Insurance Practices in the Late Nineteenth Century

The post Civil War period was a time of rapid expansion in the United States and in technological innovation. It has been described accurately as an age of rampant opportunism and speculation virtually unregulated by government. Monopolistic practices and industrialization were focused toward the amassing of vast personal fortunes almost untouched by taxes. Get rich quick schemes were the order of the day, generally ending in the loss of one’s investment. It was a time well characterized by P. T. Barnum’s famous quip, “There’s a sucker born every minute.”SDALI 4.3

The fledgling insurance industry was fully involved in the spirit of the times, a spirit steeped in the essence of high risk. Undercapitalized insurance stock groups, while promising quick wealth, frequently collapsed without notice, leaving their policies worthless. Company dealings with their customers often were unjust and not infrequently fraudulent in nature. Policies written on the lives of complete strangers were urged upon a public that was encouraged to invest in the hope of profiting from the death of the insured.SDALI 4.4

The abuses of such a system led to public demand for government regulation. Beginning in 1906, State and Federal regulatory laws were designed to limit fraud and require the insurance industry to follow sound practices.SDALI 4.5

Today’s life insurance industry, heavily regulated by law and government agencies, differs in important ways from that of the late 1800’s. Ellen White’s counsel against investing in life insurance must be understood against the background and practices of her times if the meaning of her words is to be properly understood.SDALI 4.6