IMPACT OF

OFFICE AUTOMATION

IN THE

INSURANCE

INDUSTRY

Bulletin No. 1468

UNITED STATES DEPARTMENT OF LABOR

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS

Arthur M. Ross, Commissioner

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
OTHER BLS PUBLICATIONS ON AUTOMATION AND PRODUCTIVITY

M anpower Planning to Adapt to New Technology at an E lectric and Gas Utility (Report 293, 1965), 25 pp.

D escribes personnel procedu res and p ractices used to m inim ize hardships on em ployees during 

con version from m anufactured to natural gas, introduction of an automated telephone system , and 

changeover to autom atic elevators.

Outlook for N um erical Control of Machine T ools (Bulletin 1437, 1965), 63 pp.

Outlook fo r this key technological innovation in the m etalworking industry and im plications for p rod u ctivity, occupational requirem ents, training p rogram s, em ploym ent, and industrial relations.

Case Studies of D isplaced W orkers (Bulletin 1408, 1964), 94 pp. , 50 cents.

Case studies of the post layoff experiences of nearly 3,000 w orkers fo rm e rly em ployed in the p e tro ­

leum refining, autom otive equipment, glass ja r, flo o r coverin g, and iron foundry industries.

T echn ological Trends in 36 M ajor A m erican Industries, 1964, 105 pp. Out of print, available in lib ra rie s.

Review of significant technological developm ents, with charts on em ploym ent, production and 

productivity. P repared for the P resid en t's A dvisory Com m ittee on Labor-M anagem ent P olicy .

Im plications of Autom ation and Other T echnological D evelopm ents: A Selected Annotated Bibliography 

(Bulletin 1319-1, 1963), 90 pp. , 50 cents. Supplement to Bulletin 1319, 1962, 136 pp. , 65 cents.

D escribes over 300 books, a rticle s, rep orts, sp eech es, conference p roceedin gs, and other readily 

available m aterials published p rim a rily between 1961 and 1963.

Industrial Retraining P rogram s fo r T echnological Change (Bulletin 1368, 1963), 34 pp. Out of print, 

available in lib ra rie s.

A study of the perform ance of older w orkers based on four case studies of industrial plants.

Impact of O ffice Autom ation in the Internal Revenue Service (Bulletin 1364, 1963), 74 pp. Out of print, 

available in lib ra rie s.

A case study highlighting manpower planning and em ploym ent im pacts during a m ajor conversion .

Impact of T echnological Change and Autom ation in the Pulp and Paper Industry (Bulletin 1347, 1962), 92 pp. , 

50 cents.

G eneral industry survey and three case studies highlighting im plications of technological change.

T echn ological Change and Productivity in the Bituminous Coal Industry, 1920-60 (Bulletin 1305, 1961),

13b p p ., 65 cents.

Trends in technology and productivity and im plications fo r em ploym ent, unem ploym ent, and w ages.

Adjustm ents to the Introduction of O ffice Autom ation (Bulletin 1276, I960), 86 pp. , 50 cents.

A study of som e im plications of the installation of electron ic data p rocessin g in 20 offices in private 

industry, with sp ecial referen ce to older w ork ers.

Studies of Autom atic Technology (F ree).

A series of case studies of plants introducing autom ation. D escribes changes and im plications for 

productivity, em ploym ent, occupational requirem ents, and industrial relations. Studies cover cases in 

ele ctro n ics, insurance, bakery, petroleum refining, and airline industries.

Sales publications may be purchased from the Superintendent of D ocum ents, W ashington, D. C. 20402, 

or from regional offices of the Bureau of Labor Statistics at the ad dresses shown below . F ree publications 

are available, as long as the supply la sts, from the Bureau of Labor Statistics, U. S. Department of Labor, 

W ashington, D. C. 20212.

Regional O ffice s:

New England Region 

18 O liver Street 

Boston, M ass. 02110

North Central Region 

219 South D earborn Street 

C hicago, 111. 60603

Middle Atlantic Region 

341 Ninth Avenue 

New Y ork, N. Y. 10001

Southern Region

1371 P eachtree Street, NE

Suite 540

Atlanta, Ga. 30309

East Central Region 

1365 Ontario Street 

Cleveland, Ohio 44114

W estern Region

450 Golden Gate Avenue

Box 36017

San F ra n cisco , C alif. 94102

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
IM PAC T OF

OFFICE AUTOMATION

IN T H E

INSURANCE

INDUSTRY

Bulletin No. 1468

UNITED STATES DEPARTMENT OF LABOR

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS

Arthur M. Ross, Commissioner

For sa le by the Superintendent o f D ocu m en ts, U .S . G overn m en t Printing O ffice, W a sh in g to n , D .C ., 2 0 4 0 2 - Price 4 5 cents

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Preface

Under the Manpower Development and Training Act of 1962, the

Secretary of Labor is required to establish techniques and methods for

detecting in advance the potential manpower impact of automation, technological progress, and other changes in the structure of production. This

type of early warning system could be of great assistance to management

and union leaders, educators, government officials, economists, and

others in planning programs to cushion the impact of change.

Electronic computers afford opportunities for impressive advances

in productivity in clerical work. Computers are being adopted on an increasingly wider scale in industry and business. The future outlook for office

employment in many parts of the economy is likely to be affected significantly by this innovation. This bulletin deals with the impact of electronic

computers in insurance, a major white-collar industry which pioneered in

the application of office automation.

The study covers the extent and pace of office automation over

1954-63, probable developments, and their implication for employment and

occupational requirements. The chief sources of information for this

bulletin were two mail surveys in 1963, covering over 400 companies having

nearly 90 percent of the industry’ s employment. The Bureau of Labor

Statistics is grateful to the many insurance company and industry association officials who assisted in the planning of the study. The cooperation of

the several hundred insurance companies which participated in the mail

surveys is deeply appreciated.

The report was prepared by Audrey Freedman, with some assistance by J. Stephen Keyes and Mable Elliott, under the supervision of

Herman M. Sturm. The study was made in the Bureau's Division of Technological Studies under the direction of Edgar Weinberg, Chief, as part of the

Bureau's research program on productivity and technological developments

under the general direction of Leon Greenberg, Assistant Commissioner.

in

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Contents

Page

Chapter 1. Introduction, summary and highlights------------------------------ 1

Employment in insurance industry----------------------------------------------- 1

Growth and changes in insurance industry ----------------- ---------------- 2

Scope, method, and limitations---------------------------------------------------- 2

Summary and highlights ---------------------------------------------------------------- 4

Chapter 2. Extent and pace of office automation-------------------------------- 7

Extent of computer use ----------------------------------------------------------------- 7

Pace of introduction --------------------------------------------------------------------- 9

Utilization of computers ---------------------------------------------------------------- 13

Computer applications by life insurance com panies------------------- 15

Computer applications by property companies---------------------------- 18

Pace of conversion to E D P ------------------------------------------------------------ 18

Chapter 3. Developments and outlook in office automation--------------- 20

Greater use of optical scanners --------------------------------------------------- 20

Use of pre-authorized check plans ----------------------------------------------- 20

Mark sensing equipment---------------------------------------------------------------- 22

Extension of data transmission systems -------------------------------------- 22

Trends toward consolidation and reorganization------------------------- 23

Chapter 4. Employment in electronic data processing jobs -------------- 25

Number employed in EDP units---------------------------------------------------- 25

Occupational structure of EDP units ------------------------------------------- 25

Planning and programing personnel ---------------------------------------- 25

Computer operators ----------------------------------------------------------------- 28

Input personnel ------------------------------------------------------------------------- 28

Supporting clerical employees ------------------------------------------------- 28

Supervisory and related personnel ----------------------------------------- 30

Maintenance employees ------------------------------------------------------------ 30

Source of EDP s t a ff----------------------------------------------------------------------- 30

Women in EDP jobs ----------------------------------------------------------------------- 30

EDP and shift work ----------------------------------------------------------------------- 32

Chapter 5. Impact of EDP on employment trends in the insurance

industry--------------------------------------------------------------------------------------------- 34

Trends in insurance office employment and productivity------------ 34

Effect of EDP on insurance office occupations---------------------------- 37

Recent impact on selected occupations------------------------------------ 37

Trends in insurance occupations--------------------------------------------------- 40

Tabulating-machine operators ------------------------------------------------- 40

General clerical workers -------------------------------------------------------- 40

Keypunch operators ----------------------------------------------------------------- 40

EDP personnel--------------------------------------------------------------------------- 43

Chapter 6. Outlook and implications for the next decade------------------- 44

Prospects for next decade ------------------------------------------------------------ 44

Manpower implications ----------------------------------------------------------------- 45

v

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Contents— Continued

Page

Appendixes:

A. Notes on survey methods---------------------------------------------------------- 46

B. Selected bibliography---------------------------------------------------------------- 68

Tables:

1. Extent of computerization among 410 insurance companies,

March 1963 ...................- ...................................................................... 8

2. Size of largest computer operating, by size of company,

late 1963 ............................................................ - - ............................... 7

3. Number of responding companies with computers and total

number of computers in operation, by year, 1954-63 -------- 11

4. Number of computer applications, 206 companies, 1963 ------ 14

5. Occupational grouping of employees working directly with

EDP systems in 206 companies operating computers,

January 1963 --------- 26

6. Source of 1963 EDP staff, by occupation -------------------------------- 31

7. EDP shift practices in home offices of companies with

computers, by size of office employment, 1963 ----------------- 33

8. Office employment growth in surveyed insurance companies,

1954-63 .............. ...................................- ............... .............................. 35

9. Percent change in policies in force, office employees, and

policies per office employee in 17 life insurance

companies, 1956-59 and 1959-62 ------------------------------------------- 37

10. Effect of introducing the EDP system on specific occupational groups (as of 1963) ----------------------------------------------------- 38

11. Employment changes expected for occupational groups

during 1963-66, among 206 companies with computers in

early 1963 ------------------------------------------------------------------------------- 40

12. Expected change in total employment in two selected occupational groups by 1966, by employment in each group, all

surveyed companies which responded in 1963 --------------------- 42

Charts:

1. Computers installed and retired, 226 insurance companies,

annually, 1954-63 ------------------------------------------------------------------ 10

2. Insurance companies acquiring their first computers, by

size of office employment, for specified periods, 1954 to

1964 ---------------------- ................................................ - .......................... 12

3. Computer applications, life insurance carriers, 1963 ---------- 16

4. Computer applications, property insurance carriers, 1963 - - 17

5. Occupational makeup of the EDP unit, 206 insurance companies with computers, 1963 ----------------------------------------------- 27

vi

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
IMPACT OF OFFICE AUTOMATION IN THE INSURANCE INDUSTRY

Chapter 1. Introduction, Summary, and Highlights

Insurance companies were among the first business firms to use

electronic computers. Several of the companies began in the early 1950!s

to study the possibilities of computers. A few insurance companies installed

computers in 1954. Within the next 10 years, companies in all branches of

the insurance industry adopted electronic data processing (EDP) and applied

it to various functions and operations.

Employment in Insurance Industry

As an employer, the insurance industry ranks among the largest in

the United States. In 1964, the number of employees of insurance carriers

averaged 884,700. Operations of "Insurance Carriers" (SIC 63) include

activities in home offices and field establishments of companies that underwrite various types of insurance, providing guarantees of financial protection against specified risks or loss to life and property. Allied to "Insurance

Carriers" are "Insurance Agents, Brokers and Service Organizations" (SIC

64), employing about 225,000 persons in insurance sales activities performed

by independent contractors (or their employees) who deal with or represent

insurance carriers.

Insurance carriers, for the purpose of this study, were classified

into three groups: life insurance carriers, the largest group, which employed

about 470, 000 in 1964, or more than half of all insurance company employees;

property insurance carriers, handling fire, marine, and casualty insurance,

surety insurance, and title insurance, all of which employed a total of over

350,000 employees; and accident and health insurance carriers, which

employed the remainder. (This latter type of protection is referred to in

this study as "health insurance, " to avoid confusion of strictly personal disability risk coverage with automobile accident coverage, included under

casualty insurance.)

About 70 to 75 percent of all employees in insurance carriers are

engaged in office work; the rest, in sales, custodial or similar work. Office

work involves a wide range of skills, from those required for routine recordkeeping, typing, and office machine operation to those necessary for complex

actuarial and statistical work, management, and claims investigation. Nearly

half of all insurance carrier employees are women, most of whom work as

typists, clerks, office machine operators, and bookkeepers.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
2

Growth and Changes in Insurance Industry

Insurance carriers over the 1954-64 decade experienced a substantial increase in business. Concomitantly, total employment rose approximately 32 percent between 1954 and 1964, most of the increase occuring in

the first 5 years. This rise was significantly greater than employment gains

in the nonfarm sector as a whole.

Rising population, growth of personal income, and increasing complexity of legal and economic relationships have contributed to an increasing

demand for insurance. The increasing numbers of families and higher family

incomes have generated demand for personal insurance against risks of death

and disability. Spread of home and automobile ownership and financing, along

with many other factors, have stimulated a rise in the volume of property

insurance. Purchase of insurance by business enterprises has risen greatly.

Fundamental changes in industry organization have taken place since

1945. Less than 20 years ago, State regulations strictly limited the types of

insurance a single company could sell. Now, all types of nonlife insurance

can be sold by one carrier, which may affiliate with a life carrier to sell "all

lin es." When State regulations were changed a decade ago, consolidations

and mergers followed and former single line companies diversified.

Marketing of insurance has also been modified. For example, packaging and simplification of coverages (risks) into a single comprehensive

policy, such as the fast-growing "homeowners" policy, eliminates coverage

overlap for consumers, increases selling efficiency, and reduces office

servicing costs. In addition, a wide variety of new coverages--from dental

care to nuclear accident--are being introduced. A variety of advertising

media are now used to reach a mass market and direct selling to consumers

is done by some carriers. Finally, sales on a standardized group contract

basis have added millions of policy certificates without the necessity to "se ll"

each individual covered.

As companies increased their scale of activities, office operations

were rationalized and the feasibility of computer application was established.

In turn, the potential benefits and efficiencies of an integrated data-processing

system may have encouraged some marketing and structural changes. For

example, a company can now sell life, automobile, and homeowner's coverage

through a single agent, charge the policyholder on a single bill, process claims

and loans, and pay dividends using only a single basic record.

Scope, Method and Limitations

This study deals with the extent and pace of the adoption of electronic

data-processing technology among insurance carriers, and with its effects on

insurance office employees. Electronic data processing encompasses

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
3

extremely high speed, automatic manipulation of information by computers,

and a variety of auxiliary equipment--'‘input” devices, which accept, translate, and transfer information into the computer; and noutput” devices, to

adapt the computer's product to office use--usually by printing it.

