Civil War and Life Insurance
New York Commercial Advertiser, January 2, 1861
Rebellion and civil war bring up many grave and important questions of a financial character, the full bearing of which we incline to think the South Carolina insurgents have not taken time to consider, and one of these is the extent to which life insurance policies will be vitiated. We have been at the pains to ascertain some facts in connection with this subject, to which it may be well to direct public attention.
It is probably generally known that Southern risks have never been favorites with our life insurance companies. Owing to the greater hazards of general and epedemic disease to which residents of warm climates are exposed, higher rates have invariably been charged upon policies issued to such residents. Even at advanced rates, the assurance of Southern lives has not yielded an average profit. The following experience taken from the actuaries' report of one of the first life insurance companies of New York may serve to illustrate this position.
The estimated number of deaths for a period of fifteen years, among all assured residents of the New England and middle states, was a fraction over 623; the actual number was 440. The estimated loss in the same class was $1,118,976—the actual loss was only $782,005. Among residents of the South Atlantic and Gulf states assured in this company, the number of deaths for the same time was estimated at a fraction over 85—the actual number was 99. The estimated loss in this class was $222,130—the actual loss was $310,300. In the New England and middle states the actual loss was scarcely 70 per cent of the estimate. In the Southern Atlantic and Gulf states, it was 137 per cent.
Though discouraged by this apparent excess of mortality in the Southern states, the several life insurance companies of the North have become contingently liable for about $12,000,000 upon policies owing to residents at the South.
In the event of a civil war there will be four classes of assured persons in the Southern States: soldiers of the United States Army, stationed at their several posts; secessionists; union partizans; and slaves. Policies of life insurance contain a provision in this form: "Provided that in case the said — — shall, without the consent of this company, engage in any extra hazardous occupation, or shall without such previous consent enter into any military service whatsoever (the militia not in active service excepted) or in case he shall die by the hands of justice or in the violation of any state, national or provincial law, this policy shall be null and void."
Military men are insured only against the ordinary risks of a soldier's life during a state of peace. But a soldier has a natural right to act upon the defensive against an attacking mob, and it is the opinion of a high legal authority in this city that if he perished in thus acting upon the defensive, his policy of insurance would be binding upon the company issuing it. The case of Capt. Seymour now at Fort Sumpter, Charleston, who holds a policy from the New York Mutual Life Insurance Company, was instanced as a case of this character.
The officers of the several companies, though generally doubting the strict legality of such claims, are disposed to meet them on the ground of patriotism and honor. The secessionists, by acting against the Federal Government, at once vitiate their claims, and the patriotic citizens of the South are in no better position unless acting strictly on the defensive. The insurance upon slaves would seem to be forfeited in any event, for in the utter chaos that would overwhelm the Southern seceding states in the event of a civil contest, no claim for life-insurance upon such policies could probably be collected. It is safe therefore to suppose that the first blast of actual war between the South and the Federal government would sweep away nearly $12,000,000 of Southern capital.
There is a difference in the provisions of the policies of American life insurance companies and British companies. In the former the insured forfeit the policy in consequence of treason to or for making war upon the United States. The British policy is conditioned that the person insured shall not enter into any military or naval service whatever without special license from the company; and that doing so shall make the insurance void, and work the forfeiture of all the premiums paid.