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Embracing RiskThe Changing Culture of Insurance and Responsibility$

Tom Baker and Jonathan Simon

Print publication date: 2002

Print ISBN-13: 9780226035185

Published to Chicago Scholarship Online: March 2013

DOI: 10.7208/chicago/9780226035178.001.0001

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Embracing Fatality through Life Insurance in Eighteenth-Century England

Embracing Fatality through Life Insurance in Eighteenth-Century England

(p.80) Four Embracing Fatality through Life Insurance in Eighteenth-Century England
Embracing Risk

Geoffrey Clark

University of Chicago Press

Abstract and Keywords

This chapter takes a historical look at the role of gambling and virtue in the development of the modern insurance regime. It examines how insurance grew hand-in-hand with gambling, arguing that the business of insurance actually stimulated the speculative passions as much as it depressed risk taking. The chapter demonstrates that the culture of risk management epitomized by life insurance emerged not so much from an attempt to banish risks as to play with them. In the process, the chapter analyzes how risk sometimes is both individualized and socialized. It discusses how life insurance simultaneously enabled families to protect themselves against financial disaster, and promoted continuity and autonomy in the larger commercial society.

Keywords:   life insurance, eighteenth-century England, insurance regime, gambling, risk taking, risk management

Today speculation and prudence are assumed to derive from opposing psychological impulses toward risk. This antithetical relationship is most conventionally reflected in economic analysis, which treats risk-loving and risk-averse behaviors as mathematical negatives of each other. Consequently gambling and insurance—as the respective incarnations of these risk-taking and risk-avoiding spirits—appear as discontinuous characteristics of homo economicus. Yet the complex topology of human psychology can hardly be captured by reference to a handful of equations purporting to describe an individual's preference for work or leisure, or for security versus adventure. The point was made long ago by Johan Huizinga, who observed that only a “hazy border-line” separates serious business from play, giving as prime examples the stock market and the life insurance business (1949:52–53).

Viewing the stock market as a field of play will surprise no one, but we are much less accustomed to thinking about the playful dimension of life insurance, which is universally advertised as the very epitome of prudence and sobriety. This carefully cultivated image of restraint and security, however, masks a past in which life insurance served as a vehicle for gaming. Though ostensibly devoted to risk avoidance, life insurance arose from and drew much of its initial popularity in eighteenth-century England from people's taste for gambling on others' lives.

If the speculative roots of the life insurance business are now so obscure, that can be attributed to sustained governmental attempts (at both the private and public levels) from the late eighteenth century to impose a new mental schema out of which various insurance practices and strategies (p.81) could be formulated, what François Ewald has termed an “insurance imaginary” (1991:198). This new imaginary severed the long-standing mental and legal association of insurance with gambling and instead made them polar opposites, thereby redirecting insurance projects away from the speculative possibilities and grand designs characteristic of the insurance market of the early eighteenth century (Daston 1988, 1987:138). This procedure can most clearly be detected in the 1774 passage of the Gambling Act, which suppressed wagering by means of life insurance by requiring that a capacity for financial loss, a so-called insurable interest, be shown by purchasers of insurance policies in the lives they sought to insure.1 The imposition of this new standard of economic motivation demarcated a legally sanctioned sphere of life insurance contracts from an illicit sphere of speculative life insurance wagers.

The boundary separating these newly fashioned legal categories, however, was by no means a clear one. How was one to monetize emotional loss, for example? And so long as there existed no technique for calculating the present discounted value of a life, how could the monetary equivalents of people's lives be scaled according to their age and projected future earnings? More fundamentally, the eighteenth century only gradually acquired the requisite confidence in statistical demography that made those monetary equivalents conceivable in the first place. We must recognize, therefore, that in the absence of these standardized measures the task of distinguishing between “speculative” and “prudential” motives in the context of life insurance was itself problematic. Since these categories are themselves the intellectual products of demographic calculation, they cannot be treated as inverses in the manner specified by economistic descriptions of risk-averse and risk-loving behaviors, and require instead a broader analytical framework.

Historically, the culture of risk management emerged not so much from an attempt to banish risks as to embrace them. The early life insurance business, as a matrix both of statistical calculation and rampant speculation, provides insight into the aleatory foundations of an industry whose techniques of risk management eventually bequeathed to the societies of the industrialized West unprecedented security in life, health, and property. It also furnishes a means to historicize the moral and rational calculus of economic action, which is too often regarded as naturally given rather than as socially constructed. In addition, the history of life insurance offers an opportunity to plumb the mental and cultural associations of risk management in the late seventeenth and early eighteenth centuries, a period during which life insurance was integrally connected not just to gambling but (p.82) also to movements for moral reform, social improvement, and political liberty.