This study does not cover the impact of the use of mechanical or

electrical office equipment, such as electric accounting machinery or punchcard tabulating equipment, which have long been used in insurance offices,

or such machines as copiers, centralized dictation systems, mailing, and

checkwriting devices.

Since sales agents, custodial, and related employees are not directly

affected by the spread of EDP, they were not covered by this study. The

focus of the report is on office employees.

Method of Data Collection. The principal source of information for the study

was a mail survey conducted in two stages. First, in the spring of 1963,

questionnaires were mailed to every insurance carrier having an establishment with 250 employees or more, and to 150 smaller firms. A total of 410

firms was solicited, representing about 89 percent of all insurance carrier

employment. The response to this questionnaire provided summary information on firms with EDP for use as "screening data" in planning the second

stage. Thus, the second mailing, in late 1963, covered only the firms that

reported they were using computers or had them on order--305 in number.

This questionnaire requested detailed information, and had a slightly lower

response than the first. (Further information on the methods and limitation

of these surveys is provided in appendix A.)

Additional detailed data on the spread and use of EDP in the insurance industry and some of its implications were collected through interviews

with industry authorities, both before and after the mail surveys. Among

those interviewed were executives of 13 large and middle-size insurance

companies that accounted for about 20 percent of all insurance carrier employment. In addition, pertinent reports about insurance EDP, appearing in

trade publications and other published sources, were analyzed.

Limitations of the Study. Some limitations of this study should be observed.

Some important manpower aspects of the impact of EDP could not readily be

studied by means of mail questionnaires. For example, detailed information

was not collected on employee adjustment to the changeover; the procedures

adopted to facilitate the introduction; or the psychological reactions of individual employees to change. Such subjects are more adequately investigated

through the intensive personal interviews that are generally conducted in case

studies. Some of these case studies are listed in appendix B.

Because of the complexity and difficulty in defining the output of this

service industry, it was not feasible in the course of this study to collect

quantitative data that would be adequate for the measurement of industry and

company production, and productivity trends. The discussion of these topics

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
4

in this bulletin, therefore, is highly tentative. Further research will be

necessary to develop more definitive information on these aspects of technological change in the insurance industry.

Summary and Highlights

Use of computers in insurance is widespread. By early 1963, about 10 years

after computers were first introduced in private industry, insurance companies accounting for 80 percent of total insurance carrier employment had

installed computers; those accounting for another 5 percent of employment

had ordered EDP or were using computer service bureaus. The numerous

small companies which, together, accounted for less than 15 percent of all

industry employment were not using EDP, but a substantial proportion of

these companies had plans to install computers by 1968. An estimate for

the entire industry indicates that about 800 computers were operating in

about 300 insurance companies in 1963.

EDP applications are extensive; trend is toward an integrated, computercentered system. Computer applications include most major insurance

office operations that are done on a volume basis; primarily premium billing and accounting, commission accounting, and related recordkeeping. A

developing trend is the consolidation of individual applications into one recordkeeping flow, in which a single basic policy record can be used--inside the

computer--to accomplish all major insurance tasks. About one-third of the

companies surveyed were already using this type of consolidated records

system.

Automation of input, and the use of data transmission networks, will grow.

Automatic translation of source documents (such as premium notices, or

policy applications) to punchcards or tape will continue to grow. At the

time of this study, optical readers were already being used to reduce the

amount of manual keypunching in 8 companies; these machines were expected

to be installed in another 32 companies. Several other techniques for reducing input preparation (among them: magnetic ink encoding equipment, marksensing automatic punchers, and the use of turnaround punchcards) had been

used by a number of companies.

Data transmission by telephone and telegraph lines, enabling field

offices to transmit a large volume of information rapidly to the home office

computer, was in operation in 18 companies; 29 others had plans to install

these systems. They have the effect of reducing files and recordkeeping in

field and branch offices, decentralizing, and speeding service and collection

of premiums.

Computer units in responding companies employed about 15,000 persons; but

Et)!3 units represented only a small proportion of total office stafT. Employment in computer units soared from about 600 in 1954 to about 16, 000 by 1963.

EDP employees, however, represented only about 4 percent of total office

staff in computerized companies. New jobs, such as those of the systems

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5

analyst and programer, computer and peripheral equipment operator, comprised over a third of EDP staff. Keypunch operators comprise nearly twofifths, and other clerical workers one-fifth of EDP employees. Most women

in EDP units worked as keypunch operators or in clerical jobs; a small proportion were programers.

Over 70 percent of the EDP employees were recruited from inside

the company. Ninety percent of the console operators and EDP supervisors

and 80 percent of the clerks, secretaries, and peripheral equipment operators were recruited from within.

Some console and peripheral equipment operators, and occasionally

keypunch operators were employed for evening or night work, particularly

in large companies with extensive EDP installations. Other office workers

were rarely employed on shift work.

Survey results indicate that the growth rate of office staff declines in computerized companies. After the initial conversion to EDP was completed,

the annual rate of growth in office employment in surveyed companies

declined from 4. 2 percent to 2. 4 percent a year. Those responding companies which had more recently installed computers experienced a constant

rate of increase in office employment. The comparison indicates that after

an initial adjustment period (and perhaps after attrition has begun to affect

growth), EDP begins to break the rapid growth in office staff otherwise

experienced by many insurance companies.

EDP jobs were expected to increase, while a substantial proportion of companies expected no increase in general clerical workers. More than half of the

responding companies indicated in 1963 that they expected planning and programing and EDP machine operation jobs to rise by 1966; most of the rest

expected no change. On the other hand, general clerical groups, who

comprised nearly two-thirds of all employees, were expected to decline in

about 26 percent of the companies; to remain the same in 28 percent. Subsequent information suggests that these trends are probably valid for the

1966-70 period.

Keypunch operators were expected to decline in companies with optical

scanners. Companies with optical scanners or plans to install them, anticipated some decline among keypunch operators. Completed EDP conversions

and the use of other automatic input equipment, as well as turnaround punchcards, were also expected to reduce card punching. About half of all surveyed

companies expected a decline or no change, in this occupation.

EDP reduced employment of punchcard tabulating machine operators, calculators, and routine clerical recordkeeping employees. About seven-tenths

of responding computer installations reported a decrease in employment of

tabulating-machine operators when operations were consolidated within the

EDP system, eliminating many machine tabulation units, often scattered

throughout the company. Routine clerical recordkeeping declined in

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
6

two-thirds of the companies, where file maintenance--including checking,

transcribing, sorting, and searching--is now automatically done by computers. Employment of calculating-machine operators decreased in slightly

more than half the offices, as the computers assumed their function.

Slowdown in growth may reduce office opportunities for new job seekers.

Survey and interview results indicate that insurance offices may not continue

to provide a substantial number of openings for young women high school

graduates each year. In communities where this type of work has been relied

on for a large and steady source of openings, employment counselors may

have to consider other types of jobs in order to place succeeding high school

classes.

Adjustment of the office work force may require more planning in the future.

Until recently, the high rate of attrition among large clerical staffs, combined

with continued growth in office work force requirements, permitted insurance

companies to adjust workers to the new technology through retraining and

attrition. Such adjustments are becoming more difficult, as the EDP system

reaches further into all departments of the company, and as branch and field

office workloads are decreased or altered in worker skill requirements.

Office employment will probably increase only 5 to 10 percent over the next

decade (1965-75). EDP will have an increasing impact on unit labor require -

ments as the "total system, " into which all major office operations have been

integrated, evolves out of current computer applications. The sales component, however, will not be greatly affected by EDP, and is expected to grow

with increasing business. Total insurance carrier employment will not rise

as fast during 1965-75 as it did during 1954-64.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
7

Chapter 2. Extent and Pace of Office Automation

By 1963, practically all large and medium size insurance carriers

had acquired electronic computer installations. The few who had not were

either awaiting installation of equipment that had been ordered or were

using the services of firms that offer their EDP installations for hire on a

time basis. During recent years, insurance carriers have responded to

the development of improved computers by replacing or supplementing

early models of equipment with new models. Beyond a count of the number

of computers installed, the extent to which major insurance office functions

have been converted to EDP indicates how rapidly this new technology has

been applied— and what tasks the coming "total system11 EDP will encompass.

Extent of Computer Use

On the basis of responses to the first screening survey, covering

410 companies with 89 percent of total insurance industry employment, it is

estimated that for the industry as a whole, about 800 computers were installed (or scheduled for installation) in 300 insurance companies, accounting

for nearly nine-tenths of all industry employment in January 1963.

By March 1963, 253 of the responding companies had computers

(table 1). These companies accounted for nine-tenths of all employment

covered by the survey, and 94 percent of all office employment represented

by surveyed companies. Another 25 companies, representing about 2 percent of all office employment covered in the survey, were awaiting delivery

of their first computers, already on order. About as many companies, reporting a similar proportion of employment, were using computer time

rented from EDP service bureaus. The remaining 105 companies in this

screening survey had less than 3 percent of all office employment reported.

Among these small carriers, computer plans were being made by

30 companies.

The distribution of companies by size of computer is shown in

table 2. In general, the larger companies were using the large computers;

smaller firms, computers of lower capacities.

Table 2. Size of Largest Computer Operating, by Size of Company,

Late 1963

Companies with office

employment of-- Total

Percent of companies with - -

Large

computer

Medium

computer

Small

computer

1.499 ------------------------------- 100. 0 8.6 n . 4 80. 0

500-1, 499 -------------------- 100.0 21. 7 32. 5 45.8

1, 500 and over------------- 100. 0 62. 3 24. 5 13. 2

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
T able 1. Extent of C om puterization Am ong 410 Insurance C om panies, M arch 1963

Item

a :11 com pan ies Coi

c

npanies with 

;om puters

Com panies with c o m ­

puters on o rd e r as 

of M arch 1963

C om panies renting 

com puter tim e from 

s e rv ice bureaus only

C om panies planning 

to in stall com pu ters 

b e fo re 1968

C om panies with no 

com pu ter plans

N um ­

b er

Off:

em plo

ice

y e e s 1

N um ­

ber

Offi

em plo

ce

yees1

Number

O ffice

e m p lo y e e s1

Num ­

ber

O ffice

e m p lo y e e s1

N um ­

ber

O ffice

e m p lo y e e s1

N um ­

ber

O ffice

em p lo y e e s1

N um ber

(thousands)

P e r ­

cent

Numbe r 

(thousands)

P e r ­

cent

Num ber

(thousands)

P e r ­

cent

N um ber

(thousands)

P e r ­

cent

N um ber

(thousands)

P e r ­

cent

N um ber

(thousands)

P e r ­

cent

A ll c o m p a n ie s -----

L i f e -----------------------------

H e a lt h -------------------------

P ro p e rty -------------------

410 484. 0 100.0 253 454. 9 94. 0 25 9. 1 1 .9 27 9. 0 1 .9 30 4. 6 1 .0 75 6. 4 1. 3

181

36

193

184. 1 

24. 1 

275. 7

100. 0 

100. 0 

100. 0

101

32

120

175. 2 

22. 6 

257. 1

95. 2 

93.5 

93. 2

12

1

12

3 .5

.6

5. 0

1 .9 

2. 4 

1.8

14

2

11

1 .0 

. 7

7. 3

. 5

2. 7 

2. 7

19

1

10

2. 2 

. 3

2. 0

1 .2 

1.3 

. 7

35

40

2. 1 

4. 3

1. 1 

1 .6

1 E m ploym en t data a re fo r the pay p e rio d ending nearest Jan. 15, 1963.

N ote: B ecau se o f rounding, sum s of individual item s m ay not equal 100.0. P ercen tages calcu lated fro m unrounded data.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
9

Pace of Introduction

Detailed information about the pace of computer introduction is 

available only for those companies which responded to the second questionnaire: 206 companies which already had installed com puters, 20 companies 

which were awaiting delivery of their first machine, and another 20 com ­

panies which were renting computer time from service bureaus. Inform ation in the remainder of this bulletin is based on these responses; the data 

are not inflated to cover companies that answered only the brief screening 

que stionnaire.

The progress of electronic data processing among insurance c a r ­

rie rs, as indicated by the number of companies introducing computers each 

year and the number of computers installed, is shown in table 3. In the first 

2 years, 1954 and 1955, 17 companies installed com puters. The average 

size of the office work force in these pioneering companies was close to 

10,000. The practicability of using computers for insurance functions was 

established by these key companies and their experience was reported widely..

A fairly rapid diffusion of the new technology followed over the next 

8 years (chart 1). F rom the beginning of 1956 to the end of I960, a total of 

109 companies installed com puters, or an average of about 22 per year. 

Because m ost of these companies were very large, m ore than half of all 

insurance em ployees were working in companies with EDP by I960. As new 

and greatly im proved m odels were introduced, the number of companies 

installing computers increased from 19 in I960, to 34 in 1961, and 41 in

1962. By the end of 1963, a total of 226 insurance companies had either 

installed computers or scheduled them for installation. The diffusion of the 

technology throughout the industry was evidenced by the increasing number 

of small companies introducing computers in the decade between 1954 and 

1964. (Chart 2 .)

Another m easure of the progress of electronic data processing was 

growth in the total number of computers installed (see table 3). Since many 

companies acquired m ore than one com puter, the number of computers 

increased m ore rapidly than the number of companies installing them. In 

1954, only two com puters were in operation in two firm s; by the end of 1963, 

673 com puters w ere in use by 226 firm s; m ore than half w ere installed after 

I960. The average number had risen to three per company by the end of

1963.

