Speaker 1: Welcome to Stuff You Missed in History Class, a production
Speaker 1: of iHeartRadio. Hello, and welcome to the podcast. I'm Holly
Speaker 1: Frye and I'm Tracy B. Wilson, and we are continuing
Speaker 1: our discussion of actuarial science and insurance. And if you
Speaker 1: didn't listen to part one, go back and do that.
Speaker 1: This is part two. We're jumping in right where we
Speaker 1: left off in the story that includes actuarial science, assurance
Speaker 1: and insurance. We define what assurance versus insurance means at
Speaker 1: the top of part one, so you'll want that information.
Speaker 1: When we left off, we had just discussed the Society
Speaker 1: of Assurance for Widows and Orphans, which formed in sixteen
Speaker 1: ninety nine to ensure that a person's next of kin
Speaker 1: had a financial cushion when the family breadwinner died. And
Speaker 1: today we're going to talk about another assurance society and
Speaker 1: the various problems that both insurance and assurance companies ran
Speaker 1: into in the eighteenth and nineteenth centuries, as well as
Speaker 1: a look at gambling. In seventeen oh six, the Amicable
Speaker 1: Society for a Perpetual Assurance Office was founded, and this
Speaker 1: is often called the first life insurance company, although technically
Speaker 1: it was assurance and not insurance. As with the society
Speaker 1: that we mentioned at the end of Monday's episode. Membership
Speaker 1: to the society was also capped at two thousand. Members
Speaker 1: paid six pounds four pence each year, and at the
Speaker 1: close of each year, money that had been collected was
Speaker 1: split among the next of kin of any members who
Speaker 1: had died that year. If no one had died, or
Speaker 1: if very few people had died, the funds could be
Speaker 1: unencumbered to pay out annuities to members or for investment
Speaker 1: by the society. Those investments included malt tallies, mine venture bonds,
Speaker 1: hollow sword blade bonds, and lottery tickets yes, lottery tip.
Speaker 1: There was an age requirement that was based in part
Speaker 1: on Hallie's tables. Members had to be between the ages
Speaker 1: of twelve and forty five to minimize the risk of
Speaker 1: too many members dying in any given year. That would
Speaker 1: of course drop the payout amounts at the end of
Speaker 1: the year, and it would leave the group with far
Speaker 1: fewer contributors into the following year. Yeah, in case you
Speaker 1: didn't recall, this is different from the assurance society we
Speaker 1: talked about at the end of part one, where they
Speaker 1: had to pay an amount every time someone died. Everyone
Speaker 1: chipped in a set amount to create their payout, whereas
Speaker 1: in this case you paid a flat fee every year
Speaker 1: and that pool of money was then used to make payouts.
Speaker 1: So set up a little bit differently. Things were evolving, Yeah,
Speaker 1: try to find the best way. It reminds me a
Speaker 1: little bit of some of the mutual aid societies that
Speaker 1: numbers on the show before that some times would run
Speaker 1: into trouble with just being financially insolvent as their membership
Speaker 1: base aged over the years. Yep, we'll talk a little
Speaker 1: bit about similar things happening here in a bit. But
Speaker 1: in seventeen fifty six James Dodson created the first table
Speaker 1: of annual assurance premiums and that used the Edmund Hallie
Speaker 1: table that we talked about in Part one as a foundation.
Speaker 1: Dodson was born in seventeen ten and became a mathematician,
Speaker 1: and at the age of forty he wrote a book
Speaker 1: titled The Accountant or The Method of Bookkeeping, and this
Speaker 1: laid out how various businesses might model their account keeping
Speaker 1: to know at all times what their debts and profits were,
Speaker 1: as well as how future expenditures and income might play out,
Speaker 1: and these were not theoretical models. It was like a workbook.
