massachusetts legislation of 1844 went one step further by protecting from the claims of creditors all policies procured “for the benefit of a married woman, whether effected by her, her husband, or any other person.” The 1851 New Jersey law was the most stringent, limiting annual premiums to only $100. In those states where a general law did not exist, new companies often had the New York law inserted into their charter, with these provisions being upheld by the state courts. For example, the Connecticut Mutual Life Insurance Company (1846), the North Carolina Mutual Life Insurance Company (1849), and the Jefferson Life Insurance Company of Cincinnati, Ohio (1850) all provided this protection in their charters despite the silence of their respective states on the issue.


The second important development of the 1840s was the emergence of mutual life insurance companies in which any annual profits were redistributed to the policyholders rather than to stockholders. Although mutual insurance was not a new concept – the Society for Equitable Assurances on Lives and Survivorships of London had been operating under the mutual plan since its establishment in 1762 and American marine and fire companies were commonly organized as mutuals – the first American mutual life companies did not begin issuing policies until the early 1840s. The main impetus for this shift to mutualization was the panic of 1837 and the resulting financial crisis, which combined to dampen the enthusiasm of investors for projects ranging from canals and railroads to banks and insurance companies. Between 1838 and 1846, only one life insurance company was able to raise the capital essential for organization on a stock basis. On the other hand, mutuals required little initial capital, relying instead on the premium payments from high-volume sales to pay any death claims. The New England Mutual Life Insurance Company (1835) issued its first policy in 1844 and the Mutual Life Insurance Company of New York (1842) began operation in 1843; at least fifteen more mutuals were chartered by 1849.

Aggressive Marketing

In order to achieve the necessary sales volume, mutual companies began to aggressively promote life insurance through advertisements, editorials, pamphlets, and soliciting agents. These marketing tactics broke with the traditionally staid practices of banks and insurance companies whereby advertisements generally had provided only the location of the local office and agents passively had accepted applications from customers who inquired directly at their office.

Advantages of Mutuality

The mutual marketing campaigns not only advanced life insurance in general but mutuality in particular, which held widespread appeal for the public at large. Policyholders who could not afford to own stock in a proprietary insurance company could now share in the financial success of the mutual companies, with any annual profits (the excess of invested premium income over death payments) being redistributed to the policyholders, often in the form of reduced premium payments. The rapid success of life insurance during the late 1840s, as seen in Figure 3, thus can be attributed both to this active marketing as well as to the appeal of mutual insurance itself.

Regulation and Stagnation after 1849

While many of these companies operated on a sound financial basis, the ease of formation opened the field to several fraudulent or fiscally unsound companies. Stock institutions, concerned both for the reputation of life insurance in general as well as with self-preservation, lobbied the New York state legislature for a law to limit the operation of mutual companies. On April 10, 1849 the legislature passed a law requiring all new insurance companies either incorporating or planning to do business in New York to possess $100,000 of capital stock. Two years later, the legislature passed a more stringent law obligating all life insurance companies to deposit $100,000 with the Comptroller of New York. While this capital requirement was readily met by most stock companies and by the more established New York-based mutual companies, it effectively dampened the movement toward mutualization until the 1890s. Additionally, twelve out-of-state companies ceased doing business in New York altogether, leaving only the New England Mutual and the Mutual Benefit of New Jersey to compete with the New York companies in one of the largest markets. These laws were also largely responsible for the decade-long stagnation in insurance sales beginning in 1849 [Figure 3].

The Civil War and Its Aftermath

By the end of the 1850s life insurance sales again began to increase, climbing to almost $200 million by 1862 before tripling to just under $600 million by the end of the Civil War; life insurance in force peaked at $2 billion in 1871 [Figures 3 and 4]. Several factors contributed to this renewed success. First, the establishment of insurance departments in Massachusetts (1856) and New York (1859) to oversee the operation of fire, marine, and life insurance companies stimulated public confidence in the financial soundness of the industry. Additionally, in 1861 the Massachusetts legislature passed a non-forfeiture law, which forbade companies from terminating policies for lack of premium payment. Instead, the law stipulated that policies be converted to term life policies and that companies pay any death claims that occurred during this term period [term policies are issued only for a stipulated number of years, require reapplication on a regular basis, and consequently command significantly lower annual premiums which rise rapidly with age]. This law was further strengthened in 1880 when Massachusetts mandated that policyholders have the additional option of receiving a cash surrender value for a forfeited policy.

The Civil War was another factor in this resurgence. Although the industry had no experience with mortality during war – particularly a war on American soil – and most policies contained clauses that voided them in the case of military service, several major companies decided to ensure war risks for an additional premium rate of 2% to 5%. While most companies just about broke even on these soldiers’ policies, the goodwill and publicity engendered with the payment of each death claim combined with a generally heightened awareness of mortality to greatly increase interest in life insurance. In the immediate postbellum period, investment in most industries increased dramatically and life insurance was no exception. Whereas only 43 companies existed on the eve of the war, the newfound popularity of life insurance resulted in the establishment of 107 companies between 1865 and 1870 [Figure 1].