The average life insurance company used 3.2 com puters, property 

ca rriers used 2 .7 , and health insurance companies 2. Although health 

companies operated the fewest com puters, they had twice as many machines 

per 1,000 office em ployees as property com panies, and over 1^ tim es as 

many as life ca rrie rs.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
0 0

8 0

6 0

4 0

2 0

0 0

8 0

6 0

4 0

2 0

0

1 0

rt 1. COMPUTERS INSTALLED AND RETIRED, 

226 INSURANCE COMPANIES, ANNUALLY

1954-63

of computers

Installed

Retired

1954 1955 1956 1957 1958 1959

In 1963 includes installed and on order.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
11

T able 3* N um ber o f R espon din g C om pan ies with C om p u ters and T otal 

N um ber o f C om pu ters in O peration , by Y e a r, 1954-63

Y ear ending

N um ber of 

com p a n ies 

with

com p u ters

N um ber of 

com p u ters 

in o p e ra tion 

at som e 

tim e during 

the y e a r

A v e ra g e

num ber

of

com p u ters

p er

com pan y

1 9 5 4 ---------------------------- 2 2 1 . o

1955 ---------------------------- 17 24 1 .4

1956 ---------------------------- 35 64 1.8

1957 ---------------------------- 57 99 1. 7

1958 ---------------------------- 78 141 1.8

1959 ---------------------------- 107 185 1 .7

i 960 ---------------------------- 126 232 1.8

1961 ---------------------------- 160 387 2. 4

1962 ---------------------------- 201 544 2. 7

1963 ---------------------------- 1 226 1 673 3. 0

l

In stalled or scheduled fo r in sta lla tio n .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
1 2

Chart 2. INSURANCE COMPANIES ACQUIRING THEIR 

FIRST COMPUTERS, BY SIZE OF OFFICE EMPLOYMENT, 

FOR SPECIFIED PERIODS, 1954 to 1964

Num ber of Companies

5 0

4 0

3 0

20

I 0

1 9 5 4 -5 7 1 9 5 8 -6 0 1 9 6 1 -6 4

0

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
13

Of the com puters operating in responding companies during 1963, 

about 100 w ere in companies operating only one machine; most of the rest 

w ere functioning as parts of multicomputer system s in home offices of 

the larger com panies. Only nine respondents, all large life or property 

ca rriers with home office com puters, reported additional com puters in 

field offices. One company, however, reported as many as 28 field com ­

puters installed or scheduled for installation.

Although these figures generally m easure the rapid diffusion of 

electronic data processing, they do not fully indicate the sharp growth 

in computing capacity. An important trend, beginning in 1957 and a ccelerating after I960, was the replacem ent of previously installed com ­

puters with m ore recent im proved models. At first, larger capacity com ­

puters were adopted to replace sm aller m odels. After I960, many 

companies replaced their computers with vastly im proved "second generation" m achines. These later m odels incorporated transistors in place of 

vacuum tubes, and had m em ory capacities and tape speeds many tim es 

higher than previous com puters. In some instances, they w ere available 

at low er rental or purchase prices than had been charged for earlier 

m odels of sm aller capacity.

Looking ahead, a wave of replacem ent of "second generation" 

com puters may be anticipated over the next few years. New m odels of 

com puters, now being placed on the market, utilize m icroelectron ic 

circuits and have m em ory capacity and speeds many tim es those of the 

transistorized generation. The cost and time needed to reprogram for 

the new computer system s w ill be important factors affecting the extent 

and pace of replacem ent of older m odels.

Utilization of Computers

In assessing the pace of introducing electronic data processing, the 

extent to which com puters are applied to different work functions within in ­

surance companies is important. Only a sm all part of the data-processing 

workload susceptible to com puterization is affected at the outset of a 

changeover. Each computer application requires extensive analysis of 

existing procedures, development and testing of program s, and the retraining of em ployees.

To determine m ore p recisely how intensively electronic data p ro cessing was utilized, each company was asked to indicate which of 22 d ifferent data-processing operations were handled by a com puter, and which 

would be com puterized over the next few years. The results suggested that 

insurance companies w ere steadily extending the application of com puters, 

but that full use of the com puter's potential was still in the future. The 

median number of applications in 1963 was nine (table 4).

Such a count of applications, however, is greatly affected by the 

number of companies which either do not perform some functions at all, or

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
14

Table 4. Number of Computer Applications, 206 Companies, 1963

None reported

1 ..............................

2 ...................................................-

3 .....................-

4 ......................

5 .....................

6 ..............................

7 .....................

8 ........................

9 ......................

10 ...........................

11 .

12............................

13 .............. ..

14 ....................

15 ....................

16-22 .............

Number of applications Total number 

of companies

5

3 

8

4 

10

15

7

17

17

25

23

17

13

11

12

7

12

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
15

which have such a low volume in some functions that com puterization would 

not be worth the expense of program ing and conversion. F or example, 

some companies rely on brokerage firm s for sales and therefore would 

not have such applications as policyholder billing or com m ission accounting 

for each agent. Mutual companies would not ordinarily have stockholder 

files, nor would most stock companies p rocess policyholder dividends. 

Accordingly, the extent of utilization of computers may have been som ewhat understated.

Charts 3 and 4 show the extent to which EDP was applied in each 

of the 22 different functions by 86 life companies and 93 property com ­

panies that reported on computer applications. The types of applications 

differ between life and property ca rrie rs. In both types, however, 8 of 

the 22 work functions w ere com puterized by m ore than half of the com ­

panies by the end of 1963. Computers were also being applied for all other 

listed functions by som e com panies, but not as widely.

Computer Applications by Life Insurance Com panies. Among life insurance 

com panies, the two most frequent functions to which com puters were applied 

w ere prem ium billing and prem ium accounting--tasks which form erly r e ­

quired large numbers of clerks handling files involving from a few hundred 

thousand to tens of m illions of p olicies. These large volume tasks, typically centralized at the home office, w ere particularly adaptable to the 

com puter's tremendous speed of calculation and printing. Besides labor 

savings, intangible considerations of better management control over this 

m assive task, faster collections, and im proved custom er service were 

probably factors in introducing computers in these operations.

Since the calculation of agents' com m issions (based on types and 

sizes of policies sold) is closely related to the same policy record from 

which prem ium bills are derived, com m ission accounting was also among 

the most frequent functions for which computers were used by life ca rrie rs. 

Information on com m issions earned is a "by product" of the billing operation. Many life companies planned to extend electronic data processing 

to two interrelated functions: P olicy issue and policy loan accounting, 

which are within the same basic record flow.

Besides applying com puters to recordkeeping tasks, involving 

m assive, day-to-day workloads, some life ca rriers were utilizing com ­

puters in product developm ent--the construction of new coverages, packages, 

or rates which might expand their m arkets. Actuarial analyses and m ortality or m orbidity studies are essential for this purpose. In som e of these 

applications, com puters afford actuaries and statisticians the opportunity 

to perform calculations hitherto not econom ically feasible.

The gradual step-by-step extension of electronic data processing 

within an organization is illustrated by the experience of a large life

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
16

Chart 3. COMPUTER APPLICATIONS, LIFE INSURANCE CARRIERS, 1963

Number of Companies

A P P L I C A T I O N 0 10 2 0 30 4 0 5 0 6 0 7 0 8 0 9 0

Premium billing 

Premium accounting 

Commission accounting 

Valuation of reserves 

Agency (producer) statistics 

Actuarial analysis 

Policyholder dividend accounting 

Policy loan accounting 

Payroll

Unearned premium reserves 

Mortgage loans

Mortality and/or morbidity studies

Policy issue 

General accounting 

Miscellaneous 

Claims processing 

Stockholder dividend accounting 

Reserve for unpaid claims 

Investments other than mortgages

Personnel records

Reports to statistical (experience 

rating) agent

Underwriting

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
17

Chart 4. COMPUTER APPLICATIONS, PROPERTY INSURANCE CARRIERS, 1963

Number of Companies

APPLICATION

Unearned premium reserves 

Agency (producer) statistics

Premium accounting

Reports to statistical (experience 

rating) agent

Premium billing 

Reserve for unpaid claims 

Commission accounting 

Claims processing 

Policy issue 

Payroll

General accounting 

Miscellaneous

Policyholder dividend accounting 

Actuarial analysis

Investments other than mortgages

Valuation of reserves 

Personnel records 

Underwriting

Stockholder dividend accounting 

Policy loan accounting 

Mortgage loans

Mortality and/or morbidity studies

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
18

insurance company which installed its first computer during the m id-1950's. 

During the first few years, the company converted three operations to 

EDP: actuarial analysis, valuation of reserv es, and m ortality studies.

Since these functions are not direct services to policyholders, it was felt 

that experimentation would not disrupt custom er relations.

The next stage was the conversion of m ajor recordkeeping functions 

which required, despite mechanization, a large number of clerica l w orkers. 

These functions included prem ium billing, prem ium accounting, p olicy ­

holder dividend payments, and agent's com m ission accounting. These four 

separate files (each containing a part of the policy record of m illions of 

policyholders) were converted to computer processing. Subsequently, the 

four separate files were replaced by a single integrated file, from which all 

four functions have since been handled. In 1965, additional tasks requiring 

reference to the basic policy record (such as policy loan accounting) are being 

p rocessed by the computer using the same m aster file.

A third phase of the conversion to electronic data processing at this 

company was the establishment of computer centers away from the home 

office, linked with the home office by wire communication.

Computer Applications by Property Com panies. Among property ca rrie rs, 

m ajor functions for which computers w ere used included prem ium , reserve, 

and claim s accounting, prem ium billing and com m ission accounting.

Another important task generally com puterized was the preparation of 

agency accounts and sales record s. The variety and com plexity of company 

organization, and frequently less direct method of prem ium collection, 

among property ca rriers had somewhat slowed their progress toward 

integrated computer processing. However, as indicated on chart 4, the 

property ca rriers surveyed used EDP on as wide a selection of tasks as the 

life ca rrie rs.

An illustration of the conversion to EDP at a property company is 

the experience of an automobile casualty company. The first two operations 

com p u terized --reserve for unpaid claim s and unearned prem ium re se rv e s- - 

were large scale clerica l operations, converted from manual operations. 

Management's decision to convert claim s processin g, the third application, 

was based on a desire to analyze its underwriting experience to develop 

criteria for rejecting high risk policy applications. This EDP application 

was intended to im prove the com pany's loss record rather than to save 

clerica l m an-hours.

Pace of Conversion to EDP. The companies which installed EDP before 

1958 moved very slowly at first in converting functions to EDP. The number of functions converted during the first 2 years after EDP installation 

increased from three, for computers acquired in 1955, to over seven, for 

com puters installed between 1961 and M arch 1963. This reduction in conversion time was due to the sm aller size of companies that installed EDP

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
19

in later years; the fact that pioneering EDP companies shared their experiences with others; im proved program ing methods and better EDP equipment; 

consultant help in program ing and system s analysis, which computer 

manufacturers and management services firm s had begun to provide; 

and increased fam iliarity with EDP on the part of company management 

and em ployees.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
20

Chapter 3. Developments and Outlook in Office Automation

With electronic data processing virtually universally installed, 

technical advances in the insurance industry are expected to m axim ize 

efficiency in the utilization of computer capacity. One advance will be in 

greater automation of input through optical scanners; a second is the automation of information transm ission, while a third, and perhaps m ost im ­

portant, is consolidation of functions and files into a "total system . "

Greater use of Optical Scanners

Optical scanners— electronic devices which "rea d" code sym bols 

(bars or dots), alphabetic, or num erical characters— provide a means of 

saving clerica l labor in preparing data for electronic data processing. As 

of mid-1963, only 8 companies had installed equipment but 9 had ordered and 

23 definitely planned to order this equipment. These 40 companies employed 

about 27 percent of the office employment in 226 companies that had, or had 

ordered com puters. M ore important, they employed over 2, 000 keypunch 

operators.

The optical scanner affords opportunities for eliminating a substantial volume of document transcription done by keypunch operators. The eight 

companies that had installed optical scanners were using them prim arily for 

recording premium payments. In this application, the com puters print p remium bills on a "turnaround form "— a form designed to notify the p olicyholder of the amount due, after which it is returned by the policyholder when 

he rem its the payment. The form , when returned to the company, is p ro ­

cessed through the optical scanner which "rea d s" the amount due and policy 

identification m aterial, and transfers the information to cards or tape to be 

fed into the computer to make the appropriate accounting entries.

In two companies which had optical scanning equipment, about 10, 000 

premium collection stubs w ere scanned each day. The keypunch and verifier 

operators were no longer needed. Only two operators, having about the same 

skills as keypunch operators, were needed on the optical scanner, chiefly to 

process rejects and initiate machine runs.

Use of P re-authorized Check Plans

A development which reduces the amount of prem ium billing work is 

the pre-authorized check plan. This technique allows the ca rrie r, when 

authorized by a policyholder, to draw a check on the p olicyh old er's bank 

account to pay prem ium s as they fall due, often once a month. In order to 

facilitate bank handling of these checks, insurance companies may "en cod e," 

or print the checks, with magnetic ink characters that are readable by bank 

sorting m achines. A total of 16 com panies— 15 life and 1 health— were using 

magnetic ink encoding equipment in this way in 1963. Two m ore companies

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
21

Optical scanners coupled with data transmission facilities enable one insurance carrier to update, in its home office 

computer, premium records from hundreds of its field offices overnight.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
22

had ordered, and six had definite plans to order this equipment. Apart from 

its use in collection and banking of prem ium s, magnetic ink equipment has 

lim ited potential in insurance ca rriers.

Mark Sensing Equipment

Fourteen companies utilized m ark sensing machines to reduce input 

preparation. These devices automatically punch cards on which marks have 

been made by a pencil with a special type of lead. Four companies had o r ­

dered such devices and five definitely planned to order. These 23 companies 

had 16 percent of the office employment in the 226 companies that had installed or ordered com puters.

Mark sense cards are used by agency offices to make inquiries on 

policy status from the computer files, or to make changes automatically in 

policy records kept on tape or punched card files in the home office. An 

agent or other field em ployee marks a card and sends it to the home office. 

Mark sensing equipment automatically punches the m arks, creating a punchcard which can then be machine translated into magnetic tape. Marked cards 

can thus eliminate a typed business letter, or som e other manually produced 

form of inquiry which would require a coding clerk and a keypunch operator 

for translation to com puter-usable form .

Mark sensing equipment may eventually be supplanted by mark reading equipment. In such a case, an ordinary pencil could be used to mark 

cards, which could then be read to produce either card or tape inquiries or 

change orders to the computer.

Extension of Data Transm ission Systems

Data transm ission equipment for sending information over telephone 

or telegraph circuits in conjunction with electronic data processing are expected to have a profound impact on the distribution of record s, workload, 

and employment between field and home offices. Eighteen companies had this 

equipment— typically large com panies, with long experience in EDP and several large com puters. Six companies had ordered and 23 others definitely 

planned to order such system s. These 47 companies had 206, 000 em ployees, 

or about 52 percent of office employment in 226 companies that had installed 

or ordered com puters.

Data transm ission system s provide a means of rapid interchange of 

information between outlying branch offices and the home office computer 

center. For example, branch offices of property companies may collect 

prem ium s, deposit them in local banks, and transmit information to the home 

office to indicate which policies are paid, and the amount deposited. Home 

office computers may then use these data to update, their m aster accounts and 

policy records. Field offices which have the power to settle claim s may use 

the transm ission system to communicate the authorized claim amount to the 

home office, where a check is m ailed through the EDP accounting procedure.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
23

In health insurance com panies, field offices use data transm ission system s 

to ask the home offices whether a particular patient is a policyholder, and to 

what type of plan he has subscribed.