Gambling on Fatality

Life insurance was itself nothing new to the century of the Enlightenment, having been invented toward the close of the Middle Ages in the port cities of the western Mediterranean (Clark 1999:13–32). By the mid-sixteenth century Italian merchants had begun to underwrite lives in England. A wave of legal bans placed on the practice nearly everywhere else in Europe from the fifteenth to the seventeenth centuries transferred the business by default into the hands of English merchants, whose business centered on the lives of ship captains or of debtors seeking collateral to raise loans. Life insurance underwritten in the sixteenth and seventeenth centuries was issued for quite limited periods of time, typically ranging from a few months to a couple of years. This short-term coverage corresponded to the use of life insurance for discrete periods (the length of a sea voyage or the repayment of a loan, for example), as well as to the ad hoc nature of the associations of the merchant/insurers who underwrote marketed risks.

A decisive transformation in the life insurance market occurred at the very end of the seventeenth century, with the birth of permanent life insurance collectives. These collectives ushered in a twenty-five-year boom in life insurance promotions because they allowed the term of insurance coverage to be extended for the whole duration of life. This arrangement opened life insurance to a much wider market of people seeking long-term security in exchange for moderate periodic fees. The memberships of life insurance societies typically governed themselves by electing boards of directors, and members self-consciously came to each other's aid. Thus the cooperation entailed by the purchase of life insurance created a social and mental solidarity quite unlike the obscure affiliation that previously had linked the constituents of the risk pools drawn together merely through the business operations of individual underwriters.

These insurance societies differed significantly from the actuarially based premium insurance with which we are familiar today. Rather than relating a series of fixed premiums to a predetermined death benefit, they periodically redistributed membership fees in favor of the beneficiaries of dying members, share and share alike. This design imposed the financial risk of projecting the future level of their members' mortality upon the individual members themselves. As a consequence, the societies were never obliged to pay out in death benefits more than they received in fees. (p.83) Since Europe in the early eighteenth century still lived under threat of demographic calamities like the plague, forecasts of future mortality could not be made with great confidence. This limitation of the societies' obligations with respect to sharply fluctuating levels of mortality must be seen as a highly prudent measure quite at odds with the critical view of some scholars that early life insurance societies catered especially to clients with a taste for gambling on the longevity of third parties (Daston 1988:167, 170).

The Prevalence of Insurance Gambling

Whatever motivations insurance society promoters might have intended to draw upon, they undoubtedly did attract many customers whose primary interest in insurance lay in its speculative value. The prospect of profiting from a life insurance policy provided a strong incentive for third-party insurers to select persons whom they reckoned would die quickly, thus maximizing the expected return on their investment. Until it was outlawed by the passage of the Gambling Act in 1774, this sort of insurance gambling was quite prevalent both within insurance societies and in the life insurance industry at large. For example, in eighteenth-century England policies were issued on the lives of the Pretender and of the rebel lords during the Jacobite rebellion of 1745, as well as on the life of the unfortunate Admiral Byng during his trial for dereliction of duty (he was ultimately found guilty and executed much to the satisfaction of those who had insured his life). Even the lives of kings were not beyond the reach of the speculative insurance market: underwriters offered 25 percent against George II's returning alive from the Battle of Dettingen (Francis 1853:140; Mortimer 1761:103; Halperin 1946:64). But it wasn't only celebrities whose lives were insured willy-nilly. According to Nicholas Magens, a one-time director of the London Assurance Corporation who had a long and distinguished career in the insurance business, “in London People take the Liberty to make Insurances on any one's Life without Exception; and the Insurers seldom enquire much if there are good or bad Reasons for such an Insurance” (1755:32).