The other major innovation in life insurance occurred in 1867 when the Equitable Life Assurance Society (1859) began issuing tontine or deferred dividend policies. While a portion of each premium payment went directly towards an ordinary insurance policy, another portion was deposited in an investment fund with a set maturity date (usually 10, 15, or 20 years) and a restricted group of participants. The beneficiaries of deceased policyholders received only the face value of the standard life component while participants who allowed their policy to lapse either received nothing or only a small cash surrender value. At the end of the stipulated period, the dividends that had accumulated in the fund were divided among the remaining participants. Agents often promoted these policies with inflated estimates of future returns – and always assured the potential investor that he would be a beneficiary of the high lapse rate and not one of the lapsing participants. Estimates indicate that approximately two-thirds of all life insurance policies in force in 1905 – at the height of the industry’s power – were deferred dividend plans.

Reorganization and Innovation

The success and profitability of life insurance companies bred stiff competition during the 1860s; the resulting market saturation and a general economic downtown combined to push the industry into a severe depression during the 1870s. While the more well-established companies such as the Mutual Life Insurance Company of New York, the New York Life Insurance Company (1843), and the Equitable Life Assurance Society were strong enough to weather the depression with few problems, most of the new corporations organized during the 1860s were unable to survive the downturn. All told, 98 life insurance companies went out of business between 1868 and 1877, with 46 ceasing operations during the depression years of 1871 to 1874 [Figure 1]. Of these, 32 failed outright, resulting in $35 million of losses for policyholders. It was 1888 before the amount of insurance in force surpassed that of its peak in 1870 [Figure 4].

Assessment and Fraternal Insurance Companies

Taking advantage of these problems within the industry were numerous assessment and fraternal benefit societies. Assessment or cooperative companies, as they were sometimes called, were associations in which each member was assessed a flat fee to provide the death benefit when another member died rather than paying an annual premium. The two main problems with these organizations were the uncertain number of assessments each year and the difficulty of maintaining membership levels. As members aged and death rates rose, the assessment societies found it difficult to recruit younger members willing to take on the increasing risks of assessments. By the turn of the century, most assessment companies had collapsed or reorganized as mutual companies.

Fraternal organizations were voluntary associations of people affiliated through ethnicity, religion, profession, or some other tie. Although fraternal societies had existed throughout the history of the United States, it was only in the postbellum era that they mushroomed in number and emerged as a major provider of life insurance, mainly for working-class Americans. While many fraternal societies initially issued insurance on an assessment basis, most soon switched to mutual insurance. By the turn of the century, the approximately 600 fraternal societies in existence provided over $5 billion in life insurance to their members, making them direct competitors of the major stock and mutual companies. Just 5 years later, membership was over 6 million with $8 billion of insurance in force [Figure 4].

Industrial Life Insurance

For the few successful life insurance companies organized during the 1860s and 1870s, innovation was the only means of avoiding failure. Aware that they could not compete with the major companies in a tight market, these emerging companies concentrated on markets previously ignored by the larger life insurance organizations – looking instead to the example of the fraternal benefit societies. Beginning in the mid-1870s, companies such as the John Hancock Company (1862), the Metropolitan Life Insurance Company (1868), and the Prudential Insurance Company of America (1875) started issuing industrial life insurance. Industrial insurance, which began in England in the late 1840s, targeted lower income families by providing policies in amounts as small as $100, as opposed to the thousands of dollars normally required for ordinary insurance. Premiums ranging from $0.05 to $0.65 were collected on a weekly basis, often by agents coming door-to-door, instead of on an annual, semi-annual, or quarterly basis by direct remittance to the company. Additionally, medical examinations were often not required and policies could be written to cover all members of the family instead of just the main breadwinner. While the number of policies written skyrocketed to over 51 million by 1919, industrial insurance remained only a fraction of the amount of life insurance in force throughout the period [Figures 4 and 5].

International Expansion

The major life insurance companies also quickly expanded into the global market. While numerous firms ventured abroad as early as the 1860s and 1870s, the most rapid international growth occurred between 1885 and 1905. By 1900, the Equitable was providing insurance in almost 100 nations and territories, the New York Life in almost 50 and the Mutual in about 20. The international premium income (excluding Canada) of these Big Three life insurance companies amounted to almost $50 million in 1905, covering over $1 billion of insurance in force.

