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"Education will be our strength, and the sooner the public is better informed and more conscientiously treated, the greater the strides in adequately protecting its life values."

—John William Clegg

WHEN WORLD WAR I ENDED in November 1918, the life insurance industry, along with the rest of the world, found itself facing another crisis: a devastating influenza epidemic that took more America lives than the Great War had exacted. From late 1918 through 1919, extraordinary numbers of death claims paced a severe financial strain on the life insurance companies. The general alarm was reflected in numerous articles appearing in the industry press. "The Great Scourge of 1918," Life Association News termed the illness in its November issue. "When it is estimated by competent authorities that death losses as a direct result of the influenza epidemic will in themselves reach the enormous total of $40,000,000 during the current year," the article said, "the seriousness of the matter becomes apparent."

The estimates, The Insurance Press explained, were based on the published announcements of the Registrar of Vital Statistics of New York City, and other large municipalities, showing that the mortality for the last week in October was running at the rate of 50.00 per thousand. Contrast that with the mortality ratio of 12.40 for the corresponding week of 1917. "According to accepted figures," the article said, "the total death claims paid in 1917 amounted to $2,264,548,664."

Combining these "super mortality" costs in both classes of the business, the editors reasoned, "it may be adduced that the total claim payments, during the crest of the wave of disease which has swept the nation, amounted to $10,071,412 a week, traceable directly to the deadly germs of influenza and pneumonia."

The National Underwriter pointed out that the bulk of the claims were on the lives of "young men stationed in the various cantonments." Noting that when the United States entered the war, many believed that it was unwise to carry military personnel on the books at the same rates as civilians, the editors observed:

As one company official pointed out, under normal conditions the men in army camps are probably as well off from the standpoint of health, as they would be in civilian life. But this epidemic and the heavy toll of lives it has taken clearly demonstrates that the life companies…are subjected to what the fire insurance companies term a conflagration hazard….

While it is unfair to approach the whole question on the basis of what this epidemic, which is, admittedly an unusual thing, has done, it nevertheless emphasizes the existence of a condition that cannot be ignored. If many of the men who have died had not been in army camps and subjected to the exposure that the army life carries with it they would never have contracted the disease.

The editors hastened to add that these views were not to be taken as a criticism of the army medical corps. "Under ordinary conditions the men at the cantonments undoubtedly get much better medical attention, and their health is more carefully safeguarded than would be the case if they were at home," they concluded.

In December Life Association News reported, "INFLUENZA EPIDEMIC STILL CONTINUES: Losses Tremendous and Extra Premiums Suggested—Strong Possibility that Dividends Must Be Cut or Reduced." The Public Health Service at Washington, the article said, estimated that between 300,000 and 350,000 deaths could be attributed to the disease.

The Insurance Field raised the estimated losses in claims to $50 million, informing its readers:

As the influenza and pneumonia claims received by the various companies in the last two months began to roll up it was agreed among company officials that dividends of many of the companies hit hardest probably would be affected. The financial drain in some cases is exceedingly serious as the mortality of certain companies has been brought well above 100 per cent, making necessary a call on surplus funds. It also is freely predicted that several of the weaker life insurance institutions whose surplus funds are not adequate to meet the situation will find it difficult to weather the claims and may deem it advisable to negotiate for reinsurance.[i]

Events were to prove the melancholy predictions all too accurate. Throughout 1919 articles describing the detrimental effects of the disease on human life and the resources of the industry appeared with frequent regularity in the industry press. It was a cruel lesson to the American people. Many who buried sons, daughters, wives, husbands and sweethearts that year came to understand the value of adequate life insurance coverage with dramatic conviction.

Similarly, war risk insurance had sent the same sobering message into thousands of homes. As the resolution at the New Orleans convention of 1918 had made plain, the NALU wholeheartedly endorsed the national government's plan to offer life insurance to military personnel for the duration of the war. After the Armistice, with the Soldiers' and Sailors' Insurance bill, the government also offered inducements for those returning to civilian life to keep their insurance in force. For agents, the situation presented an excellent opportunity to encourage veterans to buy more life insurance. Urging those who held policies under the War Risk Insurance Act to continue them in force with the ultimate intention of converting them to a better form became a major theme of NALU president Voshell's administration. Emphasizing this point in a speech before the Philadelphia association on December 5, 1918, Voshell explained:

Amount other things, the act provides that the soldiers and sailors may… purchase life insurance in the maximum amount of $10,000 to be paid on the death of the insured to a designated beneficiary, a sum equal to a maximum monthly income payment of $50 for 20 years.

The plan of insurance in every case was written on the One Year Renewable Term without medical examination or restriction as to department of the service. The act further provided that the soldier or sailor must, within five years from the date peace is declared, convert the certificate into one of the plans decided upon by the government to replace the term contract if he would have the protection sought, the conversion to be made without medical examination.