Speaker 1: He laid out, for example, how exactly a shoemaker should
Speaker 1: set up their books, with lists of raw materials that
Speaker 1: might be part of that industry to include in their expenses,
Speaker 1: calculations they should make for retail space, etc. It really
Speaker 1: was a how to manual, and when he prepared his
Speaker 1: table of premiums, he was motivated by frustration at having
Speaker 1: been excluded from the Amicable Society as they did not
Speaker 1: admit anyone over the age of forty five, and he
Speaker 1: was forty six at this time. There is also a
Speaker 1: version of this story that he was actually asked by
Speaker 1: other people who were interested in forming a new society
Speaker 1: to do this, but we do know that there was
Speaker 1: this age issue. So he envisioned, with this new data set,
Speaker 1: a new insurance company that could use more up to
Speaker 1: date information to create more inclusive insurance options, and his
Speaker 1: table was a way to modernize Hollie's data for the
Speaker 1: mid eighteenth century, and just as he had laid out
Speaker 1: how to's on setting up various other businesses in his
Speaker 1: earlier writing, he wrote out what was essentially a guidebook
Speaker 1: for insurance companies, including the principles of a good business
Speaker 1: and ways to be both equitable and profit. In the
Speaker 1: documents he prepared for the more comprehensive assurance operation, he
Speaker 1: included the following four tables. A table of decrements wherein
Speaker 1: the hazard of life is esteemed to be as great
Speaker 1: as any author has conceived it to be, or as
Speaker 1: can be deduced for many bills of mortality hitherto made public.
Speaker 1: A table of the present values of annuities of one
Speaker 1: pound each for single lives, computed at three percent compound
Speaker 1: interest from the beforegoing principles. A table of premiums payable
Speaker 1: for ensuring at one payment one hundred pounds on a
Speaker 1: life of a given age, deduced from the preceding table
Speaker 1: of the values of annuities on lives. A table of
Speaker 1: annual premiums payable for ensuring one hundred pounds during the
Speaker 1: whole continuance of a single life of any of the
Speaker 1: following ages, according to the beforegoing principles. Dotson died at
Speaker 1: the age of forty seven, seven months after his work
Speaker 1: was used to petition the Privy Council for a charter
Speaker 1: for a new company. So that seems kind of like
Speaker 1: a cruel twist of fate. Yeah, So just to clarify
Speaker 1: in case any of that didn't make obvious to you,
Speaker 1: he was basically going, okay, but what if we included
Speaker 1: people that are older than forty five, but they just
Speaker 1: have to pay a different amount, Like they pay in
Speaker 1: a little bit more because we know there's greater risk.
Speaker 1: Like he was the first one who really laid out
Speaker 1: how that might all work. The first mutual insurance company
Speaker 1: was the Society for Equitable Assurances on Lives and Survivorship.
Speaker 1: That company was established in London in seventeen sixty two
Speaker 1: by Edward Rowe Moores, who had known Dodson and had
Speaker 1: literally picked up where Dodson had left off. Two hundred
Speaker 1: years later, Dodson was still invoked by actuaries when speaking
Speaker 1: of his contribution. Ah Rowle, writing for the Journal of
Speaker 1: the Institute of Actuaries in nineteen sixty two, states quote
Speaker 1: life assurance was born in the middle of the period
Speaker 1: seventeen forty to seventeen eighty. Johnson's England came when it
Speaker 1: did because the climate was favorable. England was prosperous. The
Speaker 1: mathematics of life contingencies was at hand, and there was
Speaker 1: an unsatisfied demand for the protection that life assurance can give.
Speaker 1: It also came when it did because one man, James
Speaker 1: Dodson FRS, was determined that it should largely responsible as
Speaker 1: he was, for the availability of the necessary mathematics. He
Speaker 1: also realized fully the benefits that life assurance could confirm.
Speaker 1: He conceived the vision of a mutual life assurance society
Speaker 1: conducted on scientific lines, and was all in all the
Speaker 1: ideal architect of the equitable to be. Morris is often
Speaker 1: cited as the first person to assign the title of
Speaker 1: actuary to the work that he and others were doing.
Speaker 1: Was described by an actuary historian as having quote exceptional
Speaker 1: ability in academic studies, yet with a quarrelsome temper. He
Speaker 1: probably needed to have some fight because setting up a
Speaker 1: new sort of businessiness was a lot of work, and
Speaker 1: both the establishing process in the early days of explaining
Speaker 1: how the whole operation worked to clients was arduous. He
Speaker 1: received his master's degree at the Merchant Taylor's School at
Speaker 1: Queen's College, Oxford in seventeen fifty three. He was very smart,
Speaker 1: with a broad range of knowledge, and was considered to
Speaker 1: be an eccentric. We don't know really why he started
Speaker 1: using the word actuary for the work that was being
Speaker 1: done in the field of assurance calculation. It's chalked up
Speaker 1: in some accounts as possibly just being a word he
Speaker 1: plucked from history because of his eccentricity. Yeah, we'll talk
Speaker 1: a little bit about his eccentricity on behind the scenes,
Speaker 1: because he's a pretty interesting figure. But regarding the use
Speaker 1: of the title of actuary, M. E. Augborn, Joint Actuary
Speaker 1: of the Equitable Life Assurance Society, wrote in the Journal
Speaker 1: of the Institute of Actuaries in nineteen fifty six about
Speaker 1: Moores's claim to the term, opening with actuary, it is
Speaker 1: a curious word by which to describe the profession to
Speaker 1: which it has become attached. There is no obvious connection
Speaker 1: between the meaning of the word and the professional duties
Speaker 1: which it signifies. Moreover, the title of actuary is still
Speaker 1: in use for other officials who may buy their duties.