The Armstrong Committee Investigation

In response to a multitude of newspaper articles portraying extravagant spending and political payoffs by executives at the Equitable Life Assurance Society – all at the expense of their policyholders – Superintendent Francis Hendricks of the New York Insurance Department reluctantly conducted an investigation of the company in 1905. His report substantiated these allegations and prompted the New York legislature to create a special committee, known as the Armstrong Committee, to examine the conduct of all life insurance companies operating within the state. Appointed chief counsel of the investigation was future United States Supreme Court Chief Justice Charles Evans Hughes. Among the abuses uncovered by the committee were interlocking directorates, the creation of subsidiary financial institutions to evade restrictions on investments, the use of proxy voting to frustrate policyholder control of mutuals, unlimited company expenses, tremendous spending for lobbying activities, rebating (the practice of returning to a new client a portion of their first premium payment as an incentive to take out a policy), the encouragement of policy lapses, and the condoning of “twisting” (a practice whereby agents misrepresented and libeled rival firms in order to convince a policyholder to sacrifice their existing policy and replace it with one from that agent). Additionally, the committee severely chastised the New York Insurance Department for permitting such malpractice to occur and recommended the enactment of a wide array of reform measures. These revelations induced numerous other states to conduct their own investigations, including New Jersey, Massachusetts, Ohio, Missouri, Wisconsin, Tennessee, Kentucky, Minnesota, and Nebraska.

New Regulations

In 1907, the New York legislature responded to the committee’s report by issuing a series of strict regulations specifying acceptable investments, limiting lobbying practices and campaign contributions, democratizing management through the elimination of proxy voting, standardizing policy forms, and limiting agent activities including rebating and twisting. Most devastating to the industry, however, were the prohibition of deferred dividend policies and the requirement of regular dividend payments to policyholders. Nineteen other states followed New York’s lead in adopting similar legislation but the dominance of New York in the insurance industry enabled it to assert considerable influence over a large percentage of the industry. The state invoked the Appleton Rule, a 1901 administrative rule devised by New York Deputy Superintendent of Insurance Henry D. Appleton that required life insurance companies to comply with New York legislation both in New York and in all other states in which they conducted business, as a condition of doing business in New York. As the Massachusetts insurance commissioner immediately recognized, “In a certain sense [New York’s] supervision will be a national supervision, as its companies do business in all the states.” The rule was officially incorporated into New York’s insurance laws in 1939 and remained both in effect and highly effective until the 1970s.

Continued Growth in the Early Twentieth Century

The Armstrong hearings and the ensuing legislation renewed public confidence in the safety of life insurance, resulting in a surge of new company organizations not seen since the 1860s. Whereas only 106 companies existed in 1904, another 288 were established in the ten years from 1905 to 1914 [Figure 1]. Life insurance in force likewise rose rapidly, increasing from $20 billion on the eve of the hearings to almost $46 billion by the end of World War I, with the share insured by the fraternal and assessment societies decreasing from 40% to less than a quarter [Figure 5].

Group Insurance

One major innovation to occur during these decades was the development of group insurance. In 1911 the Equitable Life Assurance Society wrote a policy covering the 125 employees of the Pantasote Leather Company, requiring neither individual applications nor medical examinations. The following year, the Equitable organized a group department to promote this new product and soon was insuring the employees of Montgomery Ward Company. By 1919, 29 companies wrote group policies, which amounted to over a half billion dollars worth of life insurance in force.

War Risk Insurance

Not included in Figure 5 is the War Risk insurance issued by the United States government during World War I. Beginning in April 1917, all active military personnel received a $4,500 insurance policy payable by the federal government in the case of death or disability. In October of the same year, the government began selling low-cost term life and disability insurance, without medical examination, to all active members of the military. War Risk insurance proved to be extremely popular during the war, reaching over $40 billion of life insurance in force by 1919. In the aftermath of the war, these term policies quickly declined to under $3 billion of life insurance in force, with many servicemen turning instead to the whole life policies offered by the stock and mutual companies. As was the case after the Civil War, life insurance sales rose dramatically after World War I, peaking at $117 billion of insurance in force in 1930. By the eve of the Great Depression there existed over 120 million life insurance policies – approximately equivalent to one policy for every man, woman, and child living in the United States at that time.

(Sharon Ann Murphy is a Ph.D. Candidate at the Corcoran Department of History, University of Virginia.)

References and Further Reading

Buley, R. Carlyle. The American Life Convention, 1906-1952: A Study in the History of Life Insurance. New York: Appleton-Century-Crofts, Inc., 1953.

Grant, H. Roger. Insurance Reform: Consumer Action in the Progressive Era. Ames, Iowa: Iowa State University Press, 1988.

Keller, Morton. The Life Insurance Enterprise, 1885-1910: A Study in the Limits of Corporate Power. Cambridge, MA: Belknap Press, 1963.

Kimball, Spencer L. Insurance and Public Policy: A Study in the Legal Implications of Social and Economic Public Policy, Based on Wisconsin Records 1835-1959. Madison, WI: University of Wisconsin Press, 1960.

Merkel, Philip L. “Going National: The Life Insurance Industry’s Campaign for Federal Regulation after the Civil War.” Business History Review 65 (Autumn 1991): 528-553.

