Article
Selecting Risks in an Anonymous World: The Agency System for Life Insurance in Antebellum America
Business History Review
(2008)
Abstract
Early American life insurers found themselves facing the problem of asymmetric information, as they needed to rely on applicants themselves to provide truthful, complete answers to a standard set of questions. In an attempt to repersonalize the relationship between their boards of directors and the individual applicants, firms selected highly respected local citizens to act as their agents. These agents were expected to evaluate the appearance of candidates, unearth evidence of unhealthy family histories or questionable habits, and attest to the respectability of people writing testimonial letters on an applicant's behalf. In short, the initial purpose of the agency system was not to actively solicit customers, but rather to recreate the glass-bowl mentality associated with small towns or city neighborhoods.
Disciplines
Publication Date
Spring 2008
DOI
https://doi.org/10.1017/S0007680500037491
Citation Information
Sharon Murphy. "Selecting Risks in an Anonymous World: The Agency System for Life Insurance in Antebellum America" Business History Review Vol. 82 Iss. 1 (2008) p. 1 - 30 ISSN: 0007-6805 Available at: http://works.bepress.com/sharon-murphy/12/