Data transm ission system s, still in an early stage of use, may r e ­

sult in significant econom ies of time and labor. Before 1970, companies 

may be using "rea l tim e" system s in which data transm ission and fast random access computer m em ories would handle each inquiry or transaction 

from a large network of field stations as fast as the inquiry occu rs. Rapid 

access to the home office computer would substantially reduce field office 

processing and records.

Trends Toward Consolidation and Reorganization

One of the m ost significant developments accompanying the in troduction of EDP is the trend toward consolidation of many separate files* and 

records into a few m aster files. In 1963, of 226 companies that had installed 

com puters, 66 companies accounting for 46 percent of office employment, 

had consolidated EDP system s, in which m ajor functions were processed by 

the computer through one basic file. Few of these system s, however, had 

reached their fullest potential of consolidation; about half of these w ere in 

life com panies, a third in property companies, and a sixth in health 

companies.

Before EDP, separate operating departments maintained separate 

sets of files for such functions as billing, loan accounting, dividend a c ­

counting, claim s, and agents com m issions. One company reported that it 

had employed a substantial number of clerks to maintain and update 14 separate files — each containing som e fragment of information about a single 

policy--distributed among agents; branch offices; and actuarial, loan, dividend, disability claim , and legal departments. A change in the policy often 

meant changing some item s in each of these 14 files, with the attendant 

possibility of errors. However, this was considered an effective way to 

maintain administrative control over the large numbers of persons and the 

mass of work involved. Minimum, limited training also mitigated the effects 

of high turnover among the fem ale high school graduates who worked only a 

few years.

As records and operations are consolidated into the EDP system , 

functions which once required the cooperation of three departments (such as 

premium billing, where loan and dividend files were also necessary to calculate the bills) are carried through all steps and reconciliation is handled inside the com puter. Bulky card files are eliminated, tabulating equipment is 

retired, fewer controls and audits are required, few er first-lin e supervisors 

are needed. A m ajor result of consolidation will be reduction in the number 

of clerks.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
24

The effects of a consolidated system on em ployees of one large life 

insurance company is described by an official:

As information becam e available in com plete form in the home 

office, rather than in the form er segmented form with loan, dividend, values, and premium data in different departments, the 

lim ited specialist clerks disappeared. So too did many of the 

old concept w ork supervisors disappear as the larger repetitive 

clerica l work staff disappeared. In their place came personnel 

trained and fam iliar with a full package of information about the 

policy .... The m ost dramatic change in field operations 

occu rred with the centralization of the m oney flow p rocesses of 

premium and other collections and with it, of course, all related 

accounting and service requests .... Thus much record re fe rence and posting activity was eliminated in the field office .... 

Typing activity too disappeared in considerable m easure as 

reports becam e unnecessary ....

The impact of the computer p rocesses on field office through 

eliminating volume transactions and reducing junior staff, while 

making m ore sophisticated tools and information directly available to the agency and agent has m aterially reduced the role of 

the field office staff to that of a relay station except for that role 

perform ed only by competent seniors with service skills and 

insurance understanding. 1

A casualty company official describes the system s in his branch of 

the industry:

The procedures we build now can help us to reach an eventual 

consolidated system in which all information pertaining to a 

single p olicyh old er--from prelim inary risk evaluation data 

through endorsement, revision, prem ium , dividend, and loss 

history for each type of coverage ca rrie d --a ll will be on one 

m aster record .... replacing various files needed for each 

policyholder even with the much im proved procedures now in 

effect. 2

In short, the consolidation of files into one m aster file, p rocessed 

on the com puter, m ay result in savings in clerica l labor much greater than 

the introduction of the computer itself.

1 Richard D. Dotts, "Impact and O pportunities--Com puters and F ield 

Operations, " in P roceedings of the L ife O ffice Management A ssociation, 1963, 

pp. 220-224. New York, N. Y. , the A ssociation, 1963.

2 Raymond Deck, Senior Vice President, A m erican Mutual Liability 

Insurance Company, as quoted in "Insuring Profitable P o lic ie s ," by Richard D. 

Kornblum, Business Automation, June 1965, pp. 54-59, 70, 72.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
25

Chapter 4. Enployment in Electronic Data Processing Jobs

One of the m ost important results of the introduction of electronic 

data processing is the creation of a group of new jobs in each office to manage, program , operate the equipment, and perform the cle rica l tasks n ecessary for preparing data for the computer. The number and type of these jobs 

in the insurance offices surveyed, and sources of recruitm ent are discussed 

in this chapter.

Number Employed in EDP Units

An estimated total of about 15, 000 persons in January 1963 were 

working directly with EDP in insurance ca rriers, contrasted with only about 

600 em ployees in EDP units in 1954. Employment in EDP jobs constituted 

about 4 percent of total office employment in insurance companies surveyed 

in 1963. F or all insurance ca rrie rs, the estimated number of EDP em ployees 

was around 19, 000.

The average (mean) number of em ployees in EDP units was 74, but 

the size of the units ranged from 5 to 1, 391 em ployees. Companies operating 

large computers had substantially larger EDP staffs than those using small 

computers only. The average EDP employment in companies operating large 

computers was 123; in those using sm all computers only, 38.

Occupational Structure of EDP Units

The work involved in electronic data processing requires em ployees 

who have a wide range of skills, ranging from routine clerica l abilities to the 

com plex skills of system s analysts. Employment, by occupational group, of 

over 15, 000 em ployees working directly with EDP system s in 206 companies 

that had installed com puters is shown in table 5 and chart 5. Although the 

few companies that w ere awaiting installation or using outside service bureaus 

had a few EDP em ployees, chiefly program ers and system s analysts, they 

were not included in this distribution.

Planning and Program ing Personnel. These key em ployees accounted for a 

little over one-fifth of all EDP em ployees in the 206 companies studied.3 

Included were p roject planners, who design organizational, procedural, and 

work flow plans; system s analysts, who analyze data processing problem s to 

devise computer system requirements and develop program ing procedures; 

and program ers, who convert the analysts' statements of technical or business 

problem s into its explicit instructions which guide the com pu ter's actions.

3 For detailed descriptions of jobs in electronic data processing, see 

the 1965 edition of the Dictionary of Occupational Titles (U. S. Em ployment Service, Bureau of Employment Security, Washington, D. C .).

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
26

Table 5. Occupational Grouping of Employees Working D irectly with 

EDP Systems in 206 Companies Operating Computers, January 1963

Occupational group

Total employment Women

Number

Percent

d istribution

Number

Percent of 

total in 

each o ccu ­

pation or 

group

A ll EDP em ployees 15,238 100. 0 9, 280 60. 9

Planning and program ing personnel:

P roject planners, system

analysts, p rog ra m ers -------------- 3,290 21. 6 509 15.4

Computer o p e ra to rs ________________ 2, 221 14. 6 289 13. 0

Console o p era tors. ____ ___ 1,025 6. 7 106 10. 3

Peripheral equipment

operators __ ___________ ____ 1, 196 7. 8 183 15. 3

Input personnel (keypunch

operators and verifiers)______ 5, 631 37. 0 5,599 99.4

Supporting clerica l w orkers __ __ 3,429 22. 5 2, 818 82. 2

Tape librarians, card and

tape file clerks 382 2. 5 306 80. 1

Secretaries, typists, and

receptionists __ __ ____ 335 2. 2 335 100. 0

Coding clerks and general

clerica l em ployees „ ___ 2, 712 17. 8 2, 177 80. 3

Supervisory and related

m anagerial and professional

em ployees ______________ __ 598 3. 9 64 10. 7

Maintenance engineers

(electronics m echanics)___________ 69 . 5 1 1.4

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
27

Chart 5. OCCUPATIONAL MAKEUP OF THE EDP UNIT, 

206 INSURANCE COMPANIES WITH COMPUTERS, 1963

Computer maintenance

Because of rounding, the figures in th is chart do not total 100.0%

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
2 8

The average (median) number of em ployees in this occupational 

group in insurance ca rrie rs surveyed was eight. The total number in the 

group, however, ranged widely among the ca rrie rs, from 1 to 191. O ffices 

using large com puters em ployed an average (median) of 22 planners, analysts and program ers; m ore than twice the staff for medium size computers 

and m ore than five tim es the average staff for sm all com puters. Since the 

large computers w ere utilized chiefly by large com panies, with extensive 

applications, a relatively large staff of program ers and system s planners 

was required.

Computer O perators. About 15 percent of all EDP em ployees were engaged 

as console, operators or peripheral-equipment operators. Console operators 

m onitor and control electronic com puters. Peripheral-equipm ent operators 

(who accounted for m ore than half of this occupational group) included high 

speed printer operators, who operate equipment which converts information 

on tape into printed records; and converter operators, who operate machines 

that transfer data from card to tape.

Computer units em ployed about 3 (median) console and 3 (median) 

peripheral-equipm ent operators. The range in the number of console op erators was relatively narrow, from 1 to 37; that of peripheral-equipm ent operators, 1 to 63. The median size of operating staffs at companies using 

large computers was not much larger than at companies using medium and 

small com puters. E lectronic data-processing equipment operates with a 

high degree of automation, requiring a minimum number of attendants. Thus, 

the size of operating staff may not grow proportionately as equipment is 

added.

Input Personnel. Keypunch and v erifier operators w ere the largest occupational group studied, representing 37 percent of all em ployees in EDP o ccu ­

pations. These em ployees operate keypunch machines to transcribe accounting and statistical data from source documents onto tabulating cards. This 

work is highly repetitive and routine, but at this stage of technology, a 

necessary prelim inary step in computer processing.

The average (median) number of keypunch and v erifier operators 

was 19. Among ca rriers with large com puters, the average (median) was 

31; with medium size com puters, 17; and with sm all com puters, 11. The 

number of input personnel depends chiefly on the volume of transactions 

handled.

Supporting C lerical Em ployees. In addition to the large group of clerica l 

em ployees engaged in directly preparing input data, a staff of 3,429 clerica l 

em ployees, com prising about 23 percent of the total EDP personnel, were 

engaged in supporting tasks. They included coding clerk s, who convert in ­

form ation into predeterm ined codes for subsequent use by keypunch operators; 

tape librarians, who classify, catalog, and maintain a library of reels of 

magnetic or punched paper tapes used in electronic data processing; and a 

sm all group of scheduling cle rk s , secretaries, typists, and receptionists.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
29

Demand for computer console operators and peripheral equipment operators in the insurance industry is expected to increase.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
30

Supervisory and Related Personnel. Supervisors of electronic data p ro ­

cessing system s and related management and professional staffs represented 

about 4 percent of total EDP employment. They coordinate activities of em ­

ployees who operate computers and peripheral equipment. Some planning 

and program ing personnel may have supervisory functions as w ell as EDP 

duties.

Maintenance E m ployees. Only six companies em ployed their own electronics 

m echanics or engineers to test and maintain EDP equipment. M ost companies 

contracted computer maintenance to the equipment manufacturer; no estimate 

of the extent of maintenance employment can therefore be made.

Source of EDP Staff

The general pattern followed in filling jobs in electronic data p r o ­

cessing was to retrain and transfer em ployees from other work in the insurance company. About 72 percent of em ployees in EDP jobs were selected 

from within the company. (See table 6.) This procedure utilized em ployees 

with a knowledge of the com pany's practices rather than of EDP. The only 

jobs for which m ost of the em ployees w ere recruited from outside the com ­

pany w ere the few electronics m echanics positions which require special 

training and experience not likely to be found among previous em ployees of 

insurance com panies.

Reliance on the com panies' own em ployees was particularly marked 

in filling positions for system s analysts, EDP supervisors, console and 

peripheral-equipm ent operators, and supporting clerica l jobs. Since m ost 

companies shifted to electronic data processing after some years of experience with punchcard tabulating system s, personnel readily adaptable to these 

EDP positions were probably available within the com panies.

A relatively high proportion (but less than half) of program er jobs 

were filled by persons from outside. A lso, a number of keypunch operators, 

a relatively low paying entry position, were recruited from the outside.

Women in EDP Jobs

Women com prised about 61 percent of all EDP employment in the 

206 companies studied (table 5). Most women EDP em ployees--about 90 

p ercen t--w ere engaged as keypunch operators and in supporting clerica l jobs 

such as tape librarians, data typists, coding, scheduling, card or tape file 

clerks. They represented about 93 percent o f all em ployees in these occupational groups.

Relatively few women were employed as project planners, system s 

analysts, or program ers, accounting for only 15 percent of the em ployees in 

these relatively higher skilled occupations. Women also represented only 

small proportions of the console and peripheral-equipm ent operators and EDP 

supervisory staff.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
31

Table 6. Source of 1963 EDP Staff, by Occupation

Occupation

Percent

A ll

em ployees

Employees 

selected 

from within 

the company

Employees 

recruited 

. from 

outside

All EDP em ployees 100. 0 71. 7 28. 3

System analysts___________________ 100. 0 77. 6 22. 4

P rog ra m ers________ ______ 100. 0 60. 5 39. 5

EDP supervisors- _____ 100. 0 90. 6 9.4

Console operators ______ 100. 0 89. 6 10.4

Peripheral-equipm ent

operators 100. 0 80. 5 19. 5

E lectronics m echanics __ _______ 100. 0 13. 3 86. 7

Keypunch op erators_______________ 100. 0 63. 0 37. 0

Tape lib ra ria n s ___________ ______ 100. 0 75. 7 24. 3

R eceptionists, secreta ries________ 100. 0 82. 0 18. 0

Coding, other clerks _______ ____ 100. 0 82. 1 17. 9

Source: Based on returns from 35 com panies, covering 7, 191 EDP 

em ployees, which reported usable information.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
32

EDP and Shift W ork

A relatively high proportion of com p an ies--55 percent—w ere 

operating their com puters on a multishift basis; 85 percent of the largest 

companies were doing so. (See table 7.) About 25 percent were on 2 shifts; 

30 percent, on 3 shifts. About 70 percent of the companies using shifts for 

EDP units had non EDP office w orkers on a day schedule only.

One factor inducing intensive use of the computer is the desire to 

get the maximum use of expensive equipment. M oreover, in som e instances, 

work after regular office hours has becom e part of an efficient cycle of operations on certain routine functions, such as billing. For example, in a 

number of com panies, the computer was used during evening and night shifts 

to perform a routine run of thousands of policies to produce prem ium bills.

In the morning, the com p u ter's output of bills was ready for mailing by the 

regular daytime office staff.