North, Douglass. “Capital Accumulation in Life Insurance between the Civil War and the Investigation of 1905.” In Men in Business: Essays on the Historical Role of the Entrepreneur, edited by William Miller, 238-253. New York: Harper & Row Publishers, 1952.

Ransom, Roger L., and Richard Sutch. “Tontine Insurance and the Armstrong Investigation: A Case of Stifled Innovation, 1868-1905.” Journal of Economic History 47, no. 2 (June 1987): 379-390.

Stalson, J. Owen. Marketing Life Insurance: Its History in America. Cambridge, MA: Harvard University Press, 1942.

Table 1

Early American Life Insurance Companies, 1759-1844

Company Year Chartered Terminated Insurance in Force in 1840
Corp. for the Relief of Poor and Distressed Widows and Children of Presbyterian Ministers (Presbyterian Ministers Fund) 1759
Corporation for the Relief of the Widows and Children of Clergymen in the Communion of the Church of England in America (Episcopal Ministers Fund) 1769
Insurance Company of the State of Pennsylvania 1794 1798
Insurance Company of North America, PA 1794 1798
United Insurance Company, NY 1798 1802
New York Insurance Company 1798 1802
Pennsylvania Company for Insurances on Lives and Granting Annuities 1812 1872* 691,000
New York Mechanics Life & Fire 1812 1813
Dutchess County Fire, Marine & Life, NY 1814 1818
Massachusetts Hospital Life Insurance Company 1818 1867* 342,000
Union Insurance Company, NY 1818 1840
Aetna Insurance Company (mainly fire insurance; separate life company chartered in 1853) 1820 1853
Farmers Loan & Trust Company, NY 1822 1843
Baltimore Life Insurance Company 1830 1867 750,000 (est.)
New York Life Insurance & Trust Company 1830 1865* 2,880,000
Lawrenceburg Insurance Company 1832 1836
Mississippi Insurance Company 1833 1837
Protection Insurance Company, Mississippi 1833 1837
Ohio Life Ins. & Trust Co. (life policies appear to have been reinsured with New York Life & Trust in the late 1840s) 1834 1857 54,000
New England Mutual Life Insurance Company, Massachusetts (did not begin issuing policies until 1844) 1835 0
Ocean Mutual, Louisiana 1835 1839
Southern Life & Trust, Alabama 1836 1840
American Life Insurance & Trust Company, Baltimore 1836 1840
Girard Life Insurance, Annuity & Trust Company, Pennsylvania 1836 1894 723,000
Missouri Life & Trust 1837 1841
Missouri Mutual 1837 1841
Globe Life Insurance, Trust & Annuity Company, Pennsylvania 1837 1857
Odd Fellow Life Insurance and Trust Company, Pennsylvania 1840 1857
National of Pennsylvania 1841 1852
Mutual Life Insurance Company of New York 1842
New York Life Insurance Company 1843
State Mutual Life Assurance Company, Massachusetts 1844

*Date company ceased writing life insurance.

Citation: Murphy, Sharon. “Life Insurance in the United States through World War I”. EH.Net Encyclopedia, edited by Robert Whaples. August 14, 2002. URL


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Troesken, Werner
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Investing in Life: Insurance in Antebellum America

Author(s):Murphy, Sharon Ann
Reviewer(s):Hilt, Eric

Published by EH.Net (March 2012)

Sharon Ann Murphy, Investing in Life:  Insurance in Antebellum America.  Baltimore: Johns Hopkins, 2010.  xii + 395 pp. $65 (hardcover), ISBN: 978-0-8018-9624-8.

Reviewed for EH.Net by Eric Hilt, Department of Economics, Wellesley College.

The first half of the nineteenth century witnessed a transformation of the American economy that some historians have termed the “market revolution.”  Financial markets and institutions played a central role in this process, as banks proliferated and securities markets deepened.  In addition, beginning in the 1820s, insurance companies began to offer American households life insurance policies.  Over the course of the nineteenth century, the business expanded rapidly, and by 1870 more than $2 billion in life insurance was in force in the United States.  The companies that underwrote these policies became important intermediaries within the financial system.

Sharon Ann Murphy’s Investing in Life tells the story of the development of the American life insurance industry through the 1870s.  Best characterized as a business history of antebellum life insurance, Murphy utilizes a rich variety of archival records from early companies, as well as newspapers and printed sources, in presenting her narrative.  The book focuses on the strategies employed by the industry’s entrepreneurs to surmount the challenges they faced in establishing and expanding the business.

And the industry faced a great many challenges in its early history. During the first half of the nineteenth century, no tables of mortality or life expectancy existed for the American population, and the vital statistics data necessary for the computations to produce such a table were generally not collected.  Rate-setting was therefore initially based on tables utilized by the English industry, combined with a fair amount of guesswork.  Also legal issues, such as common law restrictions on the ability of married women to enter into contracts, and uncertainty over the claims of a deceased person’s creditors on the payouts of life insurance policies to their families, impeded the industry’s efforts to market their products.  In response to these challenges, prominent figures in the industry worked with both the federal government and state governments to begin collecting mortality data, and to reshape the law in ways more friendly to the industry.