Life insurance provided in fact just the most institutionalized setting for what was in eighteenth-century England a rampant habit of gambling on life contingencies. Voltaire for one regarded the taste for betting on lives as peculiarly English, remarking that when the Sun King fell ill in 1715 the English ambassador, Lord Stair, could not forbear betting, “according to the genius of his nation, that the king would not live beyond September” (1754:87–88; Bensa 1897: xiii n.2). To be sure, the prevailing enthusiasm for (p.84) betting on lives occasioned some worried comment. The members of White's, the famous gentlemen's club of St. James', were sometimes depicted as gambling maniacs who had abandoned civilized standards of charity and decency. In 1750 Horace Walpole picked up a story then circulating in the newspapers about a scandalous incident at White's in which a man collapsed at the door to the club and was carried in. The members of the club immediately made bets whether he was dead or not, and when the surgeon prepared to bleed him, the wagerers for his death interposed, objecting that the provision of medical care would affect the fairness of their bets (Ashton 1898:155–56).

Of course, the opportunity to bet on human life might lead gamblers not only into immoral behavior but into actual criminality. John Richardson, a member of one insurance cooperative called the Amicable Society, feared that some unscrupulous policyholder, “prompted by the Instigation of the Devil, and Hopes of a Temporary Reward,” might “by some secret Means endeavour to hasten a Claim,” as indeed happened in 1737 when a Southwark apothecary insured the life of his wife with the London Assurance Corporation and then poisoned her (Richardson 1732:8–9; London Assurance 1737).

Apart from such qualms occasionally expressed in the first half of the eighteenth century about the possible deleterious effects of gambling on lives, it is hard to detect voices condemning insurance gambling as inherently wrong. Life insurance societies commonly tolerated the holding of gambling policies—indeed, they sometimes encouraged them in order to boost business—provided that gamblers acted fairly. John Richardson worried less, for example, about the rare cases of life insurance leading to murder than the chronic problem of gamblers foisting “bad lives” on the Amicable, resulting in a larger number of annual claims and hence in unfairly small sums being paid to beneficiaries (1732:5). Another Amicable member, William Whiston, the famous mathematician and religious radical, agreed with Richardson that the Amicable experienced a rate of mortality significantly above its “naturally expected” level due to the purposive selection of unhealthy lives by life insurance speculators (Whiston 1732:5).

Yet strikingly, neither Whiston nor Richardson advocated the prohibition of speculative policyholding on third parties. Although Richardson suggested that prospective policy purchasers show cause why they wanted to insure a particular life, there is no indication that either he or Whiston believed that gambling on lives was wrong in and of itself. For them, gambling became problematic only if it involved fraud, which put (p.85) other policyholders at a comparative disadvantage and depressed the value of all claims. In fact, far from attempting to suppress wagering, Whiston proposed as a remedy to the prevalence of bad lives that the Amicable Society choose two or three hundred healthy people between twelve and seventy years of age living in the vicinity of its office and require that speculative insurers select a person from this vetted pool. Whiston's plan sought not to root out gambling but to regulate it so that each life insured by the Amicable stood a roughly equal chance of dropping (1732:9). It was the fairness of the gamble, not the gamble itself, that was the overriding concern.

A Midcentury Shift

While during the first half of the eighteenth century objections to life insurance gambling concentrated on fraud and crime (not on the moral illegitimacy of the practice itself), after midcentury all forms of betting on life contingencies encountered a rapidly mounting chorus of hostility. Writers on commerce and business began to complain that the “spirit of gaming” had disgraced the insurance business, and they deplored the fact that gambling policies were “often set on foot, and promoted, for many thousands of pounds, even by merchants, insurers, and brokers, who in other respects stand fair in the eye of the mercantile world, as men of rank and reputation” (Weskett 1781: lv–lvi); see also Mortimer 1761:103; Marshall 1808:774).

But the reality was not that gambling had invaded legitimate business; rather, legitimate business was now being defined against the long-established practice of speculation on the continuance of human life. The new mood is evidenced by the defection in 1769 of a group of Lloyd's brokers and underwriters who superceded the older Lloyd's by reconstituting themselves as a more tightly controlled body that refused to issue gambling policies of insurance (Gibb 1957:46). Just why English society suddenly found gambling insurance unacceptable is a question that has usually been answered by reference to the rise of a sober middle-class culture that refused to countenance the use of a prudential institution for speculative ends. The invocation of this deus ex machina fails to explain with sufficient force or particularity, however, why intolerance of insurance gambling should have suddenly grown strong around the year 1770.

The real reasons behind this attitudinal shift can be detected in the evolving legal treatment of the ownership of human capital, a development manifest in three superficially unrelated cases from the early 1770s. The first stems from the rampant speculation that broke out in 1771 on the true (p.86) sex of Charles de Beaumont, the Chevalier D̓Eon—a French soldier, diplomat, and secret agent then living in London. The second concerned two heirs who agreed to “run their fathers against each other,” with the intended result being that the first to inherit would support the other. The third concerned the rights of the slave Thomas Lewis.

