Metropolitan Life Insurance Company’s Standards of Ethics
The Metropolitan Life Insurance Company’s officers were particularly careful in the selection of their agents, and inquired in detail as to their abilities, character, and previous experience. They knew how important it was to look into every application for insurance, and they urged their agents to exercise extreme care in the selection of clients.
In spite of the sharp struggle for business, the company emphasized and maintained high standards of ethics. It cautioned agents not to offer improper inducements or make unauthorized promises. It instructed them to stick to the printed text in representing the plans, features, and record of the company. Agents overstepping the bounds were reprimanded or dismissed. The officers condemned the common recourse of running rival companies down in the wild scramble for business. This malpractice, they realized, was injurious to the entire institution of life insurance. They were not building for the day; they were building for the future.
It is obvious that they were also keen businessmen and knew that generous and fair treatment of policyholders would win public recognition. Claims were paid promptly. Policies were “registered,” i.e., countersigned by the Insurance Department, indicating that a special fund was deposited by the company and held by the State as security for the payment of policies when they became due.
In order to gain official confirmation of its sound financial status, the company requested an examination by the New York State Insurance Department. In 1871, after such an examination, the Superintendent of Insurance, George W. Miller, stated that the life insurance company was managed with “integrity, energy, and ability, and concluded with the following words: “From the thorough personal examination made, 1 am satisfied that the condition of the company is such as to entitle it to the confidence of the policyholders and the public.”
Similarly, The Baltimore Underwriter, in referring to the business of 1872, wrote:
“In its issue of 8,642 policies last year, the steady augmenting of its receipts, the economy of expenditure, the character of its assets, its watchful management, its large membership, the rigid scrutiny of its risks, the public appreciation of its distinctive plans of insurance, etc.–in all these, we say, is the assurance that whatever solid life assurance contemplates the Metropolitan is abundantly able to supply.”
Intelligent management and energetic prosecution of the business by the new administration bore results. By the end of 1871, after less than four years of existence, the company had on its books more than 11,000 life insurance policies totaling almost $15,000,000 of life insurance, a considerable sum for that time. Only two years later the figures increased to 18,600 policies in force, and to more than $26,300,000 of business.
The official returns for 1873 revealed that, in the number of policies written, the company held third place among the 56 companies transacting business in New York State. By this time, the company had already entered 17 States and the Dominion of Canada. Its business extended to all the States in the New England, the Middle Atlantic, the East North Central areas, as well as to Iowa and Missouri.
This sound growth is all the more remarkable in that it occurred during a period of economic and financial excesses. Speculation and “frenzied finance” were rampant. The post Civil War demand for commodities was gradually letting up and prices declined as a result. Excessive railway building and the too rapid development of the trans-Mississippi West had brought about a glut of foodstuffs and thrown older areas out of cultivation.
A sudden crisis developed which broke into the lavish prosperity of the country and was immediately felt by all insurance firms. Partly owing to deficiencies of management, accentuated by the general economic crisis, no less than 22 life insurance companies in New York State had ceased business in the six years ending with 1873.
It must not be assumed, moreover, that the Metropolitan’s early success was achieved without many difficulties or that it continued indefinitely. The task of building a functioning organization and a Field Force was an arduous and expensive one. Competent agents were difficult to find. Many of the men engaged produced insufficient business, and a considerable number of the applications submitted were on questionable risks.
In spite of every effort, the lapse of life insurance rates was high, reflecting the adverse business conditions which were gripping the country. As the depression deepened, insurance company after insurance company went to the wall. Of the more than 15 life insurance companies incorporated in the State of New York in the three year period of 1866 to 1868, the Metropolitan alone survived.
Metropolitan Life Insurance Company’s Standards of Ethics
The Metropolitan Life Insurance Company of officers were particularly careful in selecting their agents, and asked in detail about their abilities, character, and previous experience. They knew how important it was to look at every application for insurance, and urged its officials to exercise extreme care in the selection of customers.
Despite the strong fight for the business, the company stressed and maintained high standards of ethics. Agents were warned not offer incentives or make unauthorized promises. They were ordered to stick to the text printed in the representation of plans, features and registration of the company. Agents of overstepping the limits were reprimanded or dismissed. The officials condemned the use of common operating companies competing in the savage fighting of the companies. This bad practice, they realized, is detrimental to the entire institution of life insurance. They were not building for the day, who were building for the future.
It is also clear that they were interested entrepreneurs and knew that generous and fair treatment of policyholders to gain public recognition. The claims are paid. The policies were “registered”, ie, endorsed by the Department of Insurance, which indicates that a special fund was deposited by the company and held by the State as collateral for the payment of the policies when they became due.
In order to obtain official confirmation of its strong financial position, the company requested a review by the New York State Insurance Department. In 1871, after such a review, the Superintendent of Insurance, George W. Miller said that the life insurance company was managed with “integrity, energy and ability, and concluded with the following words:” From the deep personal examination, 1 am convinced that the condition of the company is such that entitles the confidence of policyholders and the public. ”
Similarly, the Baltimore Underwriter, referring to the activity in 1872, wrote:
“In its 8642 edition of the policies of the past year, the steady rise in their incomes, the economy of expenditure, the nature of its assets, the management of his look, his large number of members, the rigid control of their risks, ¬ public appreciation of his distinctive insurance schemes, etc.-in all these, we say, is ensuring that whatever solid life insurance covers the Metropolitan is very capable of delivering. ”
Intelligent management and energetic prosecution of the company by the new administration gave results. In late 1871, after less than four years of existence, the company had its books in more than 11,000 life insurance policies totaling nearly $ 15000000 of life insurance, a considerable sum for the time. Only two years later, the numbers increased to 18,600 policies in force, and more than $ 26300000 of the company.
The official returns for 1873 showed that the number of policies written, the company held the third place among the 56 companies from transacting business in the State of New York. At this time, the company had already entered into 17 states and the Dominion of Canada. Their business extended to all states of New England, Middle Atlantic, East North Central, as well as Iowa and Missouri.
This sound is the most remarkable growth to the extent that occurred during a period of economic and financial excesses. Speculation and “frantic financing” is rampant. The post of the Civil War demand for commodities was a little bit and let prices decreased as a result. Excessive railway construction and also the rapid development of the trans-Mississippi West has led to an excess of foodstuffs and yielded major growing areas.
A sudden crises who broke into the luxurious country’s prosperity and immediately felt by all insurance companies. In part because of poor management, accentuated by the general economic crisis, no less than 22 life insurance companies in the State of New York had stopped business in the six years ending in 1873.
It should not be assumed, moreover, that the Metropolitan early success was achieved without much difficulty or continuing indefinitely. The task of building an organization and functioning of a Field Force was an arduous and expensive. The players are hard to find. Many of those engaged businesspeople produced insufficient, and a considerable number of applications submitted were of dubious risks.
Despite every effort, the expiration of the rate of life insurance is high, reflecting the adverse business conditions, that is gripping the country. As the depression deepened, the insurance company after the insurance company went to the wall. Of the more than 15 life insurance companies in the State of New York at the three-year period 1866 to 1868, the Metropolitan just survived.
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