Cultural barriers were important as well.  Murphy persuasively refutes the notion that Americans’ religious beliefs were somehow incompatible with purchasing life insurance, as some scholars have suggested.  Nonetheless, the European experience with using life insurance policies to gamble on the duration of other people’s lives (or worse) made the American population initially reluctant to utilize the industry’s services.  The industry therefore adhered to strict standards regarding “insurable interest” – one could only insure the life of another if a financial interest in that person’s life, such as a debt owed from that person, could be documented.  And the industry emphasized the benefits of safety and security that a life insurance policy could offer to the growing ranks of salaried, middle-class household heads in their advertising campaigns.  As the composition of the population changed, the industry began to change the products it offered as well, for example creating low-cost “industrial” policies for working-class employees in the second half of the nineteenth century.

Although the earliest life insurance corporations were organized as stock companies, starting in the mid-1830s mutuals were created, and quickly dominated the industry.  Murphy argues that the success of the mutual model was not due to the lower rates they initially charged, or to other organizational advantages, but rather to a marketing advantage: the contracts of mutuals offered the appeal of a long-term investment, since the policy holders were entitled to a share of the accumulated profits from their premium payments.  The mutuals thus advertised themselves as “savings institutions” to the middle class, offering something more than insurance to households who might have considered an account with a savings bank. The stock companies responded in the 1850s by offering policies on mutual plans, and by offering tontine or “deferred dividend” plans.

Murphy argues that the Civil War was a watershed event in the industry’s development.  It profoundly disrupted the operations of Northern companies that had underwritten policies on the lives of people residing in Southern states, including some that had insured the lives of slaves on behalf of their masters.  But more importantly, it created an opportunity for the industry to market its services to the men who served in the War, and associate itself with the Union’s cause.  In the end the extremely high rates charged for these policies made them relatively unattractive, and few were sold.  But Murphy argues the industry benefitted from the war because “it revealed to Americans the benefits of insurance” (p. 274), while raising awareness of mortality.  New civilian policies did indeed grow rapidly during the War.

The Civil War created considerable uncertainty over rate-setting, and the industry’s trade association responded by setting an industry standard for war rates.  At least since the 1850s, prominent firms in the industry had attempted to coordinate rate-setting policies in order to reduce the competition they faced from new entrants.  The American states had also established a tradition of imposing high fees on out-of-state companies, in order to protect the underwriters located within their borders.  The industry sought to replace these state regulations with a system of federal regulation, and also challenged state laws that discriminated against out-of-state companies on constitutional grounds.  But in 1869, the Supreme Court ruled in Paul v. Virginia that insurance contracts underwritten by companies across state lines were not “interstate commerce,” and therefore fell within the legitimate purview of state law.

The book’s treatment of the managerial strategies employed in the industry, such as the development of the agency system, the content of the companies’ marketing campaigns, and the details of how different insurance products worked, are particularly strong.  This book makes a fine contribution to the study of the history of the insurance business.  My only criticism of the book is that its focus on management comes at the cost of excluding other questions of potentially great interest.  For example, insurance companies became enormously important financial intermediaries over the nineteenth century, but there is very little analysis or data on the firms’ investments or their role in the financial system.  And although some detail is provided on the content of state regulations of insurance companies, the political economy of these regulations is not explored, nor is much of a comparative perspective on these regulations presented.  Finally, the book mentions that waves of failures occurred in the 1870s, but relatively little attention is given to those events or to other collapses from earlier periods in the industry’s history, which to this reader seem as important as the successes.

Eric Hilt is Associate Professor of Economics at Wellesley College.  He is the author of “Rogue Finance: The Life and Fire Insurance Company and the Panic of 1826” (Business History Review, Spring 2009). Email:

Copyright (c) 2012 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (March 2012). All EH.Net reviews are archived at

Subject(s):Business History
Geographic Area(s):North America
Time Period(s):19th Century

The Appeal of Insurance

Author(s):Clark, Geoffrey
Anderson, Gregory
Thomann, Christian
Schulenburg, J.-Matthias Graf von der
Reviewer(s):Murphy, Sharon Ann

Published by EH.NET (May 2011)

Geoffrey Clark, Gregory Anderson, Christian Thomann, and J.-Matthias Graf von der Schulenburg, editors, The Appeal of Insurance. Toronto: University of Toronto Press, 2010. x + 247 pp. $50 (cloth), ISBN: 978-1-4426-4065-8.

Reviewed for EH.Net by Sharon Ann Murphy, Department of History, Providence College.

