Page 31 - Insurance Times February 2023

Father of

Life

Dr. K. Raja Gopal Reddy
Ph.D, FIII, FCII, FLMI, Chartered Insurance
Insurance Topspot Insurance Broking Private Ltd.
Practitioner, Principal Officer

(commercially known as 'insurancepe')

actuarial reference table for the US insurance industry
Elizur Wright, a 19th
century American who in 1853.
started his career as a 2. To force insurance companies to follow the calculations,
mathematician is widely he lobbied the state legislators in Massachusetts to
considered to be the regulate insurance companies. The new law compelled
father of life insurance. insurance companies to reveal their financial standing
and reserves.
In 1844, there was a
3. The new law also benefitted the policyholders. It gave
public auction of old, sick
the policyholders more rights in terms of getting back
men in London. These
at least some of the money they paid to life insurance
men could no longer
companies. After becoming insurance commissioner, he
afford the premiums on
introduced the concept of surrender &paid-up value -
their life insurance policies.
non-forfeiture provision.
Speculators would inspect the men and bid on the right to
take over their premiums, become the beneficiary, and The insurers soon found that the non-forfeiture provision was
collect the proceeds when they died. Bidding was more actually a selling point for its life insurance policies and
active on those men who looked very ill. Elizur Wright hated brought in more business. The zeal of Wright for making sure
this systembecause he believed: life insurance companies continually prove their financial
It is immoral to have a beneficiary invest in someone's solvency made the Massachusetts-based life insurance
death. companies attractive to potential customers nationwide.
That the men who had been paying premiums, had
In effect, operating under the regulatory rule of Elizur
nothing to show for cash value.
Wright was a seal of approval for a life insurance company
in terms of its product, financial standing, and management.
Wright was then in London to assess the calculations behind
It helped Wright's goal of making better life insurance
British life insurance practices to help an American life
products for consumers.
insurance company. Many life companies often failed to
accurately estimate longevity and interest rates, leading to Thus, a mutually beneficial relationship grew between the
their insolvency. Of the 300 British life insurance companies regulator, the insurance companies and the policyholders.
formed up to 1830, 250 companies failed.Hence, Wright In today's political climate, amidst the various debates
resolved to do the following: about financial inequities and regulation, the "father of life
1. To fix the calculations, he published the first practical insurance" is worth remembering.

28 January 2023 The Insurance Times