Speaker 1: Have a more direct claim to the title from its
Speaker 1: original derivation. The Latin word actuarius is the word that
Speaker 1: actuary is derived from. In Latin, this could be assigned
Speaker 1: to various jobs, including wage disbursement as a borrow word.
Speaker 1: Actuary in the English language referred to registrars or clerks,
Speaker 1: or to secretaries or accountants who kept a company's books,
Speaker 1: But then, thanks to Mores's use of the word, it
Speaker 1: also came to mean an insurance official who used to
Speaker 1: statistical tables to calculate premiums or manage financial risks. But
Speaker 1: Mores included the list of duties he thought the actuary
Speaker 1: of the company should perform in the Equitable Society's formation paperwork,
Speaker 1: and it included things that were not just calculations of tables.
Speaker 1: The actuary was expected to go to work each day
Speaker 1: except Sunday, write and keep the books, enter the applications
Speaker 1: for membership and all transactions into a daily journal, and
Speaker 1: enter the minutes of the society's meetings. People of a
Speaker 1: higher rank were actually the ones responsible for the decisions
Speaker 1: regarding finance numbers. Yeah, so it's not quite the role
Speaker 1: of actuary as we see it now. So next we're
Speaker 1: gonna jump to Wales and talk about a man who
Speaker 1: redefined what that role was to be more like what
Speaker 1: we would think today. But before we talk about William Morgan,
Speaker 1: we're gonna pause for a sponsor break. William Morgan was
Speaker 1: born on May twenty sixth, seventeen fifty in Newcastle, Glamorgan, Wales.
Speaker 1: It's believed that his birth date is based on the
Speaker 1: Julian calendar, as other records show his date of birth
Speaker 1: as June sixth. That was likely the date after the
Speaker 1: Gregorian calendar was adopted, which happened just two years after
Speaker 1: he was born. His father, also named William Morgan, was
Speaker 1: a physician and an apothecary, and his mother was Sarah
Speaker 1: Price Morgan. The Morgan's had eight children. William was the
Speaker 1: third and the first son, and his father decided that
Speaker 1: he should also go into medicine. There's a gap in
Speaker 1: the records regarding William's early schooling. The Dictionary of Welsh
Speaker 1: Biography notes that there aren't records of his attendance at
Speaker 1: the Cowbridge Grammar School, although his brother George is listed
Speaker 1: as a student, but it seems likely that William also
Speaker 1: attended the school is mentioned by him in his writings.
Speaker 1: William was not it seems entirely sure about the plan
Speaker 1: for him to become a doctor, but he left home
Speaker 1: at nineteen to go to London for medical study. His
Speaker 1: first apprenticeship with an apothecary, appears to have ended in
Speaker 1: some kind of physical altercation with his boss, at which
Speaker 1: point his uncle on his mother's side, Richard Price, helped
Speaker 1: him get a second apprenticeship. During this same period, Richard
Speaker 1: Price published the book Observations on Reversionary Payments that was
Speaker 1: in seventeen seventy one. Price's book established systems and formulas
Speaker 1: that laid out how annuities could work for pensioners and widows.