Perhaps reflecting twenty-first century concerns about risk mitigation, scholarly interest in the history of insurance has been booming of late.? The fruits of a larger conference on the insurance industry, the ten thought-provoking essays that comprise The Appeal of Insurance are certainly a part of this trend.? While editors Geoffrey Clark (State University of New York at Potsdam) and Gregory Anderson (University of Salford) broadly assert in the introduction that insurance ?shap[ed] contemporary economic institutions, techniques of government, mechanisms of social welfare, and patterns of thought,? the essays are all supposed to pivot around the more narrow concept of ?appeal? and its dual meanings of ?attraction? and ?entreaty? (p. 3).? Yet whereas this unifying thread is readily apparent in several of the essays, a few seem out of place in this volume.? Additionally, the thematic, geographic, and temporal scope of the essays are uneven; more than half focus on the British industry, more than half have their main focus on life insurance, and three-quarters are set in the eighteenth or nineteenth centuries.? While this imbalance does not take away from the quality of the individual essays, the volume might have told a more coherent overall story if the editors (who also include Christian Thomann and J.-Matthias Graf von der Schulenburg, both of Leibniz University, Hanover) had attempted to focus on specific insurance lines before the First World War, while casting their geographic net more widely (at least within Europe).? However, I suspect that this imbalance largely reflects the realities of current insurance historiography.

The essays in this volume that fit together best are those which address the lived experience of individuals who solicited insurance in response to a rapidly changing risk environment.? These essays focus on the timing of demand, the language used to understand the risk environment, and the behavior of insured individuals, pushing back against scholars who posit insurance as a purely rational risk-mitigating strategy.? In ?How to Tame Chance: Evolving Languages of Risk, Trust, and Expertise in Eighteenth-Century German Proto-Insurances,? Eve Rosenhaft (University of Liverpool) examines the participants in two eighteenth-century German widows? funds to demonstrate that risk-averse behaviors (such as joining an association to provide for your wife and children upon your death) were not mutually exclusive from risk-taking behaviors (such as trusting that this untested form of association would not fail before your family benefited from its protections).? As the nexus of trust shifted from providence to expert managers over the course of the century, Rosenhaft offers an intriguing argument that while the participants? understanding and expectation of risk evolved, the acquisition of this proto-insurance did not represent a conscious shift towards risk-aversion over risk-taking.

Robin Pearson (University of Hull) comes to a similar conclusion in ?Fire, Property Insurance, and Perceptions of Risk in Eighteenth-Century Britain.?? In complicating the idea that fire insurance was a rational response to the increasing risk of urban fires, Pearson asserts that this industry owed its growth as much to unempirical factors as it did to the emergence of concrete statistical knowledge, stating that people were both concerned ?about measurable risk and unmeasurable uncertainty, fortune and fate, fear and prudence, passion and reason? (p. 85). Most interestingly, he concludes that the risk-reducing strategy of buying fire insurance was not accompanied by other common-sense measures of fire prevention: ?Prudence was no more an outcome of insurance than it was a product of the science of prediction? (p. 98).

These questions of language and the understood conception of risk continue in Geoffrey Clark and Timothy Alborn?s essays, which both grapple with the moral quandary of placing a monetary value on human life.? In ?The Slave?s Appeal: Insurance and the Rise of Commercial Property,? Clark investigates the legal problems surrounding the underwriting of slaves (who were at once life and property) and how similar dilemmas later emerged with speculative life policies and insurance by wives on their husbands.? By ?knit[ting] economic actors together in novel ways … [s]uch socially degrading commercial contracts threatened not only to upend the established social hierarchy, but also to curtail the economic liberty of the self due to husbands, fathers, and masters? (pp. 67-68).? The paradoxical nature of insurance as both a moral good and an instrument of speculation is sustained by Alborn (Lehman College, City University of New York) in ?A Licence to Bet: Life Insurance and the Gambling Act in the British Courts.?? The highly-contested nature of the 1774 Gambling Act, which was intended to eliminate speculative life policies through ?the determination of a boundary between legitimate and illegitimate insurance,? revealed that the ?insurance market … appealed to all social classes because of ? not in spite of ? the fact that it often shaded imperceptibly into gambling? (p. 109).

