Transportation history and insurance.
The end of the year often is a great time to look back at our heritage and examine the ghosts of Christmas past and the specters of Christmas future. December, itself, is somewhat of an important month in insurance history. Serious tragedies tend to occur in December, for some strange reason. Looking back through a couple of years of Firehouse Magazine's Rekindles column, it was in December 1901 that fire destroyed a Baltimore department store (built of iron and stone, no less), as well as a dry-goods store in Wilkes-Barre, a barrel factory in Brooklyn, and the administration building of the University of Wooster in Ohio. The following December, fire killed 14 in the Lincoln Hotel in Chicago and destroyed a furniture store in Atlanta. The entire ship yard at Dumbarten in London was damaged by fire, and almost burned up the Shamrock III, Sir Thomas Lipton's (of tea tame) America's Cup yacht. Many of the historic losses this writer has described in Claims occurred in December, including the "Winecoff Hotel fire, Pear Harbor, and the Halifax Harbor explosion.
What is there about a holiday season that also seems to bring tragedy? People are excited, they travel to see friends and family, they mark holidays such as a new year with promises. Those promises may be to do better in school, earn more money pay off a debt, or just be a better person. Optimism rages; everyone and everything is on the move. Trains, planes, and boats are crowded. But, at least for those of us in the Northern Hemisphere, it is winter. Roads are icy, waterways are clogged with ice, and storms decrease the efficiency" of our modes of transportation. The hazards are increased and, as all risk managers know, an increase in hazard is more likely to lead to the event of a peril.
Transportation and insurance have had a long relationship. The first insurance forms ever written were early marine policies on Phoenician shipping. A variant of livestock insurance existed in Flanders even earlier than 1250, and the Medieval insurance guilds wrote coverage protecting goods in transit, as well as the merchants transporting them. It was, perhaps, on a Christmas holiday trip to Britain that Hartford resident James G. Batterson became intrigued with the Railway Passenger's Assurance Company of London's railway travel disability' insurance. He returned to Connecticut and began his own insurance company for travelers: The Travelers.
In late 1897, Truman J. Martin, a Buffalo physician, was thinking about joining the other 190 people in the United States who owned one of the newly invented contraptions called horseless carriages. Martin decided to insure his vehicle and, on Feb. l, 1898, he became the first person to purchase an automobile liability insurance policy. The concept was so new that the insurer had to issue it on a teamsters liability form. Physical damage insurance followed soon after; in one unusual claim in 1904, the Boston Insurance Company paid $9,500 to one of its own vice presidents whose flivver's gas tank had exploded on a trip from Boston to Worcester.
For more than 300 years, the standard Lloyd's marine policy has begun with the same beautiful wording, similar to that found in Shakespeare and texts such as the King James Bible:
"Touching the adventures and perils which the Underwriters are contented to bear and do take upon themselves, they are of the seas, men-of-war, fire, lightning, earthquake, enemies, pirates, rovers, assailing thieves, jettisons, letters of mart and counter-mart, surprisals, takings at sea, arrest, restraints and detainments of all -kings, princes and peoples, of what nation, condition or quality soever; barratry of the master and mariners, and all other like perils, losses and misfortunes that have or shall come in the hurt, detriment or damage of the vessel, or any part thereof.
How's that for an all-risk coverage?
Now, of course, there are many exclusions, and both underwriters and average adjusters need tobe aware of all the terms and conditions of polities. The point here, however, is that without the protection provided by the insurance industry throughout history, there would not have been the advanced commerce that led to the modern global-economy world. Merchants and entrepreneurs would have been far more reluctant to undertake risk without the financial security provided by a parallel insurance industry.
The 20th Century
This past summer, my wire and I toured the mutes of many of the old canals in Indiana, Ohio, New York, and Pennsylvania. We visited ghost towns (some, along canals, were frill of mosquitoes) and back roads that followed the 19th century paths of pre-railroad days. As a rail buff, I already had traveled the old rail routes, some of which are still mainlines today. For example, from one bridge in New York, I photographed the old Erie Canal (now known as the New York State Barge Canal) and the CSX mainline, the former New York Central of Twentieth Century Limited fame. (Remember the old Hitchcock thriller, North by Northwest?) Amtrak still races along that same pathway.
This year, 2003, is the 100th anniversary of flight, thanks to a couple of Ohio brothers named Wright. On our first trip together 35 years ago, I took my wife on the famous Ford Tri-motor of Island Airlines out to the islands of Lake Eric. I loved it, flying in the old antique airliner; she hated in I ended up having to sing in an opera as a penalty (but that's another story).
Once I made a hurried business trip to Key West when I was assigned in Miami and supervised the claims in the Florida Keys. The flight was aboard a restored DC-3. Much as I love trains, I admit to loving old aircraft just as much. "When an insured hacked his truck into an old South American Airline's Lockheed Constellation at Miami International one Thursday night, I spent an entire weekend monitoring the repairs so that it would be back in the air without too much delay. One becomes intimately familiar with old things when handling claims of that snort.
Today, I still love to fly, as long as I have the window seat and can look out on this great nation my wife and I have traveled from end to end, or on the islands of the oceans when traveling overseas. So what if the seat is smaller and they charge $8 for a dry sandwich. Sure, luxury travel is a thing of the past, but it's the travel, the mode of transportation, that counts, not necessarily the luxury..
And luxury does still exist. Several years ago, I traveled round trip from Florida to Los Angeles on Amtrak's Sunset Limited, by way of New Orleans, San Antonio, and Tucson, first class. The meals, the companionship of fellow travelers, even the shower on the lower deck of the train, were indeed luxuries. I'm not much for cruise ships; but there are still many fresh water or ocean voyages of a day or less that can bring back memories of what ocean travel was like before airlines stole the business. Try Victoria to Seattle, or Bar Harbor to Yarmouth, or the ferries across Lake Michigan or Lake Erie. Take a steamer up the Hudson, or even one of the few remaining ferryboats across the Ohio or Mississippi, or a ferry out to some island off an oceanic seashore, where the pilot still relies on the flashes of an historic lighthouse to navigate the vessel. (There's going to be a new hydrofoil across Lake Ontario, from Rochester to Toronto, next year. I can hardly wait in ride it.)
Today, insurance probably is more concerned with the goods in transit than the people. Oh sure, there have been outbreaks of illnesses aboard the cruise ships, and Sept. l 1, 2001, did claim a lot of lives in the airliners, but public transportation still is the safest way to travel. If you want a hazardous journey, take your car.
The wear and tear on freight is frightful. Vandals--those modern-day "pirates, rovers, and assailing thieves" who hijack tractor-trailers, rip off merchandise in containers aboard trains as they pass through rail yards, or scavenge at the scene of derailments--are the banditos of today, Like Butch Cassidy and the Sundance Kid, they go for the gold. It keeps those of us in the insurance claim profession busy. Our employers probably wish that we were less so.
The next time you take a plane somewhere, sit at a crossing waiting while a freight train passes, or cross a bridge over a river on a road named McGinty's Ferry, think of the historical aspects of that transportation and imagine the various insurance policies that cover the hull of the aircraft, the safety of the passengers, the freight on the railroad, the structure of the bridge, or even the marine coverage on the old ferry that the bridge replaced. December is a time to travel, but then, any time is a great time to travel.
Ken Brownlee, CPCU, is a former adjuster and risk manager, based in Atlanta. He now authors and edits claim adjusting textbooks.