Speaker 1: Not long after Price released the book, his brother in
Speaker 1: law and William Morgan's father died, and this meant that
Speaker 1: even though William was still technically a medical student, he
Speaker 1: had to go home to Wales to try to keep
Speaker 1: his father's medical practice running. This did not go well
Speaker 1: at all. I saw one write up that suggested he
Speaker 1: was too young and people didn't trust him. He also
Speaker 1: may have had a mild physical deformity that made people
Speaker 1: think he was not capable of being a doctor, which
Speaker 1: is beloney. But it just did not work out. He
Speaker 1: was not going to have a career in medicine. So
Speaker 1: soon he went back to London and he asked his
Speaker 1: uncle Richard Price for advice, and Price reportedly asked William
Speaker 1: if he knew anything about math, and William told him
Speaker 1: that he did not, but he sure would be happy
Speaker 1: to learn. So Price, who was working at this point
Speaker 1: with the Society for Equitable Assurances, found his nephew a
Speaker 1: low level job there. In less than two years into
Speaker 1: his time with the company, then twenty five year old
Speaker 1: William became its actuary and he served in that role
Speaker 1: for more than fifty years. This is an important moment
Speaker 1: in actuarial history because William, working with his uncle, refined
Speaker 1: actuary science in significant ways. Richard Price published a data
Speaker 1: set called the Northampton Table in seventeen eighty. It used
Speaker 1: a long term study of the parish of Northampton to
Speaker 1: assemble detailed mortality statistics. The table included more than four
Speaker 1: decades of information, so it was pretty robust, and William
Speaker 1: Morgan used this table to further refine the formulas that
Speaker 1: were used in calculating premiums. He wrote two papers on
Speaker 1: the matter, both of which were presented by his uncle
Speaker 1: to the Royal Society, and this resulted in William being
Speaker 1: made a fellow there. William's entry into the actuary field
Speaker 1: is recognized as important because he was able to advance
Speaker 1: the mathematics of it to a point where the Equitable
Speaker 1: Assurance Company flourished, and he advised other companies at a
Speaker 1: time when many were still struggling to make policy payouts
Speaker 1: and stay afloat. In eighteen oh six, the Amicable Society
Speaker 1: reorganized and they adopted a graduated scale of premiums based
Speaker 1: on Morgan's work. Though many other men were working on
Speaker 1: these concepts before him, Morgan's contributions to the advancement of
Speaker 1: his field were so significant that he's often called the
Speaker 1: father of actuarial science, and he has often called the
Speaker 1: first true actuary because of his valuable service to the company.
Speaker 1: When he retired after fifty six years, he continued to
Speaker 1: receive his full salary amount annually until his death. He
Speaker 1: sometimes considered the first real actual wis in the sense
Speaker 1: that we used the word today, because he had both
Speaker 1: medical and mathematical expertise, and he could use those to
Speaker 1: elevate the position of actuary beyond the more secretarial duties
Speaker 1: that had initially been laid out for the position. He
Speaker 1: could make and refine tables, really analyze liability from a
Speaker 1: medical standpoint, and calculate premiums based on both. When William
Speaker 1: Morgan was right in the middle of his career. A
Speaker 1: man named Jacob Shoemaker opened the first actuary office in
Speaker 1: North America. That was in Philadelphia, Pennsylvania, in eighteen oh nine,
Speaker 1: and that was the Pennsylvania Company for Insurances on Lives
Speaker 1: and Granting Annuities. By eighteen twenty three, Boston also had
Speaker 1: a life insurance company, and in eighteen thirty so did
Speaker 1: New York. The first mutual life insurance company in North America.
Speaker 1: That's a company that's owned by its policyholders open in
Speaker 1: the eighteen forties. Forming a society of actuaries in the
Speaker 1: US was discussed for decades before it finally got off
Speaker 1: the ground. The Actuarial Society of America was established in
Speaker 1: eighteen eighty nine with just thirty eight members, and it
Speaker 1: began publishing an actuarial periodical called Transactions. As actuary work
Speaker 1: and insurance companies were growing in the US and Europe,
Speaker 1: Britain experienced an event called the Insurance Controversy in eighteen
Speaker 1: fifty two. A growing concern about the way insurance and
Speaker 1: assurance companies were operating led to a call to the
Speaker 1: Board of Trade to investigate, and it became apparent that
Speaker 1: over the course of several years at the end of
Speaker 1: the eighteen forties and into the eighteen fifties, a group
Speaker 1: of new assurance associations had taken in seven hundred forty
Speaker 1: five thousand and ten pounds, They had disbursed eighty seven thousand,
Speaker 1: nine hundred and eighty nine pounds in claims and annuities,
Speaker 1: and had spent two hundred eighty seven thousand, three hundred
Speaker 1: thirty nine pounds on operating expenses. That meant they had
Speaker 1: spent more than fifty fifty percent of the money they
Speaker 1: had taken in, leaving a relatively small sum to invest
Speaker 1: and to pay out as claims arose. That led to
Speaker 1: accusations of ignorant business practices at best and corruption at worst.
