You Bet Your Life: Life Assurance’s Early History6 October, 2015
You Bet Your Life: the Early History of Life Assurance
Around 1700, social and economic conditions prevailed which made the birth of life assurance as we know it not only possible, but inevitable.
Since the time of Sir Thomas Gresham in the mid-Elizabethan period, economic conditions and investment opportunities became increasingly sophisticated but medicine, general health and life expectancy remained anchored in the Middle Ages: life remained extremely precarious. And so to a population which loved and understood gambling – at least conceptually – the appeal of life assurance was obvious.
Whether you call it gambling or investing, the late 16th Century Londoner didn’t make that distinction. He was an enthusiastic, sophisticated – if not necessarily wise – punter in money markets in whichever form they came.
By then and for well over a century London had been the home of the Royal Exchange, our own bourse of international trade.
Since the Restoration, lotteries – both public and private – were once again legitimate: it’s estimated that over 3.5 million tickets were sold in the 1690s.
The City also hosted the headquarters of various joint-stock trading companies – the Levant, the East India, the Hudson’s Bay, the Africa, the Muscovy, and many more. This risk to their ships carrying high value cargoes was unthinkable. This gave rise to marine insurance obtainable out of coffee shops such as Edward Lloyd’s. And while quite often the lives of ships’ masters might be insured, but we should discount this as being life assurance as it is commonly understood, i.e. for the benefit of dependents rather than investors.
Similarly, following the Great Fire of 1666, fire insurance emerged and with it the wonderful metal signs of the companies attached to the front of insured buildings.
But life assurance was slightly late to the party in this story. We may argue perhaps, as radically-minded social historians, that the explanation for this is that goods and property were more highly valued than lives. But no. The emerging “middling sort” with spare money to invest but no real security for their dependents in a still unsure and unpredictable world, would have snapped up life assurance in a heartbeat.
he problem was that nobody at that time really understood the risk. That was until Edmund Halley, the Astronomer Royal, produced in 1693 the first English mortality tables. Following Blaise Pascal in France a generation earlier, these were crude compared with what was to come in the years ahead, but sufficient enough to allow a new insurance category to emerge.
Almost immediately the Society for the Assurance of Widows and Orphans was established in 1699.
Then in 1706, William Talbot and Sir Thomas Allen founded what most consider the world’s first life assurance company: the Amicable Society for a Perpetual Assurance Office, attracting 2,000 members who paid £6 4s per annum, a considerable premium for that time. In the early days it operated from the Cheshire Cheese tavern in Fleet Street – still there today – before setting up a permanent office in 1716 and adopting its serpent and dove symbol.
Early success did not prevent the company from suffering from common setbacks of the day. It lost £13,000 during the South Sea bubble of 1720 and during the same period saw over £8,000 disappear via embezzlement by its own staff.
But the basic business was strong. Over the years the company doubled and re-doubled its members, eventually to 32,000 by 1836. Many strong competitors had sprung up in the intervening time and in 1866 the Amicable was acquired by Norwich Union (founded 1797).
Mike Paterson is the founding director of London Historians which celebrated its 5th anniversary in August 2015. He studied history at Royal Holloway, University of London in the early 1990s. While providing most of the content for the London Historians web site and blog, he also organises their very busy events programme. He is most interested in the late Stuart and Edwardian periods. Mike’s current research projects include the history of coaching inns in the capital and London’s boxing heritage. Follow him on Facebook and Twitter.