Elizur Wright (born on 12 February 1804), an American
mathematician and abolitionist is described as the father of Life insurance as
he campaigned that life insurance companies must keep reserves and provide
surrender values.
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| Elizur Wright (1883) |
Graduated from Yale university in 1826, he spent his
early life being a Mathematics and Natural philosophy professor. Apart from his love for
mathematics, he believed that slavery was immoral and ineffective and should
immediately be abolished. Along with other like-minded individuals, Wright
founded the American Anti-Slavery Society in 1833 with the aim of espousing
immediate abolition of slavery. The organization later on began to fall apart due
to ideological differences among members. Wright eventually became estranged from
the abolitionist movement due to lack of support and became interested in life
insurance as a mathematical study. As a matter of facts Wright read “the best
works on life insurance.. with the same ardor which young ladies devour an
exciting novel”.
At the age of 40, Wright visited the royal exchange in London to
investigate the life insurance industry. It was on
this trip where he saw an advertisement in the Daily Telegraph 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 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 looked to speculators or investors.
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.
Upon his return to
America, he began campaigning for a cleanup of the life insurance business, by
requiring insurers to pay surrender values to policyholders on request and to
hold adequate reserves to do so. Wright realized how easy it was for
insurance carriers to cheat, so he devised formulas for calculating the
reserves and created statutory capital requirements for the industry.
Ultimately, the life insurance industry accepted Wright's reforms. Wright
served as an insurance commissioner for the State of Massachusetts from 1858
to 1866. Also, he devised a new
formula for finding the values of policies of various terms, known as the Accumulation formula which is widely prevalent
in the actuarial industry today.
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Wright invented the “arithmeter,”(1869) to facilitate his work. It is a mechanical
contrivance for multiplication and division, based on the logarithmic
principle, a form of cylindrical slide rule.
This great mind died on 22nd
November 1885 but left behind legacy and devised the working of the life
insurance industry for centuries to come. Among the many lessons we get from Wright’s life, one thing is for sure, with the right attitude and focus,
solutions can be created.
This article provides a fascinating glimpse into the life and contributions of Elizur Wright, highlighting his pivotal role in reforming the life insurance industry in the 19th century. Wright's journey from a mathematics professor to a champion of insurance reform underscores the power of individual conviction and determination in effecting meaningful change. Wright's insight into the plight of policyholders, coupled with his mathematical acumen, led him to advocate for crucial reforms such as requiring insurers to pay surrender values and maintain adequate reserves. His efforts not only brought about significant improvements in the insurance business but also laid the foundation for modern actuarial practices. To discuss more about visit Financial Planning In Dubai
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