Speaker 1: Ys Tracy mentioned often these kinds of societies would start
Speaker 1: to break down because the finances just didn't work out,
Speaker 1: and like right out of the gate, they were spending
Speaker 1: way more than they should be, and this led to
Speaker 1: an examination of existing laws and calls for reform from
Speaker 1: the Institute of Actuaries, including the recommendation that a person
Speaker 1: had to pass examinations to become an actuary. You couldn't
Speaker 1: just say I'm good at math. This is my job.
Speaker 1: The Parliamentary committee that prepared an extensive report on the
Speaker 1: matter noted that one big problem was that you couldn't
Speaker 1: really legislate away fraud. It was already against the law
Speaker 1: and swindlers were always going to try it, but that
Speaker 1: a need for change was really recognized. The committee report
Speaker 1: noted that the field of assurance operated very differently from
Speaker 1: almost any other business, so trying to adapt existing business
Speaker 1: law to it was obviously not working. The remainder of
Speaker 1: the eighteen fifties were a time of new legislation and
Speaker 1: efforts to head off abuses in the industry in the UK,
Speaker 1: and one of those changes was that life assurance companies
Speaker 1: were protected by a limited liability law, meaning members were
Speaker 1: protected at new upfront how much they could lose if
Speaker 1: things went completely wrong with the assurance association. In eighteen
Speaker 1: sixty nine, the Institute of Actuaries published a new, more
Speaker 1: accurate mortality table and that was considered far more accurate
Speaker 1: and scientifically compiled than its predecessors. To collect data for it,
Speaker 1: the Institute collected information from twenty British life assurance offices,
Speaker 1: which included a total of one hundred and forty seven
Speaker 1: thousand counted people who had health exams when they joined
Speaker 1: assurance societies and were pronounced healthy. It tracked the number
Speaker 1: of deaths within the group. The Institute published alongside this
Speaker 1: table a monetary analysis of it. So we're going to
Speaker 1: talk about some of the challenges that faced the actuarial
Speaker 1: sciences and the insurance industry in the twentieth century, right
Speaker 1: after we hear from some of the stuff you missed in
Speaker 1: history classes sponsors. On September second, eighteen ninety five, the
Speaker 1: first International Congress of Actuaries was held. Brussels, Belgium was
Speaker 1: the host city, and many cities have hosted it over
Speaker 1: the decades. It moves every time. It has convened at
Speaker 1: roughly four year intervals ever since, the most recent having
Speaker 1: been held in Sydney, Australia in twenty twenty three, and
Speaker 1: September second remains International Actuaries Day. The organizing group was
Speaker 1: named the Comitte Parmenent de Concreis dactua, or Standing Committee
Speaker 1: of Actuarial Congresses. It was officially renamed the International Actuarial
Speaker 1: Association in nineteen sixty eight. The early twentieth century was
Speaker 1: a time of extreme challenge and growth for actuarial science.
Speaker 1: There were suddenly a lot of new circumstances that changed
Speaker 1: life expectancy, in some cases dramatically, in the course of
Speaker 1: just a few decades. The airplane was invented. Maybe not
Speaker 1: as big of an effect now, but early airplanes. Yes,
Speaker 1: there were two World wars. There was an influenza epidemic,
Speaker 1: the Great Depression, the beginning of the social security system
Speaker 1: in the US, and advances in science and technology that
Speaker 1: changed quality of life while also introducing new risks. At
Speaker 1: the same time, an insurance shift that came from the
Speaker 1: corporate sector had to be incorporated into actuarial science. As
Speaker 1: companies started to offer group insurance to employees and pension
Speaker 1: plans became both more common and more complex, All of
Speaker 1: those benefits and their costs had to be accounted for
Speaker 1: so that insurance companies could set their rates and know
Speaker 1: both the risks and potential profitability of their plans. Also,
Speaker 1: during the first half of the twentieth century, multiple professional
Speaker 1: actuarial organizations formed in the US. This resulted in a
Speaker 1: lot of cases where an actuary was a member of
Speaker 1: multiple groups that essentially had the same purposes and goals,
Speaker 1: and in nineteen forty nine, several of these groups merged
Speaker 1: to form the Society of Actuaries, headquartered in Chicago. In
Speaker 1: the time since then, of course, actuarial science has continued
Speaker 1: to encountershifts that impact the way their work assesses things
Speaker 1: like life expectancy. Additionally, the computer age has meant that
Speaker 1: not only has computing power enabled great calculation capability and
Speaker 1: machine generated tables, but it's also brought more variables with it,
Speaker 1: so the work continues to evolve. I imationed that COVID
Speaker 1: threw a big wrench into all of all of actuarial scie.
