Insurance Company of North America
American
| Notable Position | Person | From | To |
|---|---|---|---|
| President | Benjamin Rush |
| Notable Position | Person | From | To |
|---|---|---|---|
| President | Benjamin Rush |
| Y/M/D | Description | Association | Composition | Place | Locale | Food | Event |
|---|---|---|---|---|---|---|---|
| Y/M/D | Description | Association | Composition | Place | Locale | Food | Event |
| 1792/11/19 | Insurance Company of North America is established. | Founding location | Independence Hall | Philadelphia, PA | |||
| 1916/00/00 | Insurance Company of North America pay's $21740 partial insurance coverage | Insurance Underwriter | RMS Lusitania (shipwreck) | Sinking of the RMS Lusitania | |||
| 1925/00/00 | Owner | Insurance Company of North America Building | Philadelphia, PA |
History
Founded in Independence Hall on November 19, 1792, the Insurance Company of North America grew out of the Universal. Tontine Association formed the previous year by Samuel Blodget Jr and Ebenezer Hazard. When the tontine association proved a failure after only a few months, its stockholders elected Blodget, Hazard, John M. Nesbit and 10 others directors of a new ' company to write marine, fire, and life insurance. Nesbit was chosen president and Hazard secretary. Because the firm soon found life insurance too new and undeveloped and fire insurance too competitive to be profitable, the directors concentrated chiefly, almost from the start, on marine risks. Marine underwriting, says James (historian Marquis James), was " an established line of business, representing, in fact, the oldest form of insurance known." Moreover, because American sea-borne commerce was booming, marine risks held promise of significant profits despite competition.
At this time Philadelphia reigned as the commercial center of the country, but marine underwriting, despite its long history, was at best an informal activity conducted first in the London Coffee House and later in the City Tavern. Some 50 groups or individuals competed fairly successfully with British insurance companies for the business of American shippers, but the Philadelphians suffered from a shortage of capital and could not cover large risks on short notice. The Insurance Company of North America brought both formal organization and capital to United States marine underwriting. According to Huebner (historian Solomon Huebner) once INA became incorporated in 1794, it represented both " the first stock company of its kind upon the continent whose name it bore" . . . and a model for similar undertakings in other parts of the country."
In its first decade INA collected premiums of more than $6 million, paid claims of just over $5.5 million, and ranked as the country ' s largest single insurer of ships cargoes. After 1797, however, almost continuous warfare between Prance and England brought to marine underwriting a period of instability that continued through the War of 1812. For example, during President Thomas Jefferson' s 14-month trade embargo in 1807-8, INA wrote no marine risks at all. During those periods when fighting slackened, however, INA continued to lead the way in insuring American shipping.
Despite their preference for marine risks, company officials turned their attention back to fire insurance whenever foreign trade slowed. In fact, by 1796, says James, " the North America had made a number of contributions to fire insurance which were destined to have permanent effects on the business." Although fire insurance was at least 100 years old and America ' s first fire insurance company dated from 1752, INA in 1794 became the first American firm to insure the contents of buildings as well as the structures themselves. The following year, INA became the first to insure houses against fire anywhere in the United States, or as James puts it, " the first insurance company to follow the pioneers into the settlements they were carving from the wilderness of Ohio and Kentucky and Tennessee with a specific offer of participation in the westward march of empire." From this company expansion came the germ of the local agency system. In 1797 INA signed an experimental contract with a Charleston, SC, firm both to advertise and sell policies and then a decade later launched what, according to James, was " the first approach to a national advertising campaign by an insurance company." The following year in Lexington, Ky, INA opened its first agency in the West. Others followed soon in Louisville, Cincinnati, Wheeling, and Nashville and helped INA weather the decline of its marine business during the embargo.
After the War of 1812, INA continued to regard itself as principally a marine insurer, but due to the adverse effects of the war and the financial panics of 1817 and 1837 on American shipping, fire insurance remained a larger enterprise than marine insurance. Moreover, Philadelphia' s bowing to New York as the country' s chief port hurt INA especially. The 1840' s and 1850's brought a resurgence of marine activity, however, and. the company, by exercising, traditional caution in its choice of risks, managed to emerge from the Civil War with a 25 percent increase in business. And the firm continued to grow despite a reduction by 1866 of more than 50 percent in the amount of United States trade being carried in American bottoms. High taxes on Yankee ships and building materials favored vessels sailing under the English flag, and this in turn gave English insurance firms a larger share of marine risks. Still, in 1872 INA ' s marine premiums totaled more than $1.2 million, one-fourth of which was profit. This, says James, was a " growth achieved against international competition in the one major field where American enterprise was steadily losing."