While these four contributions mesh together extremely well, the second group of essays moves away from the lived experience of insuring individuals and instead focuses on the reciprocal relationship between the insurance industry and the state.? The essay ??The Rules of Prudence?: Political Liberalism and Life Assurance in the Nineteenth Century? by Liz McFall (Open University) serves as a transitional chapter between these two approaches.? While she also concentrates on issues of language, her focus on ?prudence? is not concerned with how this concept was understood by the insuring public. Rather, she is interested in the promotion of this notion by insurance companies, and how ?[n]ineteenth-century life assurance institutions traded their product in a manner that closely mirrored mainstream currents within Victorian liberalism? (p. 145).? For most of the remaining essays, the idea that ?[l]ife assurance was one of those techniques that seemed to spring up to fill the gap between liberal governmental theory in the abstract and the management of concrete social problems? (pp. 145-146) seems a more appropriate unifying motif than the individual experience with insurance.? For example, the essay ?Gottfried Wilhelm Leibniz?s Work on Insurance? by Schulenburg and Thomann is primarily concerned with the assertion by the seventeenth-century scientist and philosopher that ?the government has to install public insurance companies because the welfare of the people is increased if certain risks are securely covered by a public scheme? (p. 44).
Like McFall, Gregory Anderson?s interesting piece, ?Honesty, Fidelity, and Insurance in Eighteenth- and Nineteenth-Century England,? wrestles with the promotion of an idea through insurance ? this time the notion of fidelity ? and its relationship with governing principles.? As the legal system began to address the emerging problem of white-collar crimes, the insurance industry responded with the creation of fidelity insurance to ?provide protection against acts of dishonesty by trusted employees in public and private companies and by officers of state? (p. 151).? The demands of employers ? and in particular, the state itself who worried about the very real fiscal (and thus political) consequences of white-collar crimes within the growing bureaucratic ranks ? actively shaped the fidelity line. Yet as Anderson reveals, it was always unclear whether this new insurance product actually ?promote[d] commercial stability and security? (p. 160) or rather ?undermine[d] personal morality? (p. 161).
This interwoven relationship between insurance companies and government actors is likewise apparent in the essays by Martin Lengwiler and Jer?nia Pons Pons.? Arguing in a vein similar to Anderson, Pons Pons (University of Seville) finds in ?Employers and Industrial Accident Insurance in Spain, 1900-1963? that both a constantly shifting legal environment and the demands of a corporate clientele significantly shaped the development of the accident insurance industry in Spain.? Private employers served as an intermediary of sorts between state-sanctioned requirements and the products offered by insurers: ?Although it is true that employers took out insurance due to the responsibilities the new law had recently obliged them to accept, they soon found advantages in the practice of insurance and, above all, in the control of the insurance process? (p. 202).? The greatest fear of both of these actors (the employers and the private companies) was that the state would proactively try to shape the insurance market. They perhaps feared the type of industrial order that Lengwiler (University of Basle) finds in ?Competing Appeals: The Rise of Mixed Welfare Economies in Europe, 1850-1945.? Lengwiler examines the impact of public insurance plans on the growth of the industrial insurance industry in England and Germany, and the health insurance industry in Germany and Switzerland.? Concerned more with institutional decision-making than the response of the insuring public to these competing plans, Lengwiler perceptively concludes that ?the growing appeal of insurance after the late nineteenth century was provided … by the competition and interaction between public and private actors within the insurance market? (p. 173).?
The final essay of the volume, ?Five Ironies of Insurance? by Aaron Doyle (Carleton University and BI Norwegian School of Management) and the late Richard Ericson (University of Toronto), initially appears to be the biggest outlier of the group, yet is actually the greatest missed opportunity on the part of the editors.? Doyle and Ericson reflect on the insurance industry as a whole from a modern perspective, noting ?fundamental paradoxes or tensions in the insurance institution itself? (p. 227) such as how an industry that initially emerged as a means of spreading risks now groups people into ever-smaller risk pools with dramatically different rate schedules, as well as the ?unforeseen and unintended consequences? (p. 233) of an ostensibly risk-reducing product that in actuality encourages risk-taking behaviors.? Rather than closing the book, Doyle and Ericson?s fascinating essay would have been an ideal framework for the entire volume, effectively demonstrating that the contradictions of the modern insurance industry have their roots in historical realities.? While the concept of ?appeal? only works well for a minority of the chapters, ?irony? captures the essence of the majority.? Thus although The Appeal of Insurance suffers from the weaknesses of most conference compendia , its strengths lie in the quality of its individual parts, each of which reflects a maturing historiography that is ready to grapple with the nuances of this essential industry.

Sharon Ann Murphy is the author of Investing in Life: Insurance in Antebellum America (Johns Hopkins University Press, 2010).? Reflecting her continued interest in the complex interactions between financial institutions and their clientele, her latest project is an investigation of the public perception of commercial banks during the early American republic.

Copyright (c) 2011 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (May 2011). All EH.Net reviews are archived at

Subject(s):Economywide Country Studies and Comparative History
Financial Markets, Financial Institutions, and Monetary History
Markets and Institutions
Geographic Area(s):Europe
North America
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Regulated Lives: Life Insurance and British Society, 1800-1914

Author(s):Alborn, Timothy
Reviewer(s):Murphy, Sharon Ann

Published by EH.NET (January 2010)

Timothy Alborn, Regulated Lives: Life Insurance and British Society, 1800-1914. Toronto: University of Toronto Press, 2009. xi + 439 pp. $80 (cloth), ISBN: 978-1-4426-3996-6.

Reviewed for EH.NET by Sharon Ann Murphy, Department of History, Providence College.