The D̓eon Case

In late 1770 rumors regarding the sex of the Chevalier D̓Eon began to circulate around London, and by March of the next year books had been opened at Lloyd's and other places in the city on the truth of the reports (London Magazine 1777:445; Dictionary of National Biography, s.n. “D̓Eon”). Offering premiums of fifteen to sixty guineas per cent. (varying with the prevailing degree of uncertainty about the case), underwriters issued policies reputedly totaling upwards of sixty thousand pounds, payable upon proof that D̓Eon was in fact a woman (Weskett 1781:584–85).2

The matter finally came to a head in 1777 when D̓Eon quarreled with his friend and confidante, M. De Morande, who then publicly disclosed that D̓Eon had three years before privately confessed to being a woman (London Magazine 1777:445). Armed with De Morande's allegation, those who had wagered on D̓Eon's being female brought suit against the underwriters to pay on policies that by then had been pending for several years. In July a suit brought by a London surgeon, Mr. Hayes, against an underwriter and broker known to posterity only as Jacques, was heard before Lord Mansfield at Guildhall. The testimony offered at trial by De Morande and Mr. Le Goux, a surgeon who claimed to have examined D̓Eon's genitals, seemed to provide solid evidence of D̓Eon's female sex. Although Lord Mansfield expressed grave reservations about the propriety of such bets, he did not hold the contract to be illegal and directed the jury to determine a winner to the bet, and it found in favor of the plaintiff (Gentlemen's Magazine 1777:346–47). In Da Costa v. Jones (Weskett 1781:584–85), a similar suit brought to court the following year, Mansfield's patience for these irksome disputes came to an end. Upon the jury's announcement of its verdict in favor of the plaintiff, Mansfield ordered an arrest of judgment and later overturned the verdict based on the impropriety of submitting matters of a private and delicate nature to a public legal test. All wagers on D̓Eon's sex were thereby rendered invalid (Dictionary of National Biography, s.n. “D̓Eon”).

The permissibility of the policies issued on the Chevalier's sex boiled (p.87) down to a question of what limits could be placed on the creation of commercial property, and of how far the law would go to enforce speculative contracts made out of the fabric of other people's lives. D̓Eon always refused to demean himself by providing the court with the proof necessary to decide the numerous bets on his true sex. He maintained that his honor as a nobleman had been violated by his person having become the subject of degrading commercial contracts (Kates 1997). Nevertheless, although Mansfield threw out all law suits arising from wagers on D̓Eon's sex, he left D̓Eon's aristocratic sensibilities behind. Mansfield ruled on more general terms that all subjects of the Crown possessed a certain property in their private persons that others could not freely appropriate.

The Pigot Case

Many of the same issues were raised by another Mansfield case, this one arising out of a notorious bet contracted in 1770 between two young aristocrats at a Newmarket soirée. William Pigot and the son of Sir William Codrington each expected to inherit fortunes upon the deaths of their respective fathers, and they therefore agreed to “run their fathers against each other,” that is to bet on who lived longer. The idea was that the heir who first succeeded to his father's estate could afford to discharge the debts of his friend. Since Codrington's father was fifty years old and Pigot's over seventy, the bettors had Lord Ossory set odds to make the wager fair. When Ossory gave Codrington's father a better than three-to-one chance of surviving Pigot's, Codrington objected to the size of the handicap and withdrew from the wager. At this point another dinner guest, the Earl of March, offered to stand in Codrington's stead, and an agreement was therefore concluded between Pigot and March. Unbeknown to the parties at the time, however, Pigot's father had by a remarkable coincidence died earlier that same day 150 miles away in Shropshire. Upon learning of his father's death, Pigot refused to concede that he had lost the wager, claiming that because the bet was a contract in futuro, it was invalid since one of the lives had already terminated by the time the bet was made. March then brought suit before the King's Bench to compel Pigot's payment. Lord Mansfield left the case to the jury, which returned a verdict in favor of March.3

Although the wager between March and Pigot was held to be legally valid, the public outcry against two men wantonly betting on the lives of their fathers contributed significantly to the landmark passage of the Gambling Act. Thereafter all betting on human life was illegal, and gambling (p.88) perforce was expelled from the business of life insurance. No longer could a proprietary interest in another person's life be created simply through the issuance of life insurance or the contracting of a wager. Simply put, the Gambling Act limited the extent to which the substance of human life could be converted into a commodity.

