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Whole life or not whole life: that is the life insurance question – Part 2

Part 2: The corporate structure

In Part 1 of this series (CD – insert link), we discussed how fraternal societies formed to indemnify families against the loss of a financial provider. This “coverage” was “permanently” available since it was not known when the provider would pass away. True, the risk was greater when he went off to war, but the obligation to support his survivors remained in force even when he returned. Such is the purpose of a “burial society.”

In Part 2 we will discuss how this “fraternal” structure became more formal.

Think Advisor reports the formation of the first “insurance companies” this way:


Edward Lloyd’s Coffee House, a small shop on London’ Tower Street and a popular gathering place for ship captains, ship owners and merchants, becomes the go-to place for shipping news and, eventually, marine insurance. It was there that the modern concept of an insurance company came into being.

In 1769, a group of professional underwriters broke off to establish New Lloyd’s Coffee House, which would eventually grow up into Lloyd’s of London.


The Presbyterian Synod of Philadelphia sponsored the first life insurance corporation in America for the benefit of Presbyterian ministers and their dependents. Episcopalian ministers organized a similar fund a decade later.

(The first insurance company in the American colonies was formed before this, in Charleston, S.C., in 1735, but it offered only fire insurance at first. It didn’t add life insurance until 1760.)


It is interesting to note that companies were formed to manage other risks besides the demise of the insured. Losses due to maritime hazards, and to fire, were also indemnified. The corporate structure made it easier for interested parties to pool resources and spread the risk, thus making it possible to insure against large losses at a discount.

In our next article, we will review the formation of the modern insurance carrier.