The use of larger cargo ships and a rash of fraudulent claims made the decade 1885-95 difficult for all marine firms, and at INA this sparked the beginning of a major change in approach to marine underwriting. In 1895 INA president Charles Platt, who had handled marine business so effectively during the Civil War and had raised the company' s fire business to a position among the nation' s largest, made 25-year-old Benjamin Rush, great-grandson of the famous colonial physician of the same name, special assistant to the president. In this capacity young Rush, along with Thomas R. Young and Harry Parnum, conducted an exhausting study of INA records and developed a new systematic classification of marine risks. It increased the number of categories from 14 to 198 and thereby changed the entire course of the marine business. In 1898 Platt appointed Rush second vice-president with authority to reorganize the marine department along the new lines he had devised. The result, says James, was " the birth of modern scientific underwriting" and 21 straight years of profitable operation in the marine department, a record that " has rarely been equaled by a major company in the long history of the industry. Rush went on to become president of INA in 1916 and to serve in that capacity until 1939, and during World War II his classification system formed the basis of administration of the Federal Government' s highly important War Damage Corporation.
When Rush first arrived at INA, the company already enjoyed a reputation for fairness in claims payments and conservatism in writing new business. It had, for example, paid prompt and full claims in the Chicago and Boston fires of 1871 and 1872, hesitated to enter the inland marine field in the 1840's due to reservations about steam transportation projects, and refused to insure the fur trading business of Pierre Chouteau and Company. Rush continued both these traditions, but he proved particularly adept at steering INA away from what he considered bad risks, especially in the oil business and portions of the sugar and cotton trades.
Despite his caution regarding individual and specific classes of risks, though, Rush believed, and so persuaded the INA directors, that the company should prepare to write every form of insurance known except life, provided that the risk was reasonable. Thus growth in almost every area of underwriting has characterized INA in the 20th century. While chief of the marine department Rush successfully challenged the long - followed reciprocity-of-favor practice in which New York brokers awarded cotton business to various underwriters; sent INA agents into the South to solicit cotton business directly; helped shippers improve cotton transportation and storage practices in order to reduce fire and packing losses; and led in forming the Cotton Reinsurance Exchange in 1909. During World War I Rush kept INA marine rates stable and refused poor risks, and INA wrote more than half as much marine insurance as the Federal Government' s Bureau of War Risk Insurance. After the war Rush led an INA expansion program in which the firm bought or organized a number of subsidiaries, including Philadelphia Fire and Marine Insurance Company, Alliance Insurance Company, Alliance Casualty Company, Indemnity Insurance Company of North America, and others. In 1924 Rush formed the Marine Service Department to study the packaging and storing of products insured by the company, and as .a result, according to James, the company' s experts " learned things about the shipment of some of these products which men who had been in the business a lifetime did not know." In this way INA affected shipping practices in numerous American industries.
INA plunged fully into inland marine underwriting as early as the l890's, with major emphasis on Great Lakes shipping, and in the first half of the 20th century Rush, along with John A. Diemand who became president in 1941, made INA the leading inland marine company in the United States. Much of the impetus for the firm' s growth in this field came from World War I. During that conflict INA introduced a comprehensive policy to cover transportation of goods by coastal vessals, railroads, or trucks. Other innovations followed, and the inland marine division grew rapidly, eventually helping INA earn, says Carr, a reputation, as ' " the American Lloyd' s. " For example, in the 1930' s Diemand pioneered the revolutionary concept of multiple-line underwriting which allowed coverage of several perils in one policy package; in 1935 INA insured the Boy Scouts of America for $500,000 against the possibility of their having to postpone their first national jamboree; that same year the firm issued Dun and Bradstreet the first all- risk policy on valuable papers; in the 1940' s the company insured 20 scientists working on the Manhattan Project; in the 1950' s INA insured the United States' first full-scale civilian nuclear power plant, at Shippingport, Pa.; in the 1960's the firm insured the Navy' s first nuclear-powered submarine, USS Nautilus; and over the years the company introduced coverage on numerous now-standard inland marine items such as jewelry, fine arts, musical instruments and films. In 1956 INA incorporated a life insurance subsidiary, the Life Insurance Company of North America, and reentered life underwriting. By 1964 the new company had more than $2 billion in life insurance in force. Today the Insurance Company of North America is itself a subsidary of INA Corporation, which ranks as one of the Nation' s largest diversified financial companies, with major interests in insurance, insurance-related services, health care, and investment banking. Its 1976 revenues totaled $2.93 billion. - NRHP Nomination Form, May 1977
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