Women in Life Insurance, A History (A difficult chapter)

juneteenthIn my series of posts on the history of women in life insurance, I have worked our way up to the1920s. I realize now, however, I have skipped over an important topic that deserves its own space. It is a topic that is extremely uncomfortable and downright despicable for the industry and for me. I share this information purely as education into some of the dark early days of this industry. The subject matter does not pertain solely to women in the industry and yet I feel compelled to include it. The topic at hand: slave insurance.

I came across two excellent papers written on this subject. The first is entitled “Securing Human Property; Slavery, Life Insurance, and Industrialization in the Upper South,” written by Sharon Ann Murphy, a professor at Providence College. The paper was published in 2005 in the Journal of the Early Republic. The second paper is titled “Actuarial Issues in Insurance on Slaves in the United States South,” written by Cheryl Rhan-Hsin Chen and Gary Simon, and published in the Journal of African American History in 2004. Much of the information I will share can be found in those two papers.

In the 1830s, the Baltimore Life Insurance Company was one of the most successful life insurance companies operating in the United States South. The company’s intent was to write “white lives,” exactly as their competitor companies were doing in the North. The demand in the South, however, was not the same, and in looking for ways to diversify earning, they landed on the insurance of “negro lives.” This insurance, however, only partially mirrored the life insurance offered on “white lives.”

Slave insurance might actually be better described as “property insurance”. Chen and Simon make these distinctions: “(1) the beneficiary upon the death of the slave was never the slave’s family; (2) the face amount of the policy was directly linked to the market value of the slave; (3) the term of the policy was short,” with most policies on record for a year or less, with the maximum being seven years.

Many times, slave owners would purchase insurance on slaves they rented out for dangerous work, such as railroad building or working on the steamboats. Or else they purchased insurance on skilled artisans and house workers. Still other times they purchased the insurance as a means to fund the manumission, or freeing, of the slave. Records indicate this was often done as a means to keep families together when a slave was otherwise to be sold away to the Lower South.

There were difficulties with slave insurance. First, there was the concern that an owner might find more value in the insurance than in the life of the slave. For this reason, companies would limit the amount of insurance to 2/3 of the market value of the slave, and would write policies for short periods of time, allowing them to examine the slave more often should there be a request for a renewal. Records show that in the early days, policies were never written above $800 for males, $500 for females, and the amounts did not go up until the 1850’s when competition was stronger for these policies and the value of slaves had grown.

Closely related to this was the concern that a slave’s owner or overseer would mistreat a slave, thereby diminishing the market value of the slave. This, as above, could result in a situation where once again the slave is worth more dead than alive. In many instances, the insurance company would be underwriting the slave owner as much as the slave him/herself in order to ensure the slave would be treated well.

The third difficulty was in the pricing of the insurance. There were virtually no records on the mortality rates of slaves, so the insurance companies had to simply guess when developing their premium tables. In most instances, they simply doubled the rates charged for white lives of the same age. They would also include risk charges for slaves who were engaged in dangerous employment, and a ‘climate premium’ for slaves traveling south of the border of Virginia or Kentucky.

While the Baltimore Life Insurance Company was the first on the scene selling this type of insurance, many competitors joined the space in the late 1840s and early 1850s. Reflecting the ‘property insurance’ nature of slave insurance, many Fire Insurance companies began to sell these policies. Also, life insurance companies from the North thought they saw an opportunity here as well. According to Murphy, among the companies selling this insurance were New York Life, North Carolina Mutual Life, Aetna Life of Hartford, Hartford Life, Richmond Fire Associate of Virginia, Asheville Mutual Insurance Company of North Carolina, and Georgia Insurance and Trust Company of Baltimore, among others.

We do not have full statistics on how many policies were written, nor how many claims were paid. Murphy reports that the Richmond Fire Association wrote over 1,700 slave policies in Virginia, and that by the late 1850s over 3/4 of the business written by North Carolina Mutual was written on slaves. In addition, of the first 1,000 policies written by New York Life (then known as Nautilus Insurance Company), 339 of them were written on slaves.

Emancipation, signed into law by Abraham Lincoln on this date in 1862 rendered all of these policies void, and many of the southern insurance companies that relied on these sales were forced out of business.

In 2002, the state of California passed a law that required companies to disclose any profits they made through participation in the slave trade. Only three companies in existence today came forward, all of them expressing deep regret for their participation in this market. New York Life was able to produce evidence of 610 policies, Aetna of Hartford produced 19 policies, and AIG produced 173 policies. The analysis Chen and Simon did on these three sets of policies, given the extremely limited information they had, seemed to indicate that these companies did not profit from this business, but in fact likely lost money on these policies.

This was indeed a horrible chapter in the history of life insurance. I felt the need to include it in my history of women in life insurance because of the obvious fact that some of the slaves were women. But also because I feel it is important to recognize all of our history as an industry and as a nation. It helps us understand more about where we are today, and if we use the information right, it will  help us to avoid ever making the same mistakes again.

Thanks for reading, happy Juneteenth, keep it positive, and smile!





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