Annals, Anecdotes and Legends: A Chronicle of Life Assurance

by of the Bank of England John Francis

Mr. Povey, the founder of the above company, was a veritable promoter. Not contented with establishing an office to insure against the chances of fire, he invented also a scheme to extinguish it, and “Povey’s fire-annihilator” was then a feature of the time. This gentleman, who looked “a grave, honest-countenanced, elderly gentleman,” but is described as “a meddling, restless, and turbulent spirit,” projected a life assurance company for “4000 healthy persons, between the ages of 6 and 55,” to be called the Proprietors of the Traders’ Exchange House. This, like many of his proposals, died a natural death. With those of his class he was often in hot water, and was accused of plagiarising the ideas of others. In addition to the offices of which mention has been made, he formed the Society for Assurance for Widows and Orphans, the progress of which is lost sight of. At any rate, he comes down to us as the founder of one of the most liberal fire-offices in existence, of the capital of which it may be remarked, en passant, almost as little is known as of its projector.

The war which was undertaken by William, against France, produced a new form of assurance: not only did wagers on his life become prevalent—a betting which was but another form of insurance; policies were entered into on the result of his campaigns. The conspiracies which were formed against him increased the interest felt; and so uncertain were the chances of his taking Namur, that 30l. were offered down, to receive 100l., provided the city and castle were captured before the last day of September in 1694. At this period, also, a mutual assurance company was formed to aid an adventurer with funds to raise a vessel which, laden with the treasures of the East, had been lost on her passage home; the peculiar feature of the transaction being, that, if any of the association should die before the object was accomplished, their share was to be transferred to the remaining adventurers.

The assurance merchants found their profits endangered in 1706, when the Bishop of Oxford and Sir Thomas Allen applied to Queen Anne for a charter to incorporate them and their successors, “whereby they might provide for their families in an easy and beneficial manner.” The application was successful, and the Amicable, an improvement on the Mercers’ Company, obtained its charter, the number of shares being limited to 2000. But that which appears most extraordinary was, the mode of arranging the payments. The age of the shareholder—from 12 to 45—made no difference in his premium; and whether he were well, or whether he were dying, was no consideration. Each person paid 7l. 10s. entrance money, and 6l. 4s. per annum for life; but, as a yearly return of 1l. 4s. was paid to each shareholder, the real payment was 5l. The yearly number of deaths in London was about 1 in 20 at this period, and this fact probably originated the amount of payment, though nothing could surpass the absurdity of a plan which made no distinction between an old life and a young one,—between a healthy and an unhealthy man. It is said that the Amicable had no data; but Dr. Halley had already published his tables, and Vulture Hopkins, or Mr. Snow the banker, or any money-monger, would have taught the directors their error. It is true that success,—at any price, almost,—was their object, and this was insured by the large payment. It may be said, also, that it is wrong to judge of past actions by the aid of present information; but common sense was as general then as now, and any usurer’s books would have taught the Amicable its mistake.

The annual income, after deducting expenses, was divided yearly among the representatives of those who had died. Thus a healthy year, with only a slight mortality, made the division good; but in an unhealthy year it was proportionably less. An annual distribution of this kind was manifestly unsound, if not unfair; and must have been sometimes severely felt by the representatives of the deceased. The Amicable, however, may be received as the nursing mother of life assurance at a period when, little as arithmetical economy was understood, it was still less acted on.

Besides the attempt to engraft an annuity society on the Mercers’ Company, various minor endeavours were made, from 1690 to 1712, to establish institutions which should grant yearly payments and pay specific sums to the representatives of the deceased.

The principle of assurance, applied to other subjects than merchandise, seemed a sudden light to those who had capital, and did not know how to employ it; while it was a great boon to those who wanted money, and did not know how to get it. The latter employed their wits in its application to subjects which are not yet allowed to be legitimate; and, while the former, with the praiseworthy caution of men who had “put money in their purses,” went slowly but surely to work to found institutions like the Amicable, the Royal Exchange, and the London, the others did not hesitate to form societies, to frame rules, and to decoy all they could meet, under titles as promising as their results were ruinous.

In 1708 began what were then known as “the little goes” of assurance. One was held at the Cross Keys, in Wych Street. We gather that each person subscribed 5s. fortnightly, inclusive of policy, stamp, and entrance money, on condition of 200l. being paid to his heirs and executors. Another was an evident bubble, 5s. a quarter entitling the subscriber’s representatives to receive 120l. at his demise; while a third, called the “Fortunate” Office, was to provide marriage portions of 200l. for those who paid 2s. a quarter. If contemporary accounts are to be trusted, the ravenous appetite for assurance was something like that which at the present day possesses projectors, as offices were opened in every part of the town. If one company was commenced to insure marriage portions, a second was sure to follow to insure the portions of their children. A mutual life assurance was instantly followed by a mutual ship assurance. The following notice from the “British Apollo” will be found to illustrate this speculative fancy:—“A first and second claim is made at the Office of Assurance on Marriage, in Roll Court, Fleet Street. The first will be paid on Saturday next; wherefore, all persons concerned are desired to pay 2s. into the joint stock, pursuant to the articles, or they will be excluded. The two claimants married each other, and have paid but 2s. each.” They were, however, to receive but 37l. Here is another specimen: “Any person by paying 2s. at their entrance for a policy and stamps, and 2s. towards each marriage but their own, when the number is full, will secure to themselves 200l.; and in the mean time, in proportion to the number of subscribers.” This undertaking was found to answer so well, that many others opened in the same line—one of them, appropriately enough, in Petticoat Lane. Soon after this, appears an advertisement from a baptismal office of assurance, where every subscriber paid 2s. 6d. towards each infant baptized, until he had one of his own, when he was to receive 200l., “the interest of which is sufficient to give a child a good education; and the principal reserved until it comes to maturity.” Most of the projects were systems of wholesale robbery. For a time, however, they were greedily run after. “The success of these schemes,” says a chronicler of the time, “sharpened the invention of the thrifty, and immediately almost every street in London abounded with insurance offices, where policies for infants three months old might be obtained for short periods. From these, they diverged into other ages and various descriptions of persons.”

Emblems were placed in windows indicating the allurements of the “Golden Globe.” Tempting advertisements were inserted in the journals to show the especial advantages of a new Tontine. Infant or adult, married or single, were addressed in, “The Lucky Seventy, or the Longest Liver takes all;” while, paraded in promising forms, and painted in bright colours, arose societies to keep the subscribers when they married, and pay for their burials when they died.

There is something very painful in the recollection that the sufferers were those who could least afford it. It was not the grasping Hebrew who invested from his full store. It was not the wealthy East Indian director, the rich alderman, the over-fed citizen, or the “new-fangled banker” who lost a small portion of his gold. It was the poor and thrifty man, who, denying himself to secure his children a provision, was involved in loss.

Policies and premiums were in the mouths of all. It was the El-dorado of the London craftsman, the alchymy of the needy tradesman. The philosopher’s stone seemed placed before the class that least dreamed of grasping it: but it was the realisation of the legend in which the dreamer awakes and finds his golden pieces are turned to slate; it was the arousing of Analschar from his gorgeous vision.