The Lewis Case

The commodification of human life was even more dramatically at issue in a justly famous case that came before the Chief Justice the same year as the Pigot case. Thomas Lewis was an enslaved black man who asked the court to rule that he had the right not to be removed from the kingdom against his will. When the jury returned a verdict declaring Lewis to be outside his master's power to compel his return to the West Indies, the public gallery rang to cheers of “No Property! No Property!” (Walvin 1992:14–15). As this chant suggests, the institution of slavery and unfettered gambling on lives shared an abstract identity. Each entailed the creation of property in human lives, coercively in the case of slavery, gratuitously in the case of speculative life insurance or gambling. Each transposed the profane calculus of the marketplace into the sacred and invaluable sphere of human life. Moreover, by treating not just human labor but human life itself as an object of commerce, both slavery and gambling on lives denied to their subjects the primary article of ownership assumed in any Lockean political compact: possession of the self. It was therefore to an emerging consciousness of the problematic relationship between economic and political liberty that the eighteenth-century insurance “imaginary” owed its demise.

Life Insurance and Virtue

The Gambling Act and the legal decisions that followed removed from the life insurance business its speculative aspects, but in doing so they also stripped life insurance of many of the imaginative aims and mental associations that had proved crucial to its marked growth from the late seventeenth century. The institutional forms and functions of insurance in its pre-actuarial phase expressed a distinctive consciousness about the possibilities of establishing civic virtue in a commercial society by protecting private fortunes, fostering social fellowship for mutual support, and promoting Christian ideals.

The habit of insurance was first inculcated among thousands of households throughout London and the provinces primarily by voluntary insurance associations, not the proprietary companies that later came to dominate (p.89) the industry. These innovative bodies typically organized themselves as self-governing associations of policyholders, and therefore possessed characteristics both of businesses and clubs. Here individual responsibility was fused with a communitarian ideal, and in common with many other voluntary movements of the time with public-spirited aims, life insurance societies announced their intentions not only to indemnify their policyholders against loss, they also sought to contribute to the nation's moral, social, and economic improvement.

Life insurance societies routinely advertised themselves using the language of enlightenment and virtue, appealing to “wise and judicious persons” or “considering men” to join in a “pious and Charitable Undertaking” (Paternal Society for the Provision of Children 1710; Adams 1714; Amicable Society 1706:7). The societies advised prospective policyholders that through a variety of means they could contribute to the propagation of Christianity in foreign parts, help finance charity schools, augment the incomes of impoverished clergymen, and come to the relief of distressed debtors (Amicable Society 1706:7).

But the ambitions of life insurance projectors went beyond charitable benefaction and the support of kith and kin. Charles Povey, for example, designed his life insurance society in such a way that members automatically received his newspaper, The General Remark on Trade, so they could better “understand Trade and Business” (Povey 1706:1). Then, out of the profits of his newspaper and insurance society, Povey planned to build a hospital for up to one hundred society members who had fallen on hard times.

Although Povey's elaborate scheme entailed an unusual degree of socialized risk, other projectors were no less visionary. Richard Carter's projected life insurance society of 1712 was designed to help buoy the price of government lottery tickets (Carter 1712). Daniel Cholmondeley planned to sell contingent annuities for widows as a means for advancing the fisheries of Britain (Cholmondeley 1713, 1714). Sir James Hallet and others petitioned for a charter to grant contingent annuities, stressing the benefits that would accrue to the nation's trade by relieving commercial men of financial worry about bankruptcy or death (and thereby encouraging them to invest more of their capital to the nation's advantage) (Special Report 1720:67). Thinking along the same lines, a number of life insurance societies loaned their members money against the security of their policies, thereby introducing banking facilities to the life insurance business (Friendly Society for Insurance on Lives 1708, 1715[?]a, 1715b:15; Adams 1714; Perpetual Assurance Office 1709[?]). All of these insurance projects variously aimed at improving English society and morals by extending (p.90) credit, expanding trade, and awakening people to the ways commerce could reform society.