Shift work was introduced in som e companies during the period of 

consolidating and converting records to punchcards, prior to the start up of 

the computer installation. This extensive job frequently required nightwork 

by large numbers of keypunch operators. By 1963, however, usually only 

the computer-equipment operators w ere on shift work. The console operator 

and one or two printer or converter operators may have made a night "run" 

on one or two applications. In some com panies, keypunch operators may a lso have been on shift work. P rogram ers, system s analysts, and supporting 

clerica l em ployees, however, seldom worked on extra shifts, on a regular 

basis.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 7. EDP Shift P ractices in Home O ffices of Companies with Computers

by Size of Office Employment, 1963

Companies with office employment o f- -

Item

iv l .l companies

1-499 500-1, 499 1, 500 and over

Number Percent Number Percent Number Percent Number Percent

A ll com panies 

with E D P ---------------- 206 100.0 70 1 0 0 . 0 83 1 0 0 . 0 53 1 0 0 . 0

Companies with one 

EDP shift only:

A H ------------------------------- 93 45. 1 47 67.1 38 45.8 8 15. 1

With other office

w orkers on m ultishifts1----------------------- 10 4.9 3 4. 3 6 7. 2 1 1.9

Companies with m ore 

than one EDP shift: 

A n ... .... „ 113

52

54.9 

25. 2

223 32. 9 45 54. 2 45 84.9 jtVJLL

Two EDP 

sh ifts ------------------ 15 21.4 28 33.7 9 17.0

Three EDP 

s h ifts ------------------ 61 29.6 8 11.4 17 20. 5 36 67.9

With no other 

w orkers on shifts — 

With other office

79 38. 3 19 27. 1 36 43. 4 24 45. 3

w orkers on

sh ifts ----------------------- 34 16.5 4 5.7 9 10.8 21 39.6

1 F igures for this category are not included in totals.

NOTE: Because of rounding; sums of individual item s may not equal totals.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
34

Chapter 5. Impact of EDP on Employment Trends in the Insurance Industry

In appraising the impact of electronic data processing on em ployment trends in the insurance industry, it is important to recognize the difficulty of isolating the com plex effects of this specific technological change 

from those resulting from m ergers and consolidations, internal reorganization, changes in types of policies sold, and other changes that occu rred at 

the same tim e. Although precise measurement of the impact of EDP is not 

possible, several approaches to analyzing the effects are set forth.

Trends in Insurance Office Employment and Productivity

O ffice employment in surveyed companies increased by 32 p e rcent between 1954 and 1963, totaling nearly 366, 000 in January 1963.

In order to discern the effect of EDP on office employment growth, 

employment trends in companies which had com puters for 5 years or m ore 

were com pared with those in companies with less than 5 years of EDP ex ­

perience. The 5-year period was selected as a basis for com parison because 

within that tim e, m ajor conversions would have been com pleted. During 

the early stage of the transition to EDP, some companies found it necessary 

to employ additional tem porary clerks for conversion operations, so that 

labor trends in the first 5 years would not be useful in predicting long-term 

results. Table 8 shows the percent change in office employment over 

3-year intervals following 1954 and over the 9-year period.

O ffice employment in companies with 5 or m ore years of EDP experience increased by 31 percent over the 1954-63 period, a somewhat 

lower increase than for companies with shorter EDP experience. It is 

particularly noteworthy that the percent increase in employment in the most 

recent period among experienced companies is significantly sm aller than 

among companies with less experience. Also, the percent gain declined 

for these experienced companies in each period after 1954-57, while it 

remained fairly steady for those with shorter experience.

This analysis suggests that the lower growth rate in employment 

for companies with long EDP experience reflects the effects of greater 

productivity. In other w ords, it was possible to handle an increasing 

workload without increasing employment as much as would have been n ecessary if EDP had not been introduced.

Another possible explanation is that the volume of business among 

the companies with long EDP experien ce--gen erally large ca rrie rs --d id 

not increase relatively as much as business among the companies with 

short experience. Other information, however, indicates that this factor 

alone was not enough to cause all of the difference in employment growth 

between the two groups.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 8. Office Employment Growth in Surveyed Insurance Companies, 1954-63

Surveyed companies Percent change in office em ploym ent1

Item

Number

1 Office 

em ployment 

J anuary 

1963

1954-57 1957-60 1960-63 1954-63

All surveyed 

com panies 2---------------- 207 365,911 12. 2 8. 2 8 .4 31.5

Companies with 5 years 

or m ore of EDP e x ­

perien ce by 1963 ------------ 54 215, 473 13. 1 8. 2 7. 3 31.3

Companies with EDP 

experience of less 

than 5 years

by 1963----------------------------

Companies with EDP on 

order as of 1963-------------

127

16

136, 594 

6, 019

10.7 

14. 0

10. 2 

3.1

10.6

20.8

35.0 

42. 0

Companies using an 

EDP service bureau 

in 1963 ---------------------------- 10 7, 825 9.6 -1 3 .7 -5. 5 -10.6

1 January data used throughout table.

2 Only com panies which provided office employment data for all 4 years (1954, 1957, 

I960, 1963) w ere included.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
36

Although definitive quantitative data on output of the companies 

surveyed were not readily available, som e evidence obtained in the survey 

points to significant increases in output per em ployee in various operations 

where EDP was applied. O fficials of a number of large companies r e ­

ported that EDP made it unnecessary for them to hire additional clerica l 

em ployees for billing, accounting, and collection operations when the 

volume of business increased. One company officia l estimated that the 

computer perm itted em ployees to p rocess two or three tim es m ore work 

on a particular operation than they could on electrom echanical dataprocessing equipment.

Meaningful quantitative data on the volume of work done before 

and after EDP (such as the number of prem ium invoices prepared), --in 

relation to number of man-hours or em ployees engaged in such operations- - 

were not readily available. Several companies indicated that these co m ­

parisons were difficult to make because of organizational changes, development of new types of policies requiring data processing not hitherto done, 

and lack of adequate records. A number of companies reported that their 

experience was too short to estimate the full im plications of EDP on 

productivity.

One m easure som etim es used as an indicator of the overall 

volume of work done by life insurance ca rriers is the number of policies 

in force. Since this is a net figure, changes in that number do not directly 

reflect the number of new policies and the number of cancelled p olicies, 

which presum ably reflect work done. Also, group policies, which are 

frequently billed and otherwise handled on a mass basis and which lack 

many service features, must be counted as life policies even though the 

different form s require differing amounts of office work. Among other 

production item s not properly accounted for in such a m easure are: loans

processed, annuities paid, pension plans administered, conversions and 

policy changes, billing frequency, and the variety of group and individual 

health policies also sold by life ca rrie rs.

Changes in the number of policies in force per em ployee are used 

as a rough guide to trends in efficiency, reflecting not only the effects of 

the introduction of electronic data processing in a lim ited number of 

operations, but also technical and organizational changes that affect the 

total com plex of ca rrier operations, including some changes that increase 

unit labor requirem ents.

Table 9 shows the percent changes in policies in force, em ployees, 

and policies in force per em ployee for 17 life insurance companies that had 

acquired EDP in 1954 through 1956 and therefore had had the longest ex ­

perience with EDP. The ratio of policies per em ployee for the group as a 

whole declined between 1956 and 1959 and then rose between 1959 and 1962. 

Employment also increased between 1959 and 1962 but not to the same extent as the number of policies in force.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
37

Some of the 17 companies, however, did not show an increase in 

the ratio. The group included both large and small com panies. Of the 17 

ca rrie rs, 11 showed increases in the policies per employee ratio, between 

1959 and 1962; 6 showed decreases. Officials of some of the large firm s 

that showed a decline in the ratio of policies per em ployee, however, indicated in interviews that because of organizational changes and shifts in types 

of p olicies, figures on policies in force were not fully representative of the 

work output in these companies.

Table 9. Percent Change in P olicies in F orce, Office Em ployees, 

and P olicies P er Office Employee in 17 Eife Insurance Companies,

1956-59 and 1959-62

1

Item

Percent change

1956-592 1959-622

P olicies in f o r c e ---------------------------------------------------- + 3. 5 + 3.7

O ffice em ployees -------------------------------------------------- + 6.8 + 1.6

P olicies per office e m p lo y e e -------------------------------- - 3. 1 + 2. 1

1 The 17 life insurance companies employed about 98, 000 office 

em ployees.

Decem ber 31 data used for policies in force; succeeding January 15 

data used for office em ployees.

Effect of EDP on Insurance Office Occupations

To assess the effect of EDP on specific occupational groupings, the 

companies surveyed were asked, first, about recent changes in em ployment of selected groups of insurance em ployees as a result of EDP; second, 

about prospective trends at the tim e, in employment in various occupational 

groups.

Recent Impact on Selected Occupations. Table 10 shows the proportion of 

companies indicating whether the computer resulted in employment decrease, 

increase, or no change, for each of five m ajor occupational groups. A 

m ajority of companies reported declines in three occupational groups: tabulating-machine operating; routine clerical recordkeeping, and calculating 

machine operating jobs.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 10. Effect of Introducing the EDP System on Specific Occupational Groups

(as of 1963)

Occupational group

All

companies

Percent of companies reporting 

that EDP caused employment t o --

Percent of 

companies 

not r e -

operating

computers D ecrease Remain 

the same Increase

sponding 

to this 

item

T abulat ing - mac hine 

operatin g-------------------------- 100. 0 69. 5 19. 7 9 .4 1.3

Routine cle rica l re co rd - 

keeping ---------------------------- 100. 0 66. 5 23. 2 6.9 3. 4

Calculating -m achine 

operatin g-------------------------- 100. 0 53. 2 39. 5 3, 0 4. 3

Keypunch operating------------ 100. 0 12. 4 36. 5 48. 5 2. 6

Supervisors of above 

groups------------------------------- 100. 0 16. 7 63. 5 14. 6 5. 2

NOTE: Because of rounding, sums of individual item s may not equal 100.0.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
39

The elimination of positions in these groups did not necessarily 

result in the loss of employment for those affected. Although the mail 

survey did not collect data about effects on individual w orkers, inform ation from interviews with personnel officials; case studied by the Bureau 

of Labor Statistics, State agencies, and university research ers; and 

discussions in trade journals have supported the general conclusion that 

few individuals in the insurance industry w ere laid off as a direct result of 

the introduction of EDP. Jobs had generally been eliminated without r e ­

course to layoffs through the use of attrition and tra n sfer--p rocedu res that 

w ere possible because of the high rate of turnover among young women 

clerica l em ployees, industry growth, and the creation of some new 

EDP jobs.

Thus, information from various sources suggests that some 

tabulating-machine operators (m ore than half were m en)—w ere transferred to EDP units and retrained as console and peripheral-equipm ent 

operators and program ers. Since only a sm all proportion of EDP console 

and peripheral-equipm ent operators are women, it may be presumed 

that women tabulating-machine operators who remained in the office were 

shifted to other types of work.

Among routine cle rica l em ployees, who represented a m ajor 

proportion of insurance office employment, and calculating-m achine operators, a high rate of turnover probably facilitated adjustment without layoffs. Some offices reported that the elimination of some positions because 

of EDP provided personnel to fill jobs for which no satisfactory applicants 

were available from the outside.

The impact of EDP on employment of keypunch operators, on the 

other hand, was affected by varying requirements for this group of em ­

ployees at different stages of computer technology. About half the responding offices reported that installation of EDP resulted in an increase in 

keypunch staff; about one-third reported no change; the rest reported a 

decrease. In the early stages of the transition to EDP, offices sometim es 

needed to enlarge their staff of keypunch operators in order to convert and 

consolidate old files to punchcards. Once this initial records conversion 

was completed, the tem porarily large keypunch staff could be reduced.

In addition, companies which form erly required a keypunch group in each 

of many tabulating-machine units could retire these units as their operations were absorbed by EDP.

Regarding the impact on cle rica l supervisors, a large proportion 

of offices surveyed reported little or no change in employment. About 

17 percent, however, indicated that supervisors declined in number as 

routine clerica l jobs were reduced. Because of low er turnover in these 

positions, adjustments for supervisors (particularly older em ployees) 

probably constituted one of the m ore difficult personnel problem s.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 11. Employment Changes Expected for Occupational Groups During 1963-66 

Among 206 Companies with Computers in Early 1963

Occupational group Total

Percent of responding companies 

expecting that employment would —

Percent of 

companies 

not r e -

Percent of 

total office 

employment

Increase D ecrease Remain 

the same

sponding 

to this 

item

in each o c ­

cupational 

group 1

T abulating -m achine 

operators ----------------- 100. 0 8. 3 63. 1 22. 8 5.8 i

Stenographers, 

s e c r e ta r ie s -------------- 100. 0 38. 3 4.9 49. 0 7. 8 7

General cle rica l 

w ork ers--------------------- 100. 0 39.8 25. 7 27. 7 6.8 62

Keypunch operators —- 100. 0 51. 5 14. 6 31. 1 2.9 2

EDP Personnel: 

P rogram er s, 

analysts,

op era tors ------------- 100. 0 55. 0 3. 1 37. 7 4. 2 1

1 Remaining 27 percent of office employment is distributed among m anagerial, p ro fe ssional, technical, and supervisory groups.

NOTE: Because of rounding, sums of individual items may not add to 100.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
41

Trends in Insurance Occupations

Companies using computers were also asked about employment 

prospects for key occupational groups, as foreseen at the time of the 

survey. Table 11 shows the proportion of responding companies that ex ­

pected employment in five m ajor occupational groups to in crease, decrease, 

or remain the same between 1963 and 1966. On the basis of subsequent d iscussions with industry experts, it is believed that the trends as seen in 1963 

are still valid for the 1966-70 period.

Tabulating-Machine O perators. About two-thirds of the companies operating 

computers responded that this small group would decrease further. Machine 

accounting units, particularly in life and health insurance com panies, apparently were scheduled for disbandment as their functions are taken over by 

EDP.

General C lerical W orkers. This group, which com prised the m ajor p roportion of office employment, would decrease or remain the sam e, according 

to a m ajority of the responding companies. Examples of w orkers in static 

or declining clerica l jobs are premium ledger card clerks who keep records, 

premium acceptors who record payments, and policy evaluation clerks who 

calculate cash surrender and loan values of p olicies, using rate books and 

manual calculators.

However, it is noteworthy that about two-fifths of the companies 

reported that employment would in crease, presum ably because of business 

expansion in operations that had not been affected by EDP, the introduction 

of new automobile rating structures, and the application of new underwriting 

standards.

Keypunch O perators. Expectations for this occupational group were about 

evenly divided. Slightly m ore than half of the respondents expected an 

increase in employment; about 45 percent expected either a decrease, or 

stability. Some recently automated companies commented that keypunch 

work would decline once their records conversion had been com pleted.

