The Spanish Flu Centennial —1918 Flu Pandemic Hit Insurers Hard
September 18, 2018 by Allison Bell
Here is an article about the 1918 Spanish Flu pandemic that appeared on March 31, 1997, in an ALM print publication, the Centennial Issue of National Underwriter.
“Almost all agents have had startling experiences during the last few months of soliciting people for insurance who in a few days were stricken with the ‘flu’ and died.”
National Underwriter, Jan. 16, 1919
Spanish influenza slipped into National Underwriter Oct. 17, 1918, when it killed George Viehmann, a New Jersey insurance company president who was on his way to address a fire underwriters meeting.
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Three months later, the influenza “pandemic” had killed 550,000 in the United States and at least 22 million worldwide. Thomas Buckner, a New York Life Insurance Co. vice president, compared the pandemic to the plague and said it had killed more people than World I. The editors of National Underwriter compared it to the San Francisco earthquake and fire.
“Not so much because of the actual volume of claims, but chiefly because it took the best AND strongest of those protected with life insurance,” the editors wrote on Nov. 21, 1918, as the epidemic was winding down.
The “Spanish Lady” was different from most influenza epidemics that have struck before or since. Instead of decimating the weak the elderly, it picked out the best insurance risks. Healthy men between the ages of 25 and 35 were the most vulnerable of all.
The pandemic helped life insurers.
“You never before have had a more compelling argument for immediate life insurance, or a bigger opportunity to write a large volume of business than you have right now,” wrote R.W. Stevens, an executive at Illinois Life.
But the pandemic also planted long-lasting doubts about the ability of medical science to fight infectious disease. “We still don’t understand anything about why it happened,’ said Dr. Stephen Morse, a Columbia University epidemiologist, in a recent telephone interview.
Scientists offer no guarantees about their ability to prevent a similar pandemic from emerging in the future.
Back in 1918, doctors knew nothing about electronic microscopes, viruses or genetic engineering. But they had succeeded at pushing for improvements in sanitation, to keep “germs” from spreading, and they had made great strides in producing vaccines against diseases such as smallpox and rabies.
They also knew of the threat posted by influenza. In March 1918, Dr. Simon Flexner worried that contaminated saliva would spread flu among the American soldiers fighting in the War. “He characterized as a spitting nation,” National Underwriter said.
Historians say Spanish influenza probably started as a flu virus infecting Chinese ducks. The ducks infected pigs, and the pigs infected humans. The virus caused occasional pneumonia deaths in Europe and the United States in the spring of 1918. It began attracting more attention in the fall, when it got its name by killing 8 million people in Spain.
Fires, Congress and the War crowded most news of Spanish influenza out of National Underwriter until Oct. 24, 1918. The Oct. 24 issue carried an article about the flu infecting 82 members of the Cincinnati fire department and killing five.
The flu also slowed the Kentucky lumber trade, forced a postponement of the Southeastern Underwriters Association meeting, and killed at least six National Underwriter readers that week.
A week later, National Underwriter and its readers were treating the epidemic as a major story.
Insurance companies already were short-handed because of the War. Influenza menaced their remaining employees as mountains of death claims began to arrive.
“Some companies have had their employees watched carefully by medical directors and division heads and given instructions that anyone showing the slightest semblance of a cold must report immediately to the company doctor for examination,” National Underwriter said.
By Nov. 7, National Underwriter was using the term “pandemic,” a world that combines “epidemic” with a Greek word for “all.” Scientists called the Spanish influenza epidemic a pandemic because it seemed to be attacking all the people in the world.
A history of Prudential Life Insurance Co. published in 1950 said the pandemic led to a shortage of coffins and forced families to bury their own dead. Some Prudential benefits checks bounced simply because the company had too little time to shift cash into the right accounts. Banks honored the checks anyway because they knew Prudential had more than enough funds to cover any temporary shortfall.
Dr. W.B. Kitchin, medical director of the Business Men’s Indemnity of Indianapolis, estimated in January 1919 that 64% of U.S. residents had suffered a mild or severe case of the flu during the epidemic.
Experts struggled to understand why 90% of the deaths came among people under 40. Some doctors recalled that many young adults who contracted the flu during the pandemic of 1888-1890 died. But during that pandemic, most infections and most deaths occurred among adults older than 45.
Smoking, drinking and general health had no clear effect on mortality. Sickly customers survived the epidemic better than the preferred risks.
One insurance doctor told National Underwriter that healthy men hurt themselves in the 1918 epidemic by forcing themselves to continue with their normal activities. “By the time they are forced to take to their beds, they are really past medical aid,” the doctor said.
Private U.S. insurers faced modest losses in the War because government insurance covered most of the soldiers. Losses from the pandemic were far greater. New England Mutual Life Insurance Co. said it paid more in October 1918 on influenza death claims than it had during all of World War I on war-related claims.
Life companies paid out a total of $125 million in influenza death claims. Inflation statistics from the American Antiquarian Society and other sources show the payout amounted to 0.5% of 1918 U.S. gross domestic product. Today, a 0.5% slice of U.S. GDP would be worth about $30 billion.
Before the pandemic came along, consumer activists had accused life insurers of using old-fashioned mortality tables that predicted outlandishly high death rates. Many companies held actual mortality rates to less than 90% of the “expected” rates.
The flu slowed efforts to revise the mortality tables, by causing mortality ratios to skyrocket. Prudential watched its ratio climb to 143.7%, from 86.4% in 1917. The ratio leaped to 101.7% at Kansas City Life Insurance Co., up from 44.9%.
The pandemic wiped out profits at may insurers and forced some to reduce dividend payments.
But the epidemic “has brought forward the benefits of insurance to the people in a way that they had not appreciated,” National Underwriter editors wrote. “In every community where deaths have occurred in large numbers from influenza, the first question that arose was whether the deceased carried any life insurance.”
The pandemic also tested the strength of the legal reserve insurance system.
“If it had been announced that the banks had been called upon to pay $100 million out of their coffers, it would have probably created a panic,” National Underwriter said. “Yet there has never been a stir in life insurance. No one has ever questioned the ability of the companies to meet their obligations.”
Ives & Myrick, a life insurance agency representing Massachusetts Mutual Life Insurance Co., was one of the first companies to refer to the pandemic in its advertisements.
“Spanish Influenza!” the company proclaimed in the Oct. 1, 1918, issue of The New York Times. “Can You Afford Sudden Death? If Not, Protect Your Family and Business By Life Insurance.”
Other companies advised against relying on the pandemic as a marketing tool. Customers who bought policies solely because of their of the epidemic would be difficult to keep, one executive predicted.
Spanish influenza could return: scientists never managed to isolate the virus that caused it and are not entirely sure where it came from or what kind of virus it was. Some doctors thought an epidemic of a bacterial infection occurred at the same time as the influenza pandemic and increased the death rate.
Whatever the cause of the 1918 pandemic, modern doctors feel they are much better equipped to prevent a similar pandemic.
“In 1918, the human influenza virus hadn’t even been isolated,” said Dr. W. Paul Glezen an influenza expert with the Baylor- College of Medicine, Houston.
— Read The Spanish Flu Centennial: A Look at Influenza’s Continuing Pandemic Risk, on ThinkAdvisor.
