level term assurance

The Metropolitan Life Insurance Company’s officers were particularly careful in the selection of their agents, and inquired in detail as to their abilities, character, and previous experience. They knew how important it was to look into every application for insurance, and they urged their agents to exercise extreme care in the selection of clients.

In spite of the sharp struggle for business, the company emphasized and maintained high standards of ethics. It cautioned agents not to offer improper inducements or make unauthorized promises. It instructed them to stick to the printed text in representing the plans, features, and record of the company. Agents overstepping the bounds were reprimanded or dismissed. The officers condemned the common recourse of running rival companies down in the wild scramble for business. This malpractice, they realized, was injurious to the entire institution of life insurance. They were not building for the day; they were building for the future.

It is obvious that they were also keen businessmen and knew that generous and fair treatment of policyholders would win public recognition. Claims were paid promptly. Policies were “registered,” i.e., countersigned by the Insurance Department, indicating that a special fund was deposited by the company and held by the State as security for the payment of policies when they became due.

In order to gain official confirmation of its sound financial status, the company requested an examination by the New York State Insurance Department. In 1871, after such an examination, the Superintendent of Insurance, George W. Miller, stated that the life insurance company was managed with “integrity, energy, and ability, and concluded with the following words: “From the thorough personal examination made, 1 am satisfied that the condition of the company is such as to entitle it to the confidence of the policyholders and the public.”

Similarly, The Baltimore Underwriter, in referring to the business of 1872, wrote:

“In its issue of 8,642 policies last year, the steady augmenting of its receipts, the economy of expenditure, the character of its assets, its watchful management, its large membership, the rigid scrutiny of its risks, the public appreciation of its distinctive plans of insurance, etc.–in all these, we say, is the assurance that whatever solid life assurance contemplates the Metropolitan is abundantly able to supply.”

Intelligent management and energetic prosecution of the business by the new administration bore results. By the end of 1871, after less than four years of existence, the company had on its books more than 11,000 life insurance policies totaling almost $15,000,000 of life insurance, a considerable sum for that time. Only two years later the figures increased to 18,600 policies in force, and to more than $26,300,000 of business.

The official returns for 1873 revealed that, in the number of policies written, the company held third place among the 56 companies transacting business in New York State. By this time, the company had already entered 17 States and the Dominion of Canada. Its business extended to all the States in the New England, the Middle Atlantic, the East North Central areas, as well as to Iowa and Missouri.

This sound growth is all the more remarkable in that it occurred during a period of economic and financial excesses. Speculation and “frenzied finance” were rampant. The post Civil War demand for commodities was gradually letting up and prices declined as a result. Excessive railway building and the too rapid development of the trans-Mississippi West had brought about a glut of foodstuffs and thrown older areas out of cultivation.

A sudden crisis developed which broke into the lavish prosperity of the country and was immediately felt by all insurance firms. Partly owing to deficiencies of management, accentuated by the general economic crisis, no less than 22 life insurance companies in New York State had ceased business in the six years ending with 1873.

It must not be assumed, moreover, that the Metropolitan’s early success was achieved without many difficulties or that it continued indefinitely. The task of building a functioning organization and a Field Force was an arduous and expensive one. Competent agents were difficult to find. Many of the men engaged produced insufficient business, and a considerable number of the applications submitted were on questionable risks.

In spite of every effort, the lapse of life insurance rates was high, reflecting the adverse business conditions which were gripping the country. As the depression deepened, insurance company after insurance company went to the wall. Of the more than 15 life insurance companies incorporated in the State of New York in the three year period of 1866 to 1868, the Metropolitan alone survived.