Despite being one of the largest and most successful industries of the nineteenth century, life insurance has been woefully understudied by economic and business historians on both sides of the Atlantic. In Regulated Lives: Life Insurance and British Society, 1800-1914, history professor Timothy Alborn of Lehman College, City University of New York, fills this gaping void with a carefully argued and immensely readable monograph on the British industry. As the title suggests, Alborn?s work is much more than a straightforward narrative history of British life insurance. Rather, he couples a general overview of the industry with a detailed examination of how life insurance concurrently shaped and reflected the complicated Victorian understanding of human life; for insurers, the individuality of life and the tragedy of death (a sympathetic view of life) coexisted with the more detached, scientific evaluation of an individual?s risk for premature death (a medical view of life), the statistical calculation of the chances of death according to unfeeling mortality tables (a numerical view of life), and the somewhat disquieting process of placing a money value on those lives (a commodified view of life). Although British life insurers sought to balance these four conceptions of life by carefully controlling how agents, actuaries, and doctors presented life insurance to the consuming public, as Alborn concludes, ?the regulated lives who bought insurance policies always resisted complete commodification, enumeration, or medicalization, by holding life insurance offices to their initial promise of sympathy and by playing these different manifestations of modernity against one another? (p. 7).

The first third of the book is devoted to providing a brief sketch of the British life insurance industry over the course of the long nineteenth century. Chapter 1 details the geographic spread of insurance from the London core out to the English countryside and into Scotland, and then its export both to the British Empire and into foreign countries. Whereas these firms began by concentrating on an aristocratic clientele, new competitors emerged to target first the middle class and then eventually a working-class pool, with some offices further segmenting the market by profession, religious denomination, or other definable group characteristic. Finally, this chapter describes the basic business structure of life firms. Chapter 2 charts the growth of the industry, the government?s various attempts to regulate the conduct of companies (mainly in response to failing firms), and the industry?s efforts at self-regulation. In chapter 3, the internal structure of insurers is broken down, with detailed descriptions of the key personnel: shareholders, directors, actuaries, and salesmen. Of particular interest in these chapters is the contrast in conduct between English and Scottish life offices. Alborn readily admits that this overview is not comprehensive; he has carefully selected those aspects of the history most pertinent to his wider story, and future researchers should use this sketch as the starting-point for deeper analysis of the industry.

For the remainder of the book, Alborn focuses on his main theme of how insurers and the insuring public reconciled their understanding of the meaning of human life with the depersonalized and sometimes cold-hearted process of obtaining a life policy. Through a series of topically-themed chapters, Alborn moves from the problems of accurately calculating and using mortality tables (Chapter 4), and the marketing of insurance through melodramatic pleas for the protection of widows and orphans, more dispassionate appeals to the needs of debtors, or the capitalistic desires for investment opportunities (Chapters 5 and 6), to the development of new insurance products (e.g., endowment and paid-up policies, or loans and non-forfeiture clauses) in response to consumer demands (Chapter 7), and the numerous contradictions involved in medically selecting lives and preventing adverse selection (Chapters 8, 9, and 10). Along the way, Victorian views of women, marriage, domesticity, class, health, and death are all brought into sharp relief. In these chapters, Alborn is at his best when connecting the various aspects of the insuring process with wider themes of display, discipline/accountability, fairness, altruism, and gatekeeping. For example, he provides a wonderful description of how companies mastered the art of spectacle in preparing and presenting dividends to their shareholders or mutual customers. Part of this section includes a fascinating vignette on the complicated process of preparing the bonus, providing the reader with a rare detailed glimpse at the internal functioning of a business office (pp. 182-84).

The shortcomings of this book are relatively minor. One of the tradeoffs of dividing the chapters by topic is a loss of chronological structure. While most chapters provide a sense of change over time, it is difficult for the reader to overlap these chapters to obtain a dynamic understanding of the evolution of the industry as a whole. While Alborn perhaps intended for the first three chapters to provide this structure, they do not create a sufficient superstructure for this purpose. Second, while the views of actuaries, agents, and doctors are well-documented, the voice of the insuring consumer is largely absent, appearing only as reflected by the firms themselves. More direct evidence of the applicant?s perspective on life, death, the insuring process, medical selection, fairness, etc., certainly would have strengthened Alborn?s overall argument.

As Alborn concludes, ?an emblem of Victorian domesticity, life insurance took its place at the middle-class hearthside next to the dog-eared Dickens novel and the purring Persian cat? (p. 306). By interweaving business with the wider social context of Victorian Britain, Alborn successfully captures the centrality of life insurance over the long nineteenth century. While it is certainly invaluable for its insights into British life insurance (especially when read alongside Geoffrey Clark?s Betting on Lives: The Culture of Life Insurance in England, 1695-1775. Manchester: Manchester University Press, 1999), Regulated Lives should be read by anyone interested in the business culture of nineteenth-century Britain.

Sharon Ann Murphy is the author of Investing in Life: Insurance in Antebellum America, forthcoming from Johns Hopkins University Press in 2010.

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII