Father of Life Insurance - Elizur Wright

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.

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.

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 22^nd 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.