New-York tribune., 1909-09-25
HOW INSURANCE GREW
BOOM CAME AFTER 90.
Development of J'ario"s Forms of
Policies and Increase of Protection.

auaount Of business in insuTing lives was IN the
hands Of religious or fTaternal organizations ana
stock companies, which conducted 1t as a sue
issne to banking or trust business Between
1S43 and 1S47 seven mutual companies were OF
eanized. All of them still in existence and
foremost in the ranks OF the army of other
eoYnpanies which have grown UP around them
These companies speedily organized agency
forces and systems OF presenting insurance prop
ositions attractivey. surrounding themselves
with nrecautiops which were to the mutual ad-
vantage Of the companies and their policy
holders and inaugurated vigorous campaigns
for business II is reasonable 20 estimate that
the volume Of insurance il force in $40 did not
exceed S1OOOOOOO Under the stimulus applied
by the pioneer mutual companies this total had
been doubled four years later while in 1919 II
exceeded S4OOOOOOO and in 1854 S.0Oo0O0O.
The New York Insurance Department was or
ganized in 1859 and since then there have been
available all reports and comparative statistics
Of the companies doing business in the state
New York state companies have always trans
acted the bulk of the insurance business OF the
country.
life insurance took upon itself 4 fresh attrac-
tion, and provided the sellers with a new appeal
which undoubtedly stimulated the public inter
est tremendously. when, in 1860 nou-forfciting
policies were introduced. Until then all policies
according 10 their terms. lapscd if the premiums
were not paid. One was insured only so long as
the premiums were forthcoming II had become
common practice, however, for the companies to
give pad-up insurance, or proportion OF cash
for surrendered policies; but that was custom
and not a right which the companies yielded TO
their customers.
NEW YORK COMPANY FIRST.
1t was a New York company which first issued
. non-forfeting policy. Before three Legis-
.Iatures previously had Elizur Wright Commits
sioner of Insurance for Massachusetts,, urged
non-forfeiting law, and finally obtained its en-
actmcnt by the lawmakers Of that state.
In this manner the insurance business ad-
vanced at q leap and took firm stand that was
due TO rebound to the companies lasting benefit
by making their contracts with polcyhodeTs
1,st and safe Then came endowment policies,
giving protection to the family Of the insured
for a stated term OF years and providing for a
payment in cash to the insured when the policy
expired, if he survived. Here was effected
safe combination Of investment and insurance
Following were the tontine policies, in the
issuing OF which some OF the companies took
hack step in regard to forfeitures and progressed
in regard to cash values. The tontine policy
was forfeitable for non-paymcnt Of premiums.
bat stipulated for a cash value at the end of the
first dividend period from the reserve fund Of
the policy and its surplus accumulations
These policies enjoyed much popularity for
nye years from 1869 to 1874 The dividend
period on tontine policies was either ten, fifteen
or tsenty years. Deferred dividends were NJ
new. as al OF the dividends of the early COM
panies were either deferred or paid in scrip, the
payment of which was in turn deferred. 1t was
argued that the cost Of insurance for long terms
OF years had not been definitely ascertained.
and that pending exact information on this
point a surplus must be accumulated to provide
for contingencies BY making the policy for
feitabIe II was designed to increase the cash
value to survivors at the end Of the tontine
term Thus was strengthened the appeal to
those who not sufficiently impressed by the
risk of death by holding out to them the in
Sestment feature.
DEFECTS OF TONTINE PLAN.
Tontine policies did not turn out as they were
expected. The estimated results were based
upon an interest rate which suffered decline to
an extent that cut the income from this source
by 50 per cent The profit from lapses was also
cut by the tendency Of holders of tontlne policies
not to allow their policies to expire. but to pay
the premiums In hope Of participating in the
profits that were promised at the end Of the
term
The first tontines that matured were much less
profitable than had been estimated. But they
were still sufficiently remunerative TO demon
gtrate what could be done under certain cOndl-
lions, and so they retained much Of their at
tractiveness for policyhoders. This branch Of
The business hOurished BY the cash surrender
value option an opportunity was given to obtain
Insurance for term Of years and then receive
back as much. If not more, than had been paid
IN in premiuma Tontines were made non-for-
feIting. and in the early sos the bulk of the in
surahce business was being done by tontine
fnyY, Tla nias