Additionally, the committee severely chastised the New York Insurance Department for permitting such malpractice to occur and recommended the enactment of a wide array of reform measures. These revelations induced numerous other states to conduct their own investigations, including New Jersey, Massachusetts, Ohio, Missouri, Wisconsin, Tennessee, Kentucky, Minnesota, and Nebraska.
Most devastating to the industry, however, were the prohibition of deferred dividend policies and the requirement of regular dividend payments to policyholders. Appleton that required life insurance companies to comply with New York legislation both in New York and in all other states in which they conducted business, as a condition of doing business in New York.
The Armstrong hearings and the ensuing legislation renewed public confidence in the safety of life insurance, resulting in a surge of new company organizations not seen since the s.
Whereas only companies existed in , another were established in the ten years from to [Figure 1]. One major innovation to occur during these decades was the development of group insurance.
In the Equitable Life Assurance Society wrote a policy covering the employees of the Pantasote Leather Company, requiring neither individual applications nor medical examinations. The following year, the Equitable organized a group department to promote this new product and soon was insuring the employees of Montgomery Ward Company. By , 29 companies wrote group policies, which amounted to over a half billion dollars worth of life insurance in force. In October of the same year, the government began selling low-cost term life and disability insurance, without medical examination, to all active members of the military.
By the eve of the Great Depression there existed over million life insurance policies — approximately equivalent to one policy for every man, woman, and child living in the United States at that time. Sharon Ann Murphy is a Ph. Buley, R. Grant, H. Keller, Morton. Cambridge, MA: Belknap Press, Kimball, Spencer L. Merkel, Philip L. North, Douglass.
Ransom, Roger L. Stalson, J. Citation: Murphy, Sharon. Net Encyclopedia, edited by Robert Whaples. August 14, Please read our Copyright Information page for important copyright information.
Send email to admin eh. Newsletters To join the newsletters or submit a posting go to click here. Sharon Ann Murphy The first American life insurance enterprises can be traced back to the late colonial period. Mutuality The second important development of the s was the emergence of mutual life insurance companies in which any annual profits were redistributed to the policyholders rather than to stockholders.
Aggressive Marketing In order to achieve the necessary sales volume, mutual companies began to aggressively promote life insurance through advertisements, editorials, pamphlets, and soliciting agents. Advantages of Mutuality The mutual marketing campaigns not only advanced life insurance in general but mutuality in particular, which held widespread appeal for the public at large. Regulation and Stagnation after While many of these companies operated on a sound financial basis, the ease of formation opened the field to several fraudulent or fiscally unsound companies.
Tontines The other major innovation in life insurance occurred in when the Equitable Life Assurance Society began issuing tontine or deferred dividend policies. Reorganization and Innovation The success and profitability of life insurance companies bred stiff competition during the s; the resulting market saturation and a general economic downtown combined to push the industry into a severe depression during the s.
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Browse All. More on this topic. Resource Center View All. From John Hancock Investment Management. See also: Military families top public in coverage The end of World War II and the economic boom that followed boosted sales of life insurance in the United States.
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