St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-08-10
HOW THE L1FERs STARTED.
Historical Review OF Life Insur-

HISTORICAL hcVltW Vi l1Iic AHSuE-
ance in the United States.
The system of life insurance embraces
variety of contracts by which the In
surers engage 10 pay capital sums on
he decease of policy holders or nomt-
nees, in consideration of other sums re-
ceived during their lifetime. These
contracts may be divided into two
classes-(D those in which the sum m
sured is certain TO become payable, pro-
vided only the insurance is duly kept in
force. and ~ those which are of tenn
pOrary or contingent character, so that
the sum insured may or may not become
payable according to circumstances.
1t does not appear that the principles
of insurance were applied In any detl-
mite form to transactions depending on
human life until about the sixteenth
century. At that time, and for long
afterwards in England. the private I'M
derwriters who carried on the business
of insurance sometimes undertook risks
upon lives for short periods, to cover
contingencies of temporary character.
The premiums were very high, but this
was in part necessary for two reasons
first, the insurers had no sufficient data
upon which to estimate the risk they
incurred; and secondly, the transac-
tons were probably not numerous
enough to secure anything like regu-
lar average in the occurrence of claims.
About the end of the seventeenth cen
fury several annuity" schemes were
formed. notably that of the MERGERS
Company of London, for the benefit of
the widows and orphans of subscribers.
In the United States life insurance
has attained greater relative impor-
lance among financial institutions than
in any other country. Its history here
extends back to an early period. but the
system has received its main develop
ment in comparatively recent times.
During the years which followed the
close of the civil war il grew with I'M
paralleled rapidity. The social disor-
derS of the period excited anxiety for
the future, Ond directed earnest atten-
ton to institutions which promised ex-
ceptiOnal security. The general gov
eminent. by its financial administra-
ton, and especially by its issue of paper
money. furnished a powerful stimulus
to the speculative tendency in this
as in every branch of business.
New companies were established
in great numbers: new plans and
features of assurance contracts
were devised; thousands of energetic
agents canvaSSed the community
with their solicitations; and the pub
iished report of tile assurance CON-
panies reflected, in high degree. the
fictitious prosperity of the period of in
fiatiOn. The financial crisis OF 1873 APP
piled to the companies test of great
severity. The mushroom institutions
OF recent growth fell rapidly; and,
while the standard societies. which were
administered with wise cons ervatism,
and which had always held the greater
part of the business, were mistaken,
their growth was seriously checked.
From 1878 to 1879 the number of COM
panies and the aggregate amount at
risk steadily decreased. Since then. al
though 10 new companies have been
organized. there have been no failures,
and healthy and natural increase has
been observed in the business of the eX-
listing offices.
A subject of special interest in con-
nectiOn with life assurance in this cOHn-
try is the legislation by which it is reg
ulated. While the national government.
under the constitution of the United
States, has supreme control over all
commerce between the states, the courts
hold that insurance in its various forms
is not commerce, and that corporations
created by a state have no corporate
powers beyond the limits of that state
and can transact no business be-
yOnd those limits. except on Suf-
ferance of the local gOvernm ent.
Hence the life assurance companies
are the creatures of state law, and are !
controlled by the legislatures of the
states in which they operate. The first
systematic attempt to regulate the busi-
ness by government supervision was
made by the state of Massachusetts UNI
der statute passed in 1853, establish
ing an insurance department" New
York adopted a similar law in 1889, and
the example has since been followed in
nearly all the states, even ID those
which have no important assurance
companies of their own. Each state
has its own peculiar laws, and these I'M
dergo frequent changes in detail as sue
cessive legislatures attempt to improve
or reform the business.
The ''Tontine" system of insurance
has come into prominence of late years.
The policy holders under this plan agree
that no dividend, return-premium or
surrender value shall be received for
term of years called the ''tOntine
PERIOD; but that the entire surplus
from all sources, including lapSeS, shall
be accumulated to the end OF that
period, and then divided among all who
have maintained their assurances in
force. The tOntine companies usually
offer this plan as an alternative with the
ordinary mode of assurance. and large
numbers of applicants select it,