When the expectations of companies that had or planned to have 

optical scanners are com pared with those that did not, the possible impact 

of this innovation on keypunch operators becom e apparent (see table 12). 

Among companies that had scanners or scanner plans, those companies 

employing over 40 percent of the keypunch operators expected a decrease. 

Among companies without scanner plans, those employing less than 20 p e rcent of the keypunch operators expected a decreaseDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 12. Expected Change in Total Employment in Two Selected Occupational Groups by 1966, by Employment in Each Group,

A ll Surveyed Companies Which Responded in 19631

Companies which expected employment t o --

Occupational group

Number of 

com panies Increase D ecrease Remain the same

responding

Number P e r­ Numbe r Employment Numbe r Employment Number 

of com - 

panie s

Employment

cent of com ­

panies Numbe r P e r ­

cent

of com - 

panie s Numbe r P e r ­

cent Numbe r P e r ­

cent

Keypunch operators -------------------- 226 8,252 100.0 120 3,970 48. 1 30 1,977 23.9 76 2,305 27.9

In com panies which had or 

planned to have optical 

scanners ------------------------------- 38 2, 155 100.0 16 648 30. 1 12 944 43.8 10 563 26. 1

In com panies which did not 

have or did not plan to have 

optical s c a n n e r s ------------------ 188 6,097 100.0 104 3,322 54.5 18 1,033 16.9 66 1,742 28. 6

Tabulating-m achine operators - 208 4,357 100.0 18 483 11. 1 137 3,428 78.7 53 446 10. 2

1

Some com panies excluded because of incomplete response.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
43

Requirements for keypunch operators will be reduced somewhat by increasing use of optical scanners and consolidated systems.

EDP P erson n el. The m ost favorable outlook was reported fo r EDP p e r ­

sonnel. About 55 percent of the com panies reported that they expected 

to in crea se em ploym ent in this occupational group (table 11); only 3 p e r ­

cent expected a d ecrea se. A dditional com puter applications and com pany 

growth presum ably w ere chief reasons for this anticipated growth.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
44

Chapter 6. Outlook and Implications for the Next Decade

In assessing the outlook for insurance employment over the next 

10 years, it is important first to review trends over the past decade. The 

period was one of significant changes in the structure of the industry and in 

the type of services sold, and witnessed the first steps taken in applying EDP 

technology to handle the tremendous volume of paperwork that accompanied 

the industry's growth. Employment increased significantly. Definitive 

quantitative data are not available to m easure the changes in labor requirements in relation to the volume of insurance services produced.

P rospects for Next Decade

Office employment will probably continue to in crease, but the rapid 

growth rate of the past will probably be significantly diminished. Contributing to office employment growth will be the rise in policy sales as personal 

incom e, auto purchases, home ownership, and a rising stock of insurable 

goods continue to in crease. The age group 15-44 years, which has accounted 

for a m ajor portion of insurance purchases in recent years, will be increasing. 

New types of p olicies, options, and packages w ill probably continue to be 

devised, and may be expected to result in increased employment.

EDP w ill probably have a growing impact in reducing unit labor 

requirem ents among office w orkers in the industry. The first decade for 

EDP was a period of introduction, diffusion, and im provem ents in EDP equipment, and gradual implementation of a "total" EDP system by bringing m ajor 

insurance operations, one after another, into the computer system . The 

potentialities of EDP w ere only beginning to be explored. The next decade 

w ill see the gradual introduction of m ore powerful, "third generation" com ­

puters, and, perhaps m ore important, the m ore intensive utilization of 

computers through the consolidation of operations, data transm ission system s, 

and input automation. As EDP is m ore fully developed, the rate of productivity increase will probably also rise.

These technological developments are expected to reduce substantially the rate of office employment growth in the insurance industry. By 

1975, office employment in insurance ca rrie rs, according to estim ates, w ill 

range from 700,000 to 735,000, representing an increase of 5 to 10 percent 

over 1965. Total employment in insurance ca rriers which increased about 

32 percent in the 1954-64 period, may grow m ore rapidly from 1965 to 1975 

than office employment because of greatly increased policy sales and sales 

force. Offsetting fa ctors, such as m ergers, increasing coverage of group 

insurance and self-insurance, and use of direct selling techniques may have 

a retarding effect on the growth in sales personnel. It is assumed that continued growth in insurance serv ices, in term s of policies issued, will be at 

about the same rate as in the past few years, but that there will be at least 

a doubling in the rate of increase of policies per office em ployee. Health 

insurance ca rriers w ill probably show a higher growth rate than life or property ca rrie rs, unless increasing health business is assum ed by these latter 

industry branches.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
45

This study suggests that employment in occupations directly related 

to EDP and m anagem ent--m anagers, program ers, systems analysts, console 

and other op era tors--w ill rise, that employment of keypunch operators may 

decline by 1970, and that the largest group of office em ployees will continue 

to be the general clerica l group. For this latter group, the study indicates 

that the number of w orkers employed for routine operations will be greatly 

reduced because of EDP, but that the number of those in jobs requiring some 

judgment and decisionm aking--jobs that cannot be com puterized, or that involve individualized response to p olicyh old ers--w ill remain constant.

Manpower Implications

Some of the findings of this study have important im plications for 

manpower trends and development for the econom y, for the insurance industry, and for some cities where the industry employs a substantial proportion 

of the w hite-collar labor force.

First: a slowdown in the rate of employment increase in a m ajor 

w hite-collar industry could make the general problem of adjustment to 

technological change m ore difficult. Thus far, rapid growth of office jobs in 

insurance has provided many openings each year for young girls graduating 

from high school. Although this source will not disappear, entry jobs will 

not be available to the same extent as in the past. At the same time, the 

number of young women entering the labor force will be increasing rapidly.

Second: slower growth of clerica l jobs in insurance is likely to have

particularly serious impact in cities where insurance companies have been 

one of the m ajor sources of employment opportunities for young w om en --for 

example, Des M oines, Iowa; Omaha, Nebr. ; H artford, Conn.; Jacksonville, 

Fla. ; Portland, Maine; and Springfield, 111. Vocational guidance counselors 

and others in these and sim ilarly affected localities will need to be prepared 

for these changing prospects.

Third: employee adjustments may becom e a m ore difficult personnel

problem in the future than in the past, for em ployees and personnel departments. Since the recruitm ent of young high school graduates is expected to 

taper off, high labor turnover--w hich provided the basis for attrition policies 

in adjusting to office autom ation--m ay no longer be relied upon to avoid d isplacement of em ployees. As EDP is extended to additional areas, personnel 

management w ill need to exercise a variety of manpower adjustment techniques 

so that further advances in office automation will continue without serious p ersonal problem s to the affected w orkers.

Finally, personnel offices w ill probably becom e m ore selective in 

their choice of individuals for entry positions in insurance companies. While 

electronic data processing reduces opportunities in routine clerica l work, 

some positions are created in program ing, sales, and other com plex work 

which require longer training or m ore education. Those who have the capacity to be trained for m ore responsible work and are seeking a career may be 

preferred.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
46

Appendix A. Notes on Survey Methods

The method of selecting the companies surveyed, the development 

of the questionnaires, and the procedures used in conducting the survey are 

described below. Copies of the questionnaires and covering letters are also 

presented.

Selection of Sample

A large cutoff sample was used in making this survey. The list of 

companies included in the survey was developed in part from establishment 

listings set up by State Employment Security agencies in connection with 

reports received under unemployment insurance program s. All establishments (or offices) classified in SIC 631 (life insurance); SIC 632 (accident 

and health); SIC 633 (fire, m arine, and casualty); SIC 635 (surety); and 

SIC 636 (title insurance) which reported a total of 250 or m ore em ployees 

were selected as the basis for developing a list of com panies. Over 500 

establishments were selected and then grouped by company. This grouping 

yielded about 200 com panies, each with at least one establishm ent of 250 

w orkers or m ore.

Next, the names of 200 sm aller companies w ere added to the list. 

One hundred life insurance companies were added by selecting every sixth 

name on a list (excluding those already chosen) entitled "Ranking of 716 Life 

Companies" (1962), published by the National U nderwriter. E very 13th 

company was selected from a list in B est1 s Insurance Reports (Fire and 

Casualty edition, 1962), excluding those already chosen. A number of these 

sm aller companies were later com bined with large com panies, having 

responded that they were subsidiary to, or otherwide affiliated with, a large 

company. Companies or company groups were placed in that category (life, 

health, property) which accounted for the greatest proportion of their total 

business. The final result was a sample of 423 com panies, with about ninetenths of the industry* s employment.

Survey Questionnaires and P rocedures

Separate questionnaires were developed for two stages of the study. 

A b rief screening questionnaire, designed to provide information on the 

company* s employment and computer status (see first questionnaire in this 

appendix), was developed in consultation with industry associations and 

officials in charge of EDP operations in a number of insurance com panies. 

The screening survey also requested that companies with m ore than one 

computer center indicate the total number operating. The questionnaire was 

m ailed with a covering letter to the presidents of 423 com panies. Responses 

were received from 410 companies or 97 percent of those surveyed, with 

employment com prising 89 percent of all industry employment, as of January 

1963. Results of this survey are presented by company, office employment, 

and computer status, in table 1.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
47

The second stage of the survey involved collection of detailed in formation about use of the computer system, effects on employment, and 

occupations.

Three versions of a basic questionnaire were developed in consultation with industry experts: one was specifically designed for companies which

had their own com puters; a second for companies which had ordered their 

first com puter, but had not yet installed it; and a third, for companies which 

were renting time from a service bureau: Companies which fit into m ore than

one of these categories (for example, the second and third), were placed in 

the category with the lowest number.

To obtain information about each computer installation in companies 

which might have several EDP offices throughout the country, the questionnaire for companies in group (l) was designed so that a second part could be 

sent in multiple copies, one for each EDP installation.

The questionnaires were pretested with five companies in each of 

the three industry subdivisions. On the basis of this trial, the questionnaire 

was slightly m odified.

From responses to the screening survey, a list of companies was 

developed for the second stage. Appropriate second stage questionnaires 

•were sent to 305 companies: 253 to companies with com puters; 25 to com panies awaiting delivery of their first computer; and 27 to companies renting 

time from a service bureau. The response rate was 81 percent for all com panies; 81 percent, companies with EDP; 80 percent, companies awaiting delivery of their first com puter; and 74 percent, companies renting time from a 

service bureau. Followup letters were sent and telephone calls w ere made to 

nonresponding com panies. Since the questionnaire was detailed, responses 

came in over a period of several months.

To insure accuracy, a postediting followup procedure was adopted. 

After the questionnaires had been edited for internal consistency, those with 

possible discrepancies w ere returned to respondents for correction , if n e cessary, or explanation. Approxim ately 100 companies were contacted in this 

way.

In addition, after all results were tabulated, a number of companies 

(with about a sixth of the survey employment) were visited by the analysts for 

information which might be of help in interpreting patterns revealed by the 

data collected, particularly in the area of future plans for EDP applications, 

and possible employment effects of these plans.

In tabulating the data, the classification of computers into fTarge, n 

nmedium, n and "sm all" was based upon rental price range for the basic control unit.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
48

U.S. DEPARTMENT OF LABOR

B U R EA U O F LABO R S T A T IS T IC S

W a s h in g t o n 25, D.C.

Dear Sir:

For several years the Bureau of Labor Statistics has

been studying the effect of electronic data processing on office

work. Reports based on this research have been used by management, educators, and industry associations, as well as by government, in assessing the effects of office automation on personnel

requirements, training, and personnel practices.

One of our current studies is a survey of the extent,

uses, and effects of electronic data processing in the Insurance

industry. Before we send a detailed questionnaire to those companies which use or have ordered computers, we need to have some

preliminary Information. Therefore, we would appreciate it if

you would let us have the data requested on the enclosed form.

All information collected will be treated confidentially.

No reports issued will identify individual companies in any way.

Your cooperation will be of the greatest assistance to

the Bureau of Labor Statistics. We should appreciate having your

reply, if possible, by April 4, in order that we may complete this

step in the survey.

Sincerely yours,

/ / 

/ -

Ewan Clague / /

Commissioner of Labor Statistics

Enclosure

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
BLS 2809

49

U.S. DEPARTMENT OF LABOR

BUREAU OF LABOR STATISTICS

W a s h in g t o n 25, D.C.

Budget Bureau No. 44*6302

Approval expires 12-31-63

Survey of Electronic Data Processing in Insurance

Your reply will be held

in strict confidence.

Company code

cm

1. Please give the number of employees, full- or part-time, on the payroll of this

company (including home, branch, and agency offices) for the pay period ending

nearest January 15, 1963.

a. Total employees for entire company (include agents

on commission, office, and all other personnel)............ .. . _________

b. Total office employees (exclude agents and T o t a l ............ _ _ _ _ _ _ _

custodial employees, but include home office, Male ••••••• _ _ _ _ _

branch, and agency office personnel). Female _ _ _ _ _

2. Please check each of the following statements HyesM or MnoM according to whether it

is, or is not, applicable to this company.

a. This company owns/rents one or more electronic computers (or

shares a computer owned/rented with other insurance companies). □ Yes N o □

If checked nyesM , give number of locations (including home, branch,

and field offices) at which computers are installed............ _ _ _ _ _ _ _

b.

c.

d.

e.

This company rents computer time from a computer service bureau

or other computer center............................... . . . .

This company has one or more computers on order (either alone

or in a share arrangement).....................................

This company plans to install one or more computers within the

next five years, for which an order has not yet been placed. .

This company does not plan to install a computer within the

next five years.............................................. ..

n Yes No D

D

No □

□ Yes No D

□ Yes No D

(Name and title of person to be contacted if questions arise concerning the report)

(Address)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
50

U.S. DEPARTMENT OF LABOR

B U R EA U O F LA BO R S T A T IS T IC S

W a s h in g t o n 25, D.C.

Dear Sir:

Several months ago you furnished us, in reply to our March 18

inquiry, some information concerning your company's use of e l e c ­

tronic data processing equipment. This information has been very

useful and your cooperation is very much appreciated.

As noted in our first letter, the form you filled out was prelimi

nary to a more detailed study. In order to complete the study we

need to have the information requested on the enclosed questionnaire. If affiliated or subsidiary companies share your computer

facilities, please respond for the group as a whole and list the

included companies on a separate sheet.

This survey is being conducted in response to widespread interest

in the extent and implications of electronic data processing in

businesses such as insurance. Your response will be kept confidential. Published findings of the survey will not identify

individual companies in any way.