Insurance during the Augustan period therefore attempted to forge a social alliance among people drawn together not just through enlightened self-interest but also through a dedication to the reformation of English society through charity and the increase of commerce. Ironically, by convincing individuals that life insurance enhances family security, these institutions expanded the national fund of investment capital, which enabled entrepreneurs and state ministers alike to embark upon more and greater speculative ventures, simultaneously advancing the wealth of the nation and the power of the state. Risk taking and avoidance were thus made a ferrogilt alloy in the service of British military and commercial ambition during the eighteenth century.

The attractiveness of these schemes lay in their combining the private advantage afforded by insurance with the public benefit that could be achieved by the investment of a large capital fund, what insurance promoters referred to as a “joint-stock.” The terminology was telling, for most life insurance companies, unlike charitable foundations or friendly societies, were also profit-making ventures modeled after the joint-stock company, a type of business organization whose accessibility to smaller investors and ease of investment and disinvestment led to its rapidly growing importance in the finance of English industry from the 1680s (Dubois 1938:230; Scott 1911:441, 447). By investing in a joint-stock venture, members of life insurance societies not only acquired ownership of their policies but also gained title, like shareholders, to a fixed portion of their societies' assets. This fact is highly important for appreciating the dynamics of the early life insurance market and the particular moral regime under which they operated.

The proprietary nature of policyholding meant that, in common with the conventions followed in other sorts of joint-stock companies, the membership convened once or twice a year at a General Court to consider and vote upon general matters put to them by the directors. The boards of directors were in turn elected from among eligible society members. A substantial degree of control over life insurance companies was therefore vested in the policyholders themselves. Although they ceded direct oversight to an elected board and quotidian management of the office to the “register” (usually the projector himself), they collectively controlled their respective societies. Within the boundaries of these little commonwealths, policyholders gathered in an egalitarian fashion to protect one another from outrageous fortune. Inside this social shelter, the risks of (p.91) falling into a demeaning social dependence on relations, neighbors, or the parish could be reduced, and the continued respectability of people of middling fortunes thereby assured. Life insurance seemed therefore to provide a means to preserve the independency of commercial families in the face of mortal disaster, and consequently to contribute to the continuity and autonomy of commercial society and, by extension, of the nation as a whole.

Of course, indemnification against loss was only one side of the allure of these early insurance schemes. As one insurance office acknowledged, the “[t]hings generally desired by the people…in undertakings of this nature, are security and advantage” (Perpetual Assurance Office 1709[?]). Accordingly, many societies spiced their offerings of insurance against mortal misfortune with plans for low-risk avenues to positive wealth. Some offices promised for instance to abate their fees as interest income from the joint-stock accumulated, until such time as the society became financially self-sufficient and could do away with members' contributions altogether. Members would then hold heritable title to stated death benefits free of charge. Other offices intended to invest their joint-stocks in real estate or in fisheries, the revenue from which would provide supplemental income to members or their heirs. Whatever the precise formula, the underlying idea was to settle upon the membership a perpetual estate to be held in common. Typically, the Amicable Society declared at its inception in 1706 that annual fees were expected to cease after thirty years, after which time the society “will settle a growing estate in each family for ever, by a better tenure than most are held in England” (Amicable Society 1706:5).

Given the long-term investment contemplated here, these are not the sort of enticements calculated to lure the gambling set. Rather, participants in early life insurance schemes seem to have responded in part to the promise of conservative management and a security of investment rivaling even estates in land, normally the safest and most highly esteemed of assets. Indeed, insurance societies aspired to fulfill the role played by land in securing the fortunes of grandee families by furnishing a durable vehicle for the transmission of commercial fortunes down the generations, thus satisfying, as J. G. A. Pocock has noted, a crucial requirement for the exercise of political virtue and the establishment of moral legitimacy in English society (1975:463).

That early life insurance societies were conceived of by their members as both collective estates and as agents of moral reform explains an otherwise puzzling feature of their operations. It seems at first strange that businesses (p.92) based on at least a modicum of probabilistic expectation should not have sought to increase their memberships indefinitely, given the increased reliability of probabilistic forecasting implied by the law of large numbers. Why, in other words, did life insurance societies always limit their sizes, thereby leaving themselves more exposed to variance in the rate of mortality experienced by their members, presumably rendering membership less attractive to their prospective clientele? The answer is not that promoters of life insurance societies possessed an antiprobabilistic attitude that blinded them to the risk-reducing benefits of an amplified membership (Daston 1988:115), but rather that the calculus of mortality carried out by the promoters and members was subordinated to other social and ethical calculations.