Speaker 1: I remember seeing some threads that were about like actuarial
Speaker 1: data that was tracking what was happening in terms of
Speaker 1: like life expectancy and long COVID and all of that stuff.
Speaker 1: And I'm saying that from memories, not something I could
Speaker 1: suddenly call up without doing some more googling. Today, though,
Speaker 1: becoming an actuary takes a while. In addition to schooling,
Speaker 1: there are multiple exams and additional certifications that are pretty
Speaker 1: important to career development and progression. That said, though, it's
Speaker 1: a career that routinely appears on best jobs lists because
Speaker 1: it remains in demand with a good salary range and
Speaker 1: growth opportunities. US News and World Report ranks actuary as
Speaker 1: number eight in Best Business Jobs, number thirteen in Best
Speaker 1: stem jobs, and number twenty two in best paying jobs,
Speaker 1: and number twenty seven in one hundred Best Jobs, with
Speaker 1: a salary rating of eight point one out of ten
Speaker 1: and above medium scores and growth stress and work life balance. Listen,
Speaker 1: did I have a moment while doing this research where
Speaker 1: I went, should I have become an actuary? Not that
Speaker 1: my job isn't great, but like I don't know, it
Speaker 1: doesn't show up on the top top one hundred lists. Yeah,
Speaker 1: I'm not gonna lie. I had the same thing when
Speaker 1: I read this paragraph, and then I thought about, you know,
Speaker 1: my lifelong math struggle, right right, this is the trick
Speaker 1: if only. The thing that we have not talked about
Speaker 1: yet and I feel like is almost becoming the elephant
Speaker 1: in the podcast room is the perception that insurance is
Speaker 1: a form of gambling. But it is sometimes described that way,
Speaker 1: and whether it is or isn't has been debated by
Speaker 1: people for a very long time. Writing for the Connecticut
Speaker 1: Insurance Law Journal in two thousand and eight, Timothy Auburn
Speaker 1: opened his analysis of the matter with quote. More directly
Speaker 1: than any other enterprise apart from slavery, life insurance set
Speaker 1: a price on human life. As it evolved in Britain
Speaker 1: during the nineteenth century, the insurance industry introduced a dizzying
Speaker 1: number of variations on this theme. For the individual purchasing
Speaker 1: an insurance policy, the value of life was translated into
Speaker 1: the sum required to care for dependence, loss of access
Speaker 1: to a wife's inheritance should she die before her father,
Speaker 1: the sum lost to a creditor in the event of
Speaker 1: death occurring prior to repayment, and the loss of livelihood
Speaker 1: suffered by a tenant whose lease ended with the life
Speaker 1: of a third party. All these reasons for buying insurance
Speaker 1: established an equivalence between mortality and monetary value, a death
Speaker 1: nexus that precisely and morbidly expressed the cash nexus derided
Speaker 1: by Thomas Carlyle as the moral failing of British society.
Speaker 1: Auburn also notes that quote, since nobody knew for certain
Speaker 1: when they would die, a life insurance policy was also,
Speaker 1: by definition a wager, and since wagers occupied a quite
Speaker 1: different category, there was always at least a potential for
Speaker 1: the Life office to take on the darker colors of
Speaker 1: the gambling den. To be clear, in case you think
Speaker 1: I'm saying he's saying something he isn't. Auburn is not
Speaker 1: saying that insurance is gambling, but he's setting the stage
Speaker 1: for the discussion of how Britain addressed this concern from
Speaker 1: a legal perspective. In Part one, we mentioned the sixteen
Speaker 1: ninety case in which a man named Thornborough took out
Speaker 1: a policy on a man he was not related to
Speaker 1: who was ill as an act of fraud. That kind
Speaker 1: of thing started happening frequently, and over a few decades
Speaker 1: it became tied to another rather callous sort of entertainment
Speaker 1: that was popular in gentlemen's clubs in the eighteenth century,
Speaker 1: and that was betting on the deaths of strangers. Taking
Speaker 1: out life insurance policies was a way to get around
Speaker 1: gambling laws. If a person held a policy on somebody,
Speaker 1: it was defensible, at least per the letter of the law,
Speaker 1: for them to speculate on when that person might die.