We will greatly appreciate your cooperation in completing and

returning this questionnaire.

Sincerely yours,

Ewan Clague

Commissioner

Enclosures

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 1

Sent to companies with computers

BLS 2809-11-A

U .S. D E P A R T M E N T O F LA B O R

BUREAU OF LABOR STATISTJCS

W A S H IN G T O N 25, D .C .

B U D G E T B U R E A U NO. 44-6307 

A P P R O V A L E X P I R E S 12-31-63

Report for:

Survey of Electro nic Data Processing in Insurance

Your reply will be held

in strict confidence.

1. Please fill in the columns describing each computer now or previously owned or rented, or on order by this company or group, *

using one line for each computer. (Use extra sheets if needed.) Describe computers which are: Currently installed; on order;

previously used, but no longer in operation.

Do not include card calculators and EAM equipment (sorters, tabulators, reproducers, collators, calculators—e.g., IBM 604, 609,

610; Univac 40, 60, and 120).

Manufacturer

Designation

or name and

model number

of computer

Computer

location

(city / state)

Insert applicable

dates (month/year) If machine retired from

operation, indicate reason, and designation of

machine which replaced

it (if any)

Ownership arrangement

(check one)

Date

installed

or to be

installed

Date

retired

from

operation

Owned

Rented

from

Manuf.

from

other

source

□ □ □

□ □

□ □

□ □ a

n

a

*Note: If a computer is shared with other companies, please list names of other companies below, but complete the description of

the computer in the table above.

Name and model number of shared comouter:

(co. name) (address)

(co. name) (address)

(co. name) (address)

(co. name) (address)

(co. name) (address)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 2

2. If any offices of this company regularly rent computer time from an outside computer

a computer, please fill in the information requested below.

service bureau or from some other firm with

Location of offices which rent

computer time (city/state)

From what source is time rented? (if applicable)

Do you expect to continue renting time when

computers now on order are installed? Computer service

bureau

Other firm

with computer

Yes No

n !□ a

□ !□ □

□ □

3. If this company uses or is planning to use any of the types of equipment listed below, please fill in the information requested.

Check if Yes

Equipment Have

now

Have on

order

Definitely

planning

to order

Functions for which equipment is/will be used

(e.g., status inquiries, claim filing premium billing).

Data transmission (e.g.,

d atop bone, transceiver) !□ n

Optical scanning □ □

Magnetic ink character

recognition

Mark sensing □ □ n __________________________________________________________1

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 3

4. Taking into account your expectations concerning business expansion (or contraction), as well as plans for EDP and other company changes, what is your estimate about changes in employment in the specified categories—for the entire company in the

next three years? (Please do not limit your estimate to the EDP operations, or to any single sector of the company. We are

here attempting to find out what skills will be most needed in this industry. We would appreciate further comments on the bottom of this sheet.)

Occupational category

Estimated

company

employment

In next three years,

expect total company staff,

in this category, to

Reason or assumption on which

this expectation is based (e.g.,

"business growth", "merger",

Jan. 1963 *

Expand Remain

same

Decrease

"EDP adoption")

Professional and technical

Programers Zl n □

Systems analysts n □

All other, prof. & tech. □ □

Sales (agents, etc.) Cl n □

Managerial (company officers, dept,

managers, etc.) a !□

Clerical

Conventional-type EAM

operators □ a

Keypunch operators □ □ n

Electronic data processing

operators (e.g., console op.)

Stenographers and

secretaries □ □ □

Supervisory □ □ □

All other clerical (e.g.,

typists, clerks, etc.) n □ □

Estimates should approximate total employment figures given in question 5.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 4

5. Employment: Please give number of full and part-time employees on the payroll of this company (including all branch and company agency offices) during the pay period ending nearest January 15, for each of the requested years.

Payroll period ending nearest January 1 5 ,____

1963 I960 1957 1954

All employees, total for entire company

(include agents on commission if employees, office

and EDP personnel, and all other employees)

Office employees, total for entire company

Total

Male

Female

Agents, if employees (a)

Custodial and other non-sales, non-office

employees

Total number of employees performing work directly

associated with the EDP system (b)

(a) Do not include agents acting as independent contractors.

(b) A list of EDP occupations appears on the yellow sheet enclosed with the individual installation form.

FOR L IF E COMPANIES O N LY

For December 31 in each of the listed years, please fill in the requested information below.

December 31, 1962 December 31, 1959 December 31, 1956 December 31, 1953

Total number of individual

policies in force

Life

Other

Total number of group

certificates in force

Life

Other

Total dollar amount of life

insurance in force

(Name and title of person to be contacted if questions arise concerning the report.)

(Date of report)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 5

BLS 2809-II-A (Cont’d.)

Individual Installation

Form

U.S. D E P A R TM E N T OF LABOR 

Bureau of Labor Statistics 

Washington 25, D.C.

B U D G E T B U R E A U NO. 44-6307 

A P P R O V A L E X P I R E S 12-31-63

Survey of E lectro n ic D ata Processing in Insurance

Your reply will be held 

in strict confidence.

These questions, 6 through 9, refer specifically to individual computer installations. Please fill out a

separate set of answers for each location.

Report for:

Location of this installation (office) __________________________________________________________________

(city, state)

Name and model number of computer(s) at this installation

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 6

6. Please indicate any current or planned applications of the EDP system in this office by checking one box on each line.

Application or function

Not

applicable

in this

company

Not now

affected,

and not

planned

for EDP

Now fully

operational

on EDP system

(give year in

which placed

on EDP)

Not now operational in EDP system,

but planned for EDP

Within

1 year

from now

Within

2-3 yrs.

from now

Within

3-5 yrs.

from now

Indefinite

plan

a. Policy issue □ □ □ □ □ □

b. Underwriting □ □ □ □ □

c. Premium billing □ □ □ □ □ □

d. Premium accounting □ □ □ □ □ □ □

e. Policy loan accounting □ □ □ □

f. Policyholder dividend

accounting □ □ □ □ □ □ □

g. Stockholder dividend

accounting □ □ □ □ □ □

h. Investment records:

Mortgage loan

accounting □ □ □ □ □ □ □

i. Other investments □ □ □ □ □ □

j. Valuation of reserves □ □ □ □ □ □

k. Reserve for unpaid

claims □ □ □ □ □ □

h Unearned premium

reserves □ □ □ □ □ □

m. Agency (producer)

statistics □ □ n

n. Commission accounting □ □ □ □ □ □ □

o. Claims processing □ □ □ □

p. Actuarial analysis and

policy development □ □ □ □ □ □ □

q. Reports to statistical

agent (fire & casualty) □ □ □ □ □ □

r. Mortality and/or morbidity studies □ □ □ □ □ □

s. Personnel records n □ □ □ □ □

t. Payroll □ □ □ - □ □ □

u. General accounting □ □ n - □ □ □

Others (specify)

V . □ □ □ n n

w. □ _ _.._ □ □

i_i

V □ □ n □ □

V. _ □ □ n _ ..................................... ! □ 1____

1--------J □ □

At this location, is a consolidated (integrated) systems approach in effect (i.e., in which all major functions are processed through a consolidated master record file)? Yes [ j No j |

If yes, on what date did the consolidated system become operational? _

(month/ year)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5 7

7. Please fill in requested information for full and part-time employees in occupations directly associated with the EDP system

in this office during the payroll period ending nearest January 15, 1963* Brief guideline definitions of occupations are given

on the enclosed yellow sheet.

Occupations in EDP unit

Number of EDP personnel Source of personnel

Total Male Female

Number selected

for EDP unit

from within

company

Number recruited

for EDP unit

from outside

All EDP personnel

Project planners and systems

analysts

Chief programers, Programers I

Programers II

Supervisor, data processing

system

Console operators

Coding clerks

Keypunch and Verifier

operators

Peripheral equipment

operators (e.g., high-speed

printer and converter

operators)

Tape librarians, card and

tape file clerks

Electronics mechanics and

other machine maintenance

workers*

Receptionists, secretaries,

stenographers, typists

Other (give titles)

♦Note: If machine maintenance is performed by outside employees (e.g., by manufacturer's employees, or a contracting firm),

please check here Q ]

If programming is done by outside contractor, please indicate proportion of programming work thus handled_____%.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
58

Som e occup ation al g u id e lin e s for an sw e rin g qu estion 7. Employee should be counted in that occupation in which he spends more than 50 percent of his time.

P roje ct p la n n e r-P lan s and directs installation, modification, and operation of EDP system s. D esigns

organizational, procedural, and work-flow plans, applying knowledge of management an aly sis techniques.

Prepares budget estim ates; may participate in making decision s concerning personnel staffing and

promotions.

Sy ste m s a n a ly st —A nalyses data processin g problems to devise computer system requirements, to plan

machine layout, and to develop programming procedures.

Program er, c h ie f— P lan s, sch edu les, and supervises preparation of programs to solve mathematical and technical problems, or to process bu sin ess data by means of EDP equipment: a ssig n s, outlines, and coordinates work of programers.

Program er I — Converts or directs conversion of symbolic statem ents of technical or bu sin ess problems into

diagrams and language for solution by means of automatic data processin g equipment.

Program er I I — Selects and modifies standardized programs developed by professional programers.

Supervisor, data p ro ce ssin g sy ste m — Supervises and coordinates activities of workers who operate computer

and its components and peripheral equipment.

C o n so le operator—Monitors and controls electronic computer by interpreting programming instructions and

operates central control unit known as a console.

C o d in g c le rk — Converts information into predetermined code for subsequent use by keypunch operator.

K eypunch and verifier operator—Operates keypunch machine to transcribe accounting and statistic a l data

onto tabulating cards. Verifier operator checks accuracy of data punched on tabulating cards using keyboard-type machine which rejects incorrectly punched cards.

Peripheral equipment operators:

H ig h speed printer operator—O perates high speed printing machine to convert information previously

recorded on reels of tape into printed records.

Converter operator—Operates machine transferring data from one medium to another, such as cards to

tape.

T ap e lib ra rian — C la ssifie s, catalo gs, and maintains library of reels of magnetic or punched paper tape used

for automatic data processing purposes.

E le c tro n ic s m ech an ic— T e sts, repairs, and adjusts electronic computers and auxiliary electronic equipment.

May prepare technical reports describing performance of equipment.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
59

8. Please describe the current shift pattern of employees working directly with the EDP system at this office. If column

spacing does not permit full reply, add description on the bottom of this sheet.

Characteristic I

Day shift

II

Aft.-Eve. shift

III

Night shift

Weekend or

other shift

Hours (e.g., 9 a.m.-5 p.m.) — sp ecify hours

Days (e.g., Monday - Friday) — sp ecify days

Scheduled weekly hours (e.g., 3 7/4, 35) — give

number of hours

Number of employees

Functions performed during this shift:

(Check appropriate boxes)

a, machine operation (including peripheral) □ □

b„ machine maintenance □ □

c. planning and programming

d. other □ □ □

Do any office employees, other than those working directly with the EDP system, work an evening or night shift? Yes Q[]No 1 1

9. Has employment changed in any of the following categories because of the introduction of EDP in this office?

Number of employees

Increased Decreased No

change

□ □ Routine clerical recordkeeping

□ □ Keypunch and verifier machine operating

□ □ Electric accounting, tabulating, bookkeeping machine operating

□ □ Calculating machine operating (adding machine, comptometer, etc.)

□ □ Supervisors of above groups

(Name and title of person to be contacted if questions arise concerning the report.)

(Date of report)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
60

S e n t t o c o m p a n i e s r e n t i n g t i m e f r o m a c o m p u t e r s e r v i c e b u r e a u

BLS 2809-II-B U.S. DEPARTMENT OF LABOR

BUREAU OF LABOR STATISTICS

WASHINGTON 25, D.C.

Survey of Electronic Data Processing in Insurance

B U D G E T B U R E A U NO. 44-6307

A P P R O V A L E X P I R E S 12-31-63

Report for: Your reply will be held

in strict confidence.

1. Please fill in information below concerning each office in this company which rents computer time.

Location of offices which rent computer time (city /state )

From what source is time rented?

Computer service

bureau

3

3

n

Other firm with

computer

3

3

3

3

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
61

2. Please indicate, by checking the appropriate boxes, any applications for which computer time is rented.

Application or function Performed (whole or in

part) on rented computer

time

Done on conventional

equipment or manually

in this company

Not applicable in

this company

a. Policy issue Z Z Z

b. Underwriting Z Z Z

c. Premium billing z z

d. Premium accounting Z z z

e. Policy loan accounting Z z z

f. Policyholder dividend

accounting z z

g. Stockholder dividend

accounting Z z z

h. Investment records:

Mortgage loan accounting □ z z

i. Other investments z z z

j. Valuation of reserves z z

k. Reserve for unpaid claims z z

1. Unearned premium reserves Z z z

m. Agency (producer) statistics Z z z

n. Commission accounting Z z z

o. Claims processing 13 z z

p. Actuarial analysis and

policy development 13 z z

q. Reports to statistical agent

(fire and casualty) □ z z

r. Mortality and/or morbidity

studies 33 z z

s. Personnel records z z z

t. Payroll z z

u. General accounting Z z z

Others (specify)

V, z z

w . n z n-»

X . ZI z z

y• n z z

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
62

3. Please fill in requested information for full and part-time employees on the payroll of this company (if any) who work with

the (time rental) computers, using one line for each occupation.

EDP occupation

(e.g., programer, systems analyst, console operator)

Number of employees during

payroll period nearest Jan. 15, 1963

Total Male Female

4. Taking into account your expectations concerning business expansion (or contraction), as well as plans for EDP and other

company changes, what is your estimate about changes in employment in the specified categories—for the entire company

in the next three years? (Please do not limit your estimate to the EDP operations or to any single sector of the company.

We are here attempting to find out what skills will be most needed in this industry. We would appreciate further comments

on a separate sheet.)

Occupational category

Estimated

company

employment .

Jan. 1963*

Professional and technical

Programers

Systems analysts

All other

Sales (agents, etc.)

Managerial (company officers, dept.

managers, etc.)

C le rica l

Conventional type EAM

operators

Keypunch operators

Electronic data processing

operators (e.g. console op.)

Stenographers and

secretaries

Supervisory

All other clerical (e.g.

typists, clerks, etc.)

In next three years, expect

total company staff, in this

category, to

Expand Remain

same Decrea

□ ID ID

ID ID ID

Z Zl Z]

ID ZI Zl

□ ID ID

□ □ ID

ID □ ID

ID

Zl n

Z1 □ □

ID ID □

Reason or assumption on which

this expectation is based (e.g-

'"business growth" , * "merger",

"EDP adoption")

* Estimates should approximate total employment figures given in question 6.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
63

5. Taking into account your expectations concerning business expansion (or contraction), as well as company changes, please

check the statement which best applies to your company.

