Right from the day all of us started studying the life insurance domain in the actuarial industry, we have all been fed the concept of actuarial reserving which forms the foundation of the insurance industry. Ever wondered, who was the genius mind who would have first thought about this very important science behind the pooling mechanism based on which the modern insurance law works? Ready to know the Father of Life Insurance! ELIZUR WRIGHT
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Elizur Wright (born on 12th February 1804), is called as ‘the father of life insurance industry’ and ‘the father of insurance regulation’ as he campaigned emphasizing the fact that life insurers should keep reserves and provide surrender values to policyholders whose policies lapse.
Elizur Wright was himself known from a strict moral character, he was an American Mathematician and Abolitionist, who learned devotion to mathematical learning from his father who graduated at Yale in 1781. The younger Wright also graduated from Yale in 1826 and spent his early life being a mathematics and natural philosophy professor. Along with love for Mathematics, he was also deeply motivated for his beliefs against slavery. His whole family supported Anti Slavery Movement to show their resentment towards the widely practiced immoral practice. Elizur Wright, along with other like minded individuals found the American Anti Slavery Society that demanded the immediate abolition of slavery and an end to racial prejudice and equality for all through moral suasion by appealing to the public about this sinful act. He further became involved with the newly created Liberty party as he thought that government intervention was the way to abolition.
Gradually he became estranged from anti slavery movement due to lack of support and developed a liking for life insurance and mathematical science.
In order to help with the complex calculations required by his valuation tables, Wright invented the arithmetic, the early adding machine.
At age 40, he visited the Royal Exchange in London to investigate the life insurance industry. During his trip that he saw an advertisement in the for the Sale of 42 Old Life Insurance Policies in which old men were auctioning off their life insurance policies to investors after faithfully paying premiums all their lives. Elizur Wright felt pity that these life insurance policy owners were too old to work and could no longer afford their premium payments but were not yet dead to collect the benefit. As a result, the policy owners had to look to speculators or investors. Elizur Wright recognized and wrote about the fact that life insurance policy owners were not able to obtain as much as half of the value that should be in these policies, but do obtain such from investors in his book Politics and Mysteries of Life Insurance.
He found out how easy it was for the life insurers to cheat their clients and also devised statutory requirements for life insurer’s capital and also developed the formula for calculating reserves. Elizur Wright, the father of life insurance also found out the accumulation formula that is widely prevalent in the actuarial industry today.
This great soul, the father of life insurance left us to go to heaven on 22 November 1885 but left behind his legacy and devised the working of the life insurance industry for centuries to come. Of course, during his course of the journey, one thing that all of us get motivation from is that we should never leave hope and never give up while walking on the path which leads to things we really want to do!
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