Speaker 1: But in reality, the money spent on the policy was
Speaker 1: often from a gambling pool. The betters would pay in
Speaker 1: to cover the premium and each place a bet on
Speaker 1: when the insured person would die, and then the winner
Speaker 1: got the payout. It's so troubling to me that this
Speaker 1: was an activity in clubs that were considered gentlemen's clubs,
Speaker 1: because it's the least gentlemanly behavior I can imagine. But
Speaker 1: to combat this grisly form of amusement and the insurance
Speaker 1: fraud that was often hand in hand with it, Britain
Speaker 1: passed the Life Assurance Act of seventeen seventy four. It
Speaker 1: was also known as the Gambling Act, and the language
Speaker 1: of that act stipulated that no one could hold a
Speaker 1: policy on another person's life if they did not have
Speaker 1: a legitimate interest in that person's life, and that all
Speaker 1: life insurance policies had to include a list of beneficiaries' names.
Speaker 1: It also forbid ensuring you couldn't, for example, take out
Speaker 1: a policy on someone that was worth a great deal
Speaker 1: more than they were worth financially. This was to deter
Speaker 1: people from trying to get rich from the passing of
Speaker 1: a family member through insurance. This act impacted insurance in
Speaker 1: ways that it really didn't intend to. Its language was
Speaker 1: ambiguous in some areas, and it enabled people to find loopholes,
Speaker 1: there were instances where the difference between insuring people and
Speaker 1: ensuring items got kind of fuzzy. Additionally, as insurance became
Speaker 1: less exclusively in upper class luxury and something that the
Speaker 1: working class also used, some of the provisions of the
Speaker 1: Act excluded financial interests of beneficiaries that were actually completely reasonable.
Speaker 1: One of the main reasons people took out life insurance
Speaker 1: policies was so that their families wouldn't be unduly burdened
Speaker 1: by the expense of a funeral at a time when
Speaker 1: they were grieving. That's something people still use it for today,
Speaker 1: but per the Gambling Act, burial was not an insurable interest,
Speaker 1: but policies continued to be issued knowing that the money
Speaker 1: would be used that way. Eventually, the law caught up
Speaker 1: to reality with some amendments, but for a while insurers
Speaker 1: were issuing policies that they knew were technically illegal. Yeah,
Speaker 1: I didn't see this. I don't remember the statistic, but
Speaker 1: I saw one that was like more than fifty percent
Speaker 1: of policies could have technically been stricken because people knew
Speaker 1: that's what they were being taken out for. This issue
Speaker 1: of people thinking of insurance as gambling is not exactly settled.
Speaker 1: There are plenty of fairly recent articles about it. In
Speaker 1: twenty seventeen, a BBC News article written by Tim Harford
Speaker 1: sums up the distinction this way. Legally and culturally, there
Speaker 1: is a clear distinction between gambling and insurance. Economically, the
Speaker 1: difference is less visible, and an article published in the
Speaker 1: journal Gaming Law Review in Economics in twenty fourteen, gambling
Speaker 1: law expert I nelsonsse noted that quote insurance is of
Speaker 1: course gambling. Looking at just the required three elements, insurance
Speaker 1: has consideration, prize, and chance. A policyholder puts up a
Speaker 1: sum with the expectation of winning a larger sum if
Speaker 1: a certain contingent future event occurs. Insurance meets the legal
Speaker 1: definition of gambling. The big difference, according to Rose, is
Speaker 1: that in the case of gambling, the gambler hopes the
Speaker 1: payoff event will happen, and in the case of insurance,
Speaker 1: the insured hopes it won't. Dune dun dumn. That's really
Speaker 1: the big distinction, sort of. There are still people. I mean,
Speaker 1: you'll find it literally anywhere. If you google is insurance
Speaker 1: gambling on the Internet, you will find people on both
Speaker 1: sides of that debate. That are very very adamant of
Speaker 1: the correctness of their position. Anyway, that's our really very brief.
Speaker 1: I feel like look at insurance, assurance and actuary science,
Speaker 1: which I find quite fascinating. Now I have some fun
Speaker 1: to me listener mail. Okay, this is from our listener Caroline.