Outlining the procedures for conversion of these policies as directed by the Secretary of the Treasury, Voshell expressed the opinion that it was the agents' duty to influence "every soldier and sailor possible to convert his term insurance into some other form for as large an amount as his financial circumstances will permit to the end that the government insurance plan may not fail, but redound to the credit of the nation as one of the most justifiable pieces of legislative machinery imbuing the fighter with the spirit to go in and finish the job with the full realization that if he perishes, his family lives."[ii]

For most Americans, 1919 was a year of readjustment. The nation settled down to face a decade of peace, prosperity, and prohibition. The life insurance business, generally, seemed favorably disposed to the idea of prohibition. The industry press at this time published many articles devoted to the subject, quoting actuaries, medical examiners and company officers who spoke in favor of the new law. Remarking on the uniformly positive response to the Eighteenth Amendment, the editors of Life Association News informed the agents in their 1919 issue:

Practically all comment is to the effect that prohibition will be beneficial in every particular way. It is claimed that the health of the insuring public will be better, and consequently there will be a greater proportion of acceptable risks; that money spent in drink will now be diverted to, or at least a portion diverted to payment of insurance premiums, and in truth no one seems to greatly regret the passing of the day in a country which has been referred to as, "the land of the spree and the home of the rave."

The associated agents faced the post-war decade confident that they were witnessing an era of prosperity and growth. The public had regained its confidence in how companies were managed; it was evident that life insurance was held in better esteem than in 1905. Sales during the intervening years had been impressive. Proschansky comments:

The amount of insurance in force in American companies in 1919 was $35,880,000,000 as compared with $16,404,000,000 in 1910, an increase of 118 percent during the decade. The number of policies in force was 63,000,000 in 1919 as compared with 30,000,000 policies in 1910, an increase of 110 percent during the ten years….

Partly accounting for this rapid growth was the growing use of insurance to meet specific needs of the insured party. This trend had already been evident in the previous decade, but it received widespread attention after 1910. Business insurance, including corporation and partnership insurance, and life insurance for inheritance tax purposes, began to be written in considerable volume during this decade. Equitable first introduced group insurance in 1911 and by the close of 1919 twenty-nine companies had issued group insurance for a total of more than a billion dollars. The growing liberalization of the policy contract also won the approval of the insuring public. The provision for special disability and accident benefits was especially noteworthy; the Mutual Life of New York made a number of significant experiments along these lines during the decade.[iii]

Voshell undoubtedly expressed the views of most people in the business when he discussed the reasons for the favorable conditions at the NALU convention in Pittsburgh that September:

When the United States permitted its fighting men to insure their lives through government insurance it established life Insurance as an institution, and in a way that we never could have done. Fixing the amount for each soldier, sailor and marine at $10,000 and making the payments in monthly installments instead of lump sum, emphasized the necessity for larger insurance on lives of civilians and aided materially the placing of income policies. The effect of this insurance has been to stimulate the writing of the greatest volume of new business by the private companies in their experience. When we add to this the weight of the epidemic of influenza and inflated commercial affairs, we find agents producing business in amounts impossible to conceive a few years ago, and with a swaggering ease that fails to find any disposition to view the future in other lights.[iv]

Many ex-servicemen returning to civilian life took up life insurance as a career. The influx of new blood is reflected in association membership. By September 1919, membership in local associations came to a total of 10,372. At the annual convention in Pittsburgh, the delegates elected J. Stanley Edwards, general agent for Aetna Life at Denver, to succeed Voshell. Held at the William Penn Hotel, the 1919 meeting represented a departure from former conventions in several respects. As Edward A. Woods pointed out, even though it is the second oldest association, the Pittsburgh ALU had never hosted a national convention before. Also, the format of this convention differed from previous meetings. New emphasis was given to the practical needs of the field force. For smaller groups with special interests there were discussion sessions on such topics as "The Best Methods of Selecting Agents," "Industrial Life Insurance as a Feeder for Writing Ordinary," "Life Insurance for Farmers," and "Systematically Planned Work."

The general tone of the meetings was less formal and more exuberant than the staid proceedings of an earlier day—an indication that association membership had become less exclusive, more democratic and, perhaps, more youthful. Along with the rest of the country, the life insurance industry had emphatically entered he jazz age.

Reporting on NALU's 30th convention in its October number, Life Association News observed:

It was distinctly and conspicuously a convention of the agents, by the agents and for the agents. Even the hidebound conservatives in National Association Circles, who hitherto had demanded that the program-makers walk with grave decorum in the footsteps of their association forebears, were surrounded by an atmosphere which seemed to be the outward and visible sign of inward satisfaction.

Like Russell, J. Stanley Edwards had long been an association booster in the West. An experienced and successful general agent, he had joined his father's Aetna agency while still a student at the University of Denver. He later became a partner and eventually took over his father's agency. One of Denver's leading citizens and an enthusiastic fan of his university's football team, he would be remembered as one of the association's stronger presidents. Years later, the Eastern Underwriter named him "one of the group of early life insurance leaders credited with making N.A.L.U. the strong organization it is today."

Foreword by Alan Press, 1988-1989 NALU President

Preface by Jack E. Bobo, 1989 NALU Executive Vice President

Introduction

Acknowledgements

Chapter 1

Laying the Foundation—A Meeting at the Parker House

Leading Figures—Ransom, Carpenter, Blodgett and Plummer

Conditions Leading to the Foundation of the NALU

Rise of Modern Life Insurance and the General Agency System

Issues and Accomplishments of the First 15 Years

Chapter 2

In the Wake of the Armstrong Investigation