The revolution of women and insurance

The financial world in which we operate used to be a whole lot scarier. Until very recently, neither women nor men could operate a business — or even live their adult lives — with the assurance of insurance.

Compared with most commerce, insurance developed very late. Almost nonexistent in American colonial times, it remained rare until the middle of the 19th century.The idea of insurance had existed in the ancient Greek and Roman world, but it disappeared during Europe’s Dark Ages — probably because, as the monotheism of Christianity developed, it was seen as betting against God, as a human attempt to manipulate divine will.

The first modern insurance began in the Golden Age of England’s great Queen Elizabeth I, whose governance policies had tremendously positive long-range effects on the global economy. Specifically, the insurance industry began at Lloyd’s of London — a coffeehouse where merchants and mariners gathered to exchange news. Individual investors backed individual ships — such as Spain’s Queen Isabella bet on Christopher Columbus’ venture by putting up her personal jewelry as collateral. Sometimes those ships did not come in, and often the individual who had gambled on his or her cargo did not have enough money to pay the policy’s promise. The beneficiaries, too, were almost always other investors, not the families of the dead sailors.

Insurance remained a high-risk venture for high-dollar rollers, and the banking system grew up without it.When banks collapsed during America’s first serious depression in 1837, the effect on women was ironically liberating. Twenty-something Susan B. Anthony and future physician Elizabeth Blackwell, for instance,probably would not have begun their careers but for the fact their families needed the income when their fathers went bankrupt.

Life insurance was much more controversial than property insurance, and it did not really become routine until the beginning of the 20th century. Because men were (or at least seen to be) the primary wage earners, it was their lives that were most likely to be insured — and a surprising number of men seemed to fear that this would give their families motivation for murder. Given that more marriages then than now were not based in love, but in property — all of which belonged to the husband in most states — the fear of murder may have been reasonable in all too many cases.The intent of insurance, in fact, usually was that a woman would profit from a man’s death. Life insurance thus was a gender-based issue from the beginning.

It, therefore,was understandable that most life insurance grew out of mutual aid associations — of and by mutually related groups who had bonds of trust. Especially in immigrant communities, it became the norm to create mutual aid societies that not only paid a death benefit, but also often provided funds during unemployment, illness and other crises. Many such societies, especially among Italians and other Mediterraneanbased immigrants, hired their own doctors and ran their own clinics and hospitals. Almost all covered funerals, often in a mutually owned cemetery.

Other like societies offered fewer benefits, but provided a church’s all-important blessing on life insurance. Aid Association for Lutherans, for example, made it possible for many German patriarchs to justify buying financial protection from calamity for the families. Limiting policies to like-minded people eased their concerns that life insurance could make patricide profitable.

As the likely beneficiaries,women were in an awkward place. But some women, especially minorities, took a leading role in creating insurance companies. African Americans Mary McLeod Bethune in Florida and Maggie Walker in Virginia are two examples. Earlier, in 1892, Bina West Miller, a Jewish woman, overcame harassment from Michigan officials to begin offering life insurance to and for women. Although many thought that women’s lives were not worth insuring, Miller built a solid company. Women’s Life Insurance Society still operates out of Port Huron, Mich., 115 years later.

Especially in Irish and other ethnic enclaves of eastern U.S. cities, life insurance often was more nearly death insurance: the primary reason for buying it was not to supply a widow with the means to bring up her children, but rather to pay for the expensive wake and funeral that the neighbors expected.“Many a mother,” said one New York charity doctor,“has told me at her child’s death bed, ‘I cannot afford to lose it. It costs to much to bury it.’”A 1913 study showed that 2/3 of the resources available to widows — insurance, savings, and everything else — had been immediately used on the husband’s funeral. Social expectations mattered more than future financial security, as these women were more afraid of being deemed miserly than having an empty purse.

The great transformation in insurance finally came with the Great Depression of the 1930s. Until then, few states provided careful regulation of banks or insurers, and even fewer provided any significant benefits to the needy. With President Franklin Roosevelt’s New Deal, bank accounts were insured for the first time by the federal government; the nation adopted a system of unemployment insurance and workers’ compensation for accidents and industrial illness. Social Security for the first time ever offered some security in old age and to widows, orphans, and the disabled.

Many of these ideas for greater financial security grew out of the pioneer School of Social Service Administration at the University of Chicago, whose founding dean was economist Edith Abbott. These programs — and others — were implemented by Secretary of Labor Frances Perkins, the first woman on the Cabinet.As a result,women and men are much freer to innovate and to take business risks without fear of actual hunger.The whole economy benefits when people know they have something to fall back on, that their lives will not collapse even if their bank does. On the shoulders of women such as Abbott and Perkins, we stand secure.

For further information on the women mentioned, visit www.nwhm.org.