Speaker 1: He writes, Hi, Holly and Tracy Seasons, greetings in a
Speaker 1: happy new year to you both from Harrow in England.
Speaker 1: After listening to the seventeenth century roots of the metric system,
Speaker 1: I thought I would write to tell you the effect
Speaker 1: of growing up in England in the seventies and eighties
Speaker 1: on the way I measure things. As mentioned in the podcast,
Speaker 1: this was when schools in the UK started teaching the
Speaker 1: metric system. However, the outside world was still very much imperial.
Speaker 1: We have a little progress in using the metric system,
Speaker 1: but it has stalled, leaving me and others as a
Speaker 1: kind of hybrid. To give you some examples, when talking
Speaker 1: about the weather, I only understand how hot it is
Speaker 1: if the temperature is in celsius. But if taking a
Speaker 1: child's temperature, I'm a nanny, I find it easier to
Speaker 1: tell if they have a high fever. If I'm measuring
Speaker 1: in fahrenheit. When measuring lengths, I can only use millimeter, centimeter,
Speaker 1: and meter, but long distances need to be in miles.
Speaker 1: I have no clue about what feet and yards, but
Speaker 1: most people around my age do. When cooking or baking,
Speaker 1: I can use both metric and imperial measurements for both
Speaker 1: wet and dry ingredients. While having a stalled system change
Speaker 1: may sound like it would be confusing, it actually seems
Speaker 1: like it's the best for the moment. I suspect there
Speaker 1: would be pandemonium if they tried to make a full
Speaker 1: change all in one go. Thanks so much for your podcast.
Speaker 1: I love the topics you talk about, and I always
Speaker 1: learn something new. I also love the behind the scenes.
Speaker 1: They're my favorite episodes. You both have amazing sounding lass,
Speaker 1: which always makes me feel happy. Kind regards, Caroline, Caroline,
Speaker 1: this is such a sweet email, but also this is wonderful.
Speaker 1: I kind of love this idea of living in both,
Speaker 1: but also I can see how it would become tricky
Speaker 1: potentially when traveling, Like if you go to a country
Speaker 1: that is all metric, how do you know if someone
Speaker 1: is running a fever? I think that's thank goodness, is
Speaker 1: what I will say. For smartphones because I'm whipping that
Speaker 1: out to do calculations all the time. I remember when
Speaker 1: we went to Italy, which was a trip that got
Speaker 1: delayed several times because of COVID, and when we were
Speaker 1: there there were rules about, you know, isolating if you
Speaker 1: had symptoms and stuff, and I remember the like it
Speaker 1: was a metric fever line, yes, and being like, oh,
Speaker 1: this is good to know it's in metric. And then
Speaker 1: I was like, wait a minute, my thermometer. It's not
Speaker 1: it's not in celsius. It's in fahrenheit. Yeah. Yeah. I
Speaker 1: on the flip of that, when the pandemic was really
Speaker 1: like at its you know, early manifestation, when it was
Speaker 1: a very panicky time, I realized I didn't have a
Speaker 1: working thermometer, and I ordered one online, but of course
Speaker 1: supplies were low because everybody was doing that, and the
Speaker 1: only one I could get was Celsius. We now accidentally
Speaker 1: have four because when COVID finally struck our household, Patrick
Speaker 1: was trying to isolate in the attic and he had
Speaker 1: one up there, and then I also got sick and
Speaker 1: I was like, I can't go into the attic, it's
Speaker 1: too far, and so I just ordered another one, and
Speaker 1: then that became the one that I would just put
Speaker 1: in the bag for when traveling, and then couldn't find
Speaker 1: it in the bag. It was still in the bag,
Speaker 1: it was just sort of like tucked in a weird place.
Speaker 1: Since like, so I replaced it again and I'm like,
Speaker 1: there's just there's just thermometers everywhere. Now, listen, there's no
Speaker 1: problem with having lots of thermometers. One day, one day
Speaker 1: I'll develop my ability to do these calculations in my head. Maybe, yeah,
Speaker 1: maybe that'll be a twenty twenty five resolution. In the meantime,
Speaker 1: if you would like to write us, you can do
Speaker 1: so at History podcast at iHeartRadio dot com. You can
Speaker 1: also find us on social media. Is Missed in History?
Speaker 1: And if you would like to subscribe and have not
Speaker 1: done so yet, that as easy as pie. You can
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Speaker 1: to your favorite shows. Stuff you Missed in History Class
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