Betting on Lives: The Culture of Life Insurance in England, 1695-1775. (Reviews).

Betting on Lives: The Culture of Life Insurance in England 1695-1775. By Geoffrey Clark (Manchester and New York: Manchester University Press, 1999. xiv plus 241 pp.). $69.95.

In the global economy of our day London reigns as the world's premier foreign exchange center, surpassing even New York and Tokyo, and is possessed of the largest international insurance market. Long perceived as a world trade center par excellence, the city retains that status nowadays as much because of its invisible commerce in services as in the stuff beholden to the eye. How London acquired this financial dominance and the culture which spawned it are important aspects of the story which Clark tells in Betting on Lives.

Making a life insurance narrative scintillating as well as informative is, at the very least, a challenge, yet this author succeeds extraordinarily well on both scores. He enlivens his subject by portraying an affluent society fixated on commerce and consumption, one to which insurance proved uncommonly beneficial and sensible. Insurance as an antidote to mishap or disaster--whether to life, at sea, or from fire--guaranteed security. In so doing it fostered a climate of confidence and order: in an Age of Reason insurance embodied reason as well as enlightened self-interest. As Clark put it, this "collective management of risk led to an expansion of associational life, the foundation stone of civil society." (p. 5); it spurred what eighteenth-century Englishmen called a "polite and commercial society".

To make insurance feasible it remained only to fashion a reliable means of forecasting. The development of such a magic methodology lay in the world of probability theory and the demographic data, which became bedrock to life insurance and life annuities as they evolved during the eighteenth century and after. Clark's best chapter is this statistical one, providing as it does insight on an otherwise neglected dimension of the entrepreneurial menta1ite.

Clark expounds variously on life insurance and its culture: he introduces his subject by contrasting the moral repugnance which insurance generated on the Continent to its easy acceptance in the free-wheeling business environment of England, where chance vied successfully with Providence. His treatment of "Life Insurance in its Cultural Context" associates it with reformation of manners, spiritual and moral reform, and the pervasiveness of the gambling spirit which included the not surprising though ghoulish practice of betting on lives.

A recurring theme in Clark is the relationship of life insurance to credit, both state and personal. In the dazzling commercial society of early eighteenth-century England fortunes were made and lost overnight. In such a climate insurance had a role to play: it fortified the psychological needs of an society utterly dependent upon credit. By doing so it sustained confidence and fostered optimism, both crucial for creditworthiness. In fact, life insurance joined stock shares, bonds, mortgages, bills of exchange, and promissory notes as inevitable props for England's dynamic economy.

Further, in "The Life Insurance Business in its Formative Years" Clark discusses the occasional banking activities of insurance companies. Such an undertaking allowed insurance companies to reap the benefits of compound interest which acquired a special mystique for English Augustans. On a more technical level Clark defines types of early insurance--contributorships, mortuary tontines, premium insurance and reversionary annuity companies--and chronicles the growth of such landmark businesses as the Royal Exchange Assurance Corporation and London Assurance Corporation at the beginning of the eighteenth century, the Equitable Society of mid-century and the Westminster and Pelican which appeared at century's end.

As noted, insurance supplied for business-minded Englishmen that which they lacked in their other instruments of credit--the means for investment management based on regularity and a predictable future. Clark's chapter on "Demographic Calculation and the Management of Investment" guides the reader through the actuarial labyrinths of "political arithmetic", or mortality statistics, while that on "The Social Composition of the Life Insurance Market" provides an analysis of the interplay of occupation, politics, geography and personal connections with the insurance market. The author's injection of policyholder networks--whether of family or friends--into the equation is an intriguing addition. These personal connections, akin to those fostered by country and urban attorneys in quest of investment opportunities, say much about the ways in which potential sources of investment were tapped in this credit-driven economy.

Clark's work is important, explaining as it does the origins of insurance in its peculiar culture. Just as insurance companies and mutual societies were party to fueling eighteenth and early nineteenth-century London's commerce and short-term money market, insurance perseveres as an essential aspect of the invisible commerce which sustains London's dominance in today's sophisticated system of global finance.