The memberships of life insurance societies had no interest in growing indefinitely because they comprised a moral as well as a proprietorial sodality. The common ownership of a private estate made policyholders disinclined to dilute their own financial interest in the insurance society through the admission of additional members, while the common moral purpose that brought them together in the first place also segregated them from society at large. Within the preserve of this civil society, the acquisitive impulses of the marketplace could be reconciled with the Christian ideal of selfless benefaction, an aspiration embodied in the very design of insurance societies. Since in these redistributive schemes the size of death benefits was largest when mortality was low, the continuing vitality of one's fellows redounded to the pecuniary benefit of oneself or one's heirs. Referring to this fact, the Second Society of Assurance boasted: “Here, in our society, is a world of good nature: We pray for the lives of others, though we die our selves” (1709:25). Part reforming society, part joint-stock company, the insurance society of the early eighteenth century may thus be seen as a Janus-faced response to the moral and financial imperatives of the Augustan age, and which united the apparently contradictory impulses for assurance and adventure, for morality and money, into a coherent institutional form.


Historians have often noted that the organization and operation of eighteenth-century life insurance offices corresponded to the limited actuarial techniques and mortality data available to insurance promoters prior to the 1760s. A closer examination of the early life insurance movement reveals that its forms and practices were also shaped by strong ideological (p.93) and cultural currents running through Augustan society and politics. Life insurance was conceived as a vehicle for the amplification of British power abroad, for the stimulation of undercapitalized industries, for social security, moral improvement, the propagation of Christianity, and for turning the uncertainties of life into opportunities for enrichment. While today we conceptually oppose security to speculation, the insurance market of the eighteenth century grew out of imagined outcomes that were all in some sense speculative or hopeful.

In giving substance to these imaginings, life insurance helped to propel a broad-based movement in early-eighteenth-century England for collective self-reliance, self-governance, and public benefaction—all characteristics associated with the emerging civil society of the Enlightenment. Yet insurance societies were especially vulnerable to predatory uses of life insurance policies precisely because of their constitutional commitment to the proprietary interest conferred by policyholding. In the face of insurance gambling and the danger that bad lives posed to their memberships, life societies attempted to maintain a uniform level of risk among the lives they insured in order to ensure an ideal of fair play. By the 1770s, however, a new governmental strategy was being honed to suppress the speculative uses of life insurance. Company directors no longer rested content simply to judge whether a proposed life met the minimum standards of insurability, but went further to judge the policyholder's motive for purchasing the insurance in the first place.

The implementation of this new moral criterion was accomplished on two fronts. First, insurance companies of the later eighteenth century assumed greater corporate authority over their policyholders, in part by removing the proprietary aspects of policyholding, as the Amicable Society did in 1771 (Amicable Society 1776:31). Once the characteristics of equity disappeared from life insurance policies, so too could the control by policyholders over the affairs of the society be diminished. Policyholders were thus reduced from being equal and self-governing proprietors of their societies to being corporate customers. On the second front, the hands of insurance firms were strengthened by parliament's determination to confine risk taking within specified moral parameters, a goal finally accomplished in 1774 by passage of the Gambling Act. With this legal rationale in place, both the state and insurance companies acquired the statutory authority as well as the categorical means to segregate existing life insurance practices into “licit” and “illicit” behaviors as defined by the emerging moral and rational calculus of economic action. In its (p.94) essence, insurance might always be a gamble, but it was to become a legally sanctioned expression of a moral interest, insulated from the acquisitive passions that threatened to disrupt the virtuous operation of a propertied civil society.


(1.) 14 Geo. 3, c. 48.

(2.) Gary Kates (1995:231) has noted that French financiers alone wagered some £100,000 on D̓Eon's sex, suggesting that the total amount of money wagered in insurance offices, betting shops, and between individuals was much higher than Weskett's figure.

(3.) Earl of March v. Pigot, 98 Eng. Rep. 471–73 (1909); see also Weskett 1781: 582–84.


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(1.) 14 Geo. 3, c. 48.

(2.) Gary Kates (1995:231) has noted that French financiers alone wagered some £100,000 on D̓Eon's sex, suggesting that the total amount of money wagered in insurance offices, betting shops, and between individuals was much higher than Weskett's figure.

(3.) Earl of March v. Pigot, 98 Eng. Rep. 471–73 (1909); see also Weskett 1781: 582–84.