1 1 This company probably will rent or buy an EDP system within the next five years.

1 I This company probably will remain on a time rental basis only, for the next five years.

Remarks:

6. Employment: Please give number of full and part-time employees on the payroll of this company (including all branch and

company agency offices) during the pay period ending nearest January 15, for each of the requested years.

All employees, total for entire company

(include agents on commission if employees, office and EDP personnel, and all

other employees)

Payroll period ending nearest January 15,—

1963 1960 1957 1954

Office employees, total for entire company

Total

Male

Female

Agents, if employees (a)

..----V=Jllll

Custodial and other non-sales, non-office

employees

-r— j / —::...

Total number of employees performing work

directly associated with the EDP system

(a) Do not include agents acting as independent contractors.

FOR L IF E COMPANIES ONLY

For December 31 in each of the listed years, please fill in the requested information below.

December 31, 1962 December 31, 1959 December 31, 1956 December 31, 1953

Total number of individual

policies in force

Life

Other

Total number of group

certificates in force

Life

Other

Total dollar amount of

life insurance in force

(Name and title of person to be contacted if questions arise concerning the report.)

(Date of report)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
BLS 2809-II-C

________________________ 64__________________________

Sent to companies with their first computer on order nzn

U.S. DEPARTMENT OF LABOR

B U R E A U OF L A B O R S T A T IS T IC S

WASHINGTON 25, D.C.

Survey of Electronic Data Processing in Insurance

Report for:

B U D G E T B U R E A U NO. 44*6307

A P P R O V A L E X P I R E S 12*31*63

Your reply will be held

in strict confidence.

1. Please fill in the columns describing each computer on order by this company or group, * using one line for each computer. Do

not include card calculators and EAM equipment (sorters, tabulators, reproducers, collators, calculators—e.g., IBM 604, 609,

610; Univac 40, 60, and 120).

Manufacturer

Designation or

name and model

number of computer

Planned

computer location

( c ity / state)

Date to be

installed

(month/year)

Ownership arrangement

(check one)

Owned

Rented

From

manufacturer

From

other

source

□ □

♦ Note: If a computer will be shared with other companies, please list names of other companies below, but complete the description of the computer in the table above.

Name and model number of shared computer: ________________________________________________________

(co. name) (address)

(co. name) (address)

(co. name) (address)

(co. name) (address)

(co. name) (address)

(co. name) (address)

2. If any offices of this company regularly rent computer time from an outside computer service bureau or from some other firm with

a computer, please fill in the information requested below.

Location of offices which rent

computer time (city /state)

From what source is time rented?

Computer service

bureau

Other firm

with computer

□ □

(if applicable)

Do you expect to continue renting

time when computers now on order

are installed?

Yes No

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
65

3. If this company uses or is planning to use any of the types of equipment listed below, please fill in the information requested.

Check if Ves

Equipment Have

now

Have on

order

Definitely

planning

to order

used (e.g. s t a t u s inquiries, c l a i m filing,

p r e m i u m billing).

Data transmission (e.g.,

d a t a p h o n e , t r a n s c e i v e r ) □ □ □

Optical scanning □ □ □

Magnetic ink character

recognition □ □

Mark sensing □ □ □

4. Taking into account your expectations concerning business expansion (or contraction), as well as plans for EDP and other company changes, what is your estimate about changes in employment in the specified categories—fo r t h e e n t i r e c o m p a n y in t h e

n e x t t h r e e y e a r s ? (Please do not limit your estimate to the EDP operations, or to any single sector of the company. We are

here attempting to find out what skills will be most needed in this industry. We would appreciate further comments on a separate sheet.)

Occupational category

Estimated

company

employment

In next three years,

total company staff

category to

, expect

in this Reason or assumption on which

this expectation is based (e.g.,

"business growth", "merger",

Jan. 1963* Expand Remain

same Decrease

"EDP adoption")

Professional and technical

Programers □ □

Systems analysts

All other, prof. & tech. □ □

Sales (agents, etc.)

Managerial (company officers, dept,

managers, etc.) □ □

Clerical

Conventional-type EAM operators □ □ □

Keypunch operators □ □

Electronic data processing4

operators (e.g., console op.) □ □

Stenographers and

secretaries □ n

Supervisory □ □ □

All other clerical (e.g., typists,

clerks, etc.) □ □ □

"Estimates should approximate total employment figures given in question 6.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
_____________________________________________ 66_____________________________________________

5. Please indicate any planned applications of the EDP system to be installed in this company by checking one box on each line.

Planned for EDP operation

Application or function Not applicable

in this company

Not planned for

EDP application Within

1 year

from now

Within

2-3 yrs.

from now

Within

3-5 yrs.

from now

Indefinite

plan

a. Policy issue □ □ □ □ □ □

b. Underwriting □ □ □

c. Premium billing □ □

d. Premium accounting □ □

e. Policy loan accounting □ □

f. Policyholder dividend

accounting

□ □

g. Stockholder dividend

accounting

h. Investment records:

Mortgage loan accounting

i. Other investments

j. Valuation of reserves

k. Reserve for unpaid claims □ □ □ □

1. Unearned premium reserves

m. Agency (producer) statistics □ □ □ □ □ n

n. Commission accounting □ □ □ □ □

o. Claims processing □ □ □ □ □

p. Actuarial analysis and

policy development □ □ □

q. Reports to statistical

agent (fire and casualty) □ □

r. Mortality and/or

morbidity studies □ □ □ □ □ □

s. Personnel records □ □ □

t. Payroll □ □ □ □ □ □

u. General accounting □ □ □ □

Others (specify)

V . □ □ □ □ □

w . □ □ □ □ □ □

x . □ □ □ □ □ □

y- □ □ □ □

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
67

6. Employment: Please give number of full and part-time employees on the payroll of this company (including all branch and company agency offices) during the pay period ending nearest January 15, for each of the requested years.

Payroll period ending nearest January 15,____

1963 1960 1957 1954

All employees, total for entire company

(include agents on commission if employees, office

and EDP personnel, and all other employees)

Office employees, total for entire company

Total

Male

Female

Agents, if employees (a)

Custodial and other non-sales, non-office

employees

Total number of employees performing work

directly associated with the EDP system

(a) Do not include agents acting as independent contractors.

F O R L I F E CO M PANIES O N LY

For December 31 in each of the listed years, please fill in the requested information below.

December 31, 1962 December 31, 1959 December 31, 1956 December 31, 1953

Total number of individual

policies in force

Life

Other

Total number of group

certificates in force

Life

Other

Total dollar amount of life

insurance in force

(Name and title of person to be contacted if questions arise concerning the report.)

(Date of report)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
6 8

Appendix B. Selected Bibliography

Computer Applications in Insurance Companies

Anderson, D. L. "Electronic Underwriting, " The Spectator, October

1959, pp. 34-35, 63.

"Automation Brings Branches Closer to Home, " Business Automation,

September 1962, pp. 24-25.

Baxter, Turner B. "Computer Success Story, " Best's Insurance News,

Life Edition, April 1959, pp. 43-45, 54.

Cass, Ronald A. "Automation in the Insurance Industry, " The Spectator,

April 1959, pp. 24-25, 54.

Donally, J. B. "Profit Builder," Best's Insurance News, Fire and Casualty Edition, September 1962, pp. 55, 66-6?.

"EDP Applications in Life Insurance Companies, " Automation Report

No. 10, New York, Life Office Management Association, 1963. 32 pp.

Elliot, Richard B. "Automated Policy W riting," Best's Insurance News,

Fire and Casualty Edition, November 1962, pp. 70, 72, 84.

Golden, Larry. "Conversion and Installation, " Best's Insurance News,

Fire and Casualty Edition, November 1963, pp. 62, 64-65.

Gould, G. E. "A Functional Approach, " Best's Insurance News, Life

Edition, April 1961, pp. 76, 78-80.

Hawkins, Don C. "Optical Scanning System, 11 Best's Insurance News, Fire

and Casualty Edition, December 1962, pp. 39, 52.

"Instant Information, " Best's Insurance News, Life Edition, July 1965,

pp. 27, 38.

"The Insurance Man's Best Friend," Business Week, November 7, 1964,

pp. 100, 102, 104.

Jones, W. Everett. "The Effects of Electronics," Best's Insurance News,

Life Edition, July 1961, pp. 67-70.

Keller, Arnold E. "They do a Heap of Planning Down at State Farm, "

Business Automation, May 1962, pp. 29-33.

Kelley, John W. "Premium Payments Made Automatically," The Spectator,

April 1956, pp. 45-46, 84.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
69

Kornblum, Richard D. "Insuring Profitable P olicies," Business Automation, June 1965, pp. 55-59, 70, 72.

Kraegel, Wilfred A. EDP Organization in Life Insurance Companies,

Life Office Management Committee, Automation Committee Report

No. 2 (New York, Life Office Management Association, I960). 9 pp. ,

plus charts.

Life Office Management Association. EDP in Life Insurance, Proceedings

of Automation Forum (New York, Life Office Management Association,

1962). 544 pp.

McGill, John C. "Automated Payroll," Best's Insurance News, Life Edition, June 1963, pp. 31-33.

McLaughlin, J. G. "Optical Scanning," Best's Insurance News, Life Edition, December 1962, pp. 31, 42, 44.

Meacham, Alan D. and Thompson, Van B. , editors. Computer Appli*

cations Service, Vol. I(Detroit, American Data Processing, Inc. , 1962).

2UU pp.

Mitchell, G. M. "Why Automation Piecem eal?", Journal of Machine

Accounting, March 1962, pp. 6-8, 10-12, 14.

Phillips, A. E. "Success and Failures," Best's Insurance News, Fire and

Casualty Edition, October 1962, pp. 68, 70-72.

Rummel, Harry J. "Task Force Approach, " Best's Insurance News, Life

Edition, October 1964, pp. 65, 68-71, 78.

Schaberg, Ralph P. "The Night Shift," Best's Insurance News, Life Edition, May 1958, pp. 25-27.

Smith, Kenneth W. "Optical Scanning Methods," Best's Insurance News,

Fire and Casualty Edition, September 1963, pp. 59, 66, 67.

Smith, William M. "Automation in the Life Insurance Business: A Case

Study, " Michigan Business Review, March 1962, pp. 8-13.

Volta, V. "Computer Feasibility Studies, " Best's Insurance News, Life

Edition, February 1963, pp. 44-48.

Case Studies: Effect of EDP on Insurance Personnel

Bureau of Employment Security. A Large Life Insurance Company Automates, Automation Program Report No. 3, U. S. Department of Labor,

April 1964. 82 pp.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
70

Bureau of Labor Statistics. Adjustments to the Introduction of Office Automation, Bulletin 1276, May I960. 86 pp.

____________ . The Introduction of An Electronic Computer in a Large Insurance Company. October 1955. 18 pp.

Cibarich, August L. "An Insurance Company Automates, " Employment

Security Review, July 1962, pp. 40-41.

Faunce, William A. "Social Stratification and Attitude Toward Change in

Job Content," Social Forces, December I960, pp. 140-148.

Hardin, Einar. "The Reaction of Employees to Office Automation, "

Monthly Labor Review, September I960, pp. 925-932.

Jacobson, Eugene, and others. "Employee Attitudes Toward Technological

Change in a Medium-Sized Insurance Company, " Journal of Applied Psychology, December 1959> pp. 349-354.

Scanlon, Burt K. "After You Automate, Then W hat?", Office Management

and American Business, March 1961, pp. 30-32.

Trumbo, Don A. "Individual and Group Correlates of Attitudes Toward

Work-Related Change," Journal of Applied Psychology, October 1961,

pp. 338-344.

Manpower Requirements and Wage Data for EDP in Business

"Annual Survey of Data Processing Salaries, " Business Automation, June

1965, pp. 38-49.

Bureau of Employment Security. "Occupations in Electronic Computing

Systems. " August 1965. 72 pp.

Bureau of Labor Statistics. "Employment Outlook for Electronic Computer Operating Personnel and Programmers. " Reprint from BLS

Bulletin No. 1375-50, 1964.

Canada Department of Labour. Electronic Data Processing Occupations

in a Large Insurance Company! Ottawa, Canada, 1961. 41 pp.

Goodman, Edith Harwith. "Computer Use and Personnel Survey, Part II, "

Data Processing, August 1964, pp. 18-20.

Brandon, Dick H. "The Computer Personnel Revolution, " Computers and

Automation, August 1964, pp. 22-25.

Rico, Leonard. "The Staffing Process and the Computer," Management

of Personnel Quarterly, Autumn-Winter 1962, pp. 32-38.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
71

U. S. Department of Labor, Office of Manpower, Automation and Training.

Reading Machines for Data Processing; Their Prospective Employment

Effects, Manpower Report No. 7. 12 pp.

Insurance Personnel and Related Industry Trends

Bureau of Labor Statistics. Industry Wage Survey, Life Insurance, Bulletin 1324, 1962. 36 pp.

Cosgrove, John N. "Automation Effect on Companies and Personnel Has

Varied Aspects, " The National Underwriter, October 23, 1959,

pp. 22-24.

Holran, Virginia T. "Employment in the Insurance Business, 1962, " The

Journal of the American Society of C. L. U. , Spring 1963, pp. 154-165.

Institute of Life Insurance. "Insurance Personnel in the United States,

May 1962," The Tally of Life Insurance Statistics, October 1962,

pp. 1-3. And "Insurance Personnel in the United States, May 1963,"

The Tally of Life Insurance Statistics, April 1964, pp. 1-4.

Institute of Life Insurance. Life Insurance Fact Book, 1965. New York,

Institute of Life Insurance^ 12& pp.

Life Office Management Association. "Personnel Directors Describe

Major Problems: Recruiting, Training, Salaries Top List as in Past, "

Personnel Quarterly, March 1963, 16 pp.

McAulay, A. H. "Forecast for the Seventies," The Spectator, Part I,

July 1962, pp. 13-15, 49; Part II, August 1962, pp. 11-13, 91-92.

Rennie, Dr. Robert A. "Insurance Distribution Methods, " Best's Insurance News, Fire and Casualty Edition, January 1964, pp~ 52, 54, 56,

68-71.------

Rennie, Dr. Robert A. "Obsolete Marketing Methods Blocking Successful

Innovations in Insurance, " The Weekly Underwriter, January 25, 1964,

pp. 59-60.

☆ U.S. GOVERNMENT PRINTING OFFICE : 1966 O - 797-566

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis