The Inauguration of Group Life Insurance
The first of these administrations, covering the years 1868 to 1891, was the period of the organization of the company and the subsequent development of industrial business. The second, that of Mr. Hegeman and Mr. Fiske, from 1891 to 1919, was characterized by the opening up of other fields of operation.
When their administration began, the Metropolitan was almost altogether an industrial company. It was the ambition of Mr. Fiske to create a strong ordinary department under adequate leadership, and vigorously to develop this branch of the business.
It was characteristic of the man that he should hit upon the sound principle that the agent, who carried the message of industrial insurance each week into the homes of policyholders, should at the same time be the purveyor of ordinary insurance.
He recognized that industrial insurance was not only a direct service to the wage earning population; that it was in the nature of the case an extraordinary educator in the general insurance principle.
Those who carried small life insurance policies and who grew up with them learned to appreciate the value of life insurance and to want more of it. As these people increased their earnings and bettered their position economically, they became eligible for ordinary insurance—that is, for insurance in larger amounts paid for quarterly, semiannually, or annually.
The wisdom of Mr. Fiske’s beliefs was confirmed within a short time. The ordinary department, revived in 1891 and carried forward by an army of 5,000 field men, was crowned with success soon after its beginning. Ordinary insurance could be written at lower cost than industrial.
It obviously cost considerably less to transact business in larger amounts and to have premiums forwarded by the insured directly to the company, than to have agents make weekly collections.
Furthermore, it was found that those qualified for ordinary insurance experienced a lower mortality than industrial policyholders, because they were a more strictly selected group and lived and worked under better than average conditions. Large numbers of working men were ready to take advantage of this new opportunity.
In the very first year the company’s agents wrote more than $2,000,000 of ordinary business, the next year over $6,000,000, in 1894 more than $14,000,000. The amounts continued to spiral upward in unprecedented figures.
Few new life insurance companies could launch a fresh branch of the business with such spectacular success; but an established company with an adequate home office, an efficient organization, and a large clientele to draw upon could begin a new large scale operation like this and succeed, which Metropolitan did.
In the course of the next 10 years what was equivalent to a sizable ordinary company was established. At the end of 1902 there were on the books 278,360 ordinary policies for more than $237,000,000. Only two decades thereafter, despite its late beginning, the company arrived at the premier position in the ordinary life insurance field. Thus was launched the second major division of the company.
The varied clientele which the agents served brought into sharp focus the need for developing various forms of insurance on the ordinary plan, adapted to persons who, because of occupational hazards or economic level, could not qualify for standard insurance. Thus, in 1896, the company began to issue intermediate insurance—that is, life insurance policies on the ordinary plan in units of $500.
This type of policy was especially designed for workers who could not afford regular ordinary insurance in amounts of $1,000 or more, but who were in a position to pay premiums on a quarterly or less frequent basis.
Shortly thereafter the company made available special class policies covering those in hazardous occupations or with certain physical impairments. A large business developed in this way, covering millions of lives and serving a sector of our people hitherto without such protection.
Another step in the long series to bring life insurance coverage to salaried employees and wage earners was the organization of the Group Division in 1917. Under this form, first inaugurated in America by the Equitable Life in 1911, a blanket policy is issued to the employer covering his employees, with no medical examination life insurance, and at low cost.
Group insurance contracts have had a phenomenal development since their introduction to American industry; and provide, in addition to life insurance, annuities, sickness and accident insurance, accidental death and dismemberment benefits, hospital expense insurance, and surgical operation insurance. Millions of workers, many of whom had had no insurance protection, welcomed this new medium.
Group insurance has been an important instrument in promoting a spirit of cooperation and mutual good will between employers and employees, and has furthered their joint effort to better the conditions of the workers.
Inasmuch as group insurance operates in the wage earning group, the domain which the Metropolitan has served over the years, it is not surprising that the company had been particularly successful in this field.
Tags: no medical examination life insurance | no medical examination life insurance | life insurance companies | life insurance companies | life insurance policies | industrial