Life insurance traces colorful history

by Lynne Hooper

and David Haymes

for the Business Journal

More than 4,000 years ago, Chinese merchants pooled their cargo losses on the Yangtze River to avoid individual bankruptcies. This sharing of risk, rooted in antiquity, is still the basis for all insurance, according to the National Association of Life Underwriters.

The development of risk sharing came with the establishment of Lloyd's of London in the 16th century. Underwriters at Lloyd's assumed the full risk of a ship's loss in exchange for a fee, later called a premium.

Early life insurance contracts were actually ransom policies issued by Lloyd's underwriters to prevent loss of life from piracy. The ship's master, for example, could buy a certificate from Lloyd's that read: "Dear Mr. Pirate: If you will spare the life of Master Jones and put him on a whale boat with enough provisions to reach land, you may present this certificate to Lloyd's of London and receive 200 points sterling, no questions asked."

In 1550 A.D., a French scientist named Pascal developed the Law of Large Numbers the Law of Averages which English mathematician John Grant used to construct the first mortality table. Around 1700, Grant copied the dates of birth and death from tombstones in southern England and used that information to predict the life expectancies of Englishmen living at that time.

Thus it became possible for the first time to calculate the chance of dying at any age, and the business of life insurance was launched. Two English mathematicians, Simpson and Dodson, developed life insurance with premiums that were designed to remain level throughout a person's life; the result was the formation of the Equitable Life Assurance Society in London in 1756.

And the rest, as they say, is history.

While the basic precepts of life insurance have changed little over time, the insurance industry has evolved far beyond what those two 18th century mathematicians could have imagined.

For local life underwriters, support in the highly competitive insurance industry is available from the Life Underwriters Association of Springfield.

The local association, with 214 members comprising life and health insurance professionals, provides ongoing educational opportunities, motivational programs, industry promotion and community service. Under the leadership of Bill Yocum, LUTCF, the Life Underwriters of Springfield has been recognized for excellence in education, public relations and community service.

Insurance professionals, CPAs, attorneys and trust officers work together to assist people in making decisions about their financial futures. The Life Underwriters Association of Springfield provides the foundation for insurance professionals to network for the benefit of both members and their clients.

Goals of the association for 1998 are:

?To increase awareness of and membership in the American Health Insurance Association.

?To promote and participate in the Association Leadership Conference, the National Association of Life Underwriters convention, and the Missouri Association of Life Underwriters convention.

?To provide informational and motivational programs for the membership.

?To provide opportunities for earning continuing education credits to maintain agents' licenses.

?To enhance the image of the insurance professional in the community through ongoing public services announcements and participation in community events.

?To focus fund-raising efforts in areas that will benefit the local community.

?To encourage active participation in legislative matters affecting the insurance consumer, professional and industry.

For more information about Life Underwriters Association of Springfield, contact Lynne Hooper, at Jim Young Insurance Services, or David Haymes, at American National Insurance in Nixa.

(Lynne Hooper is public relations chair for the Springfield Association of Life Underwriters and is associated with Transamerica Life Companies in Springfield. David Haymes is membership chair for the organization and is associated with American National Insurance in Nixa.)

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