INSURANCE: Bad Risks, Good Record

Conservative, massive ($3.5 billion assets) Equitable Life Assurance Society of the U.S. looked back last week at its most venturesome life-insurance plan and wondered at its good fortune.

Two years ago this month, when other U.S. companies were asking huge premiums for war-zone insurance, Equitable agreed to give a lift to the newly formed War Agencies Employees Protective Association. It set up a worldwide system of low cost ($15-a-thousand) group life insurance for U.S. Government employes working in or around war zones.

Equitable sold policies to employes of some 40 U.S. agencies, including such definitely bad risks as the Offices of Strategic Services and War Information, which often send their men prowling under enemy guns; such medium individual risks as Harry L. Hopkins, Edward R. Stettinius, and other air-traveling statesmen and Congressmen. By last week Equitable had sold some $50,000,000 worth of such insurance, and as the program neared its second anniversary, actuaries had to whistle over some amazing actuarial facts:

¶ Only 24 death claims had been filed with Equitable in two years (about half the normal peacetime rate for a group plan covering 7,000 workers).

¶ None of the deaths had been attributed to bombs, shells or bullets (the first resulted from a fall in an Italian blackout).

¶ The company had made so much money from the eagerly bought policies that, for the second straight year, it was refunding some 30% of the premiums to WAEPA.

Just as curious as this experiment with war-risk life insurance were some of the results of war-risk property insurance.

Immediately after Pearl Harbor, the Reconstruction Finance Corp. set up War Insurance Corp., which insured, free of charge, all property in the U.S. and its possessions from war damage. So far it has paid out $327,000 (for losses in Hawaii, the Aleutians, etc.) but it has still to pay losses on Guam (perhaps four or five million) and in the Philippines. Since liberation the Philippines have filed claims for $115,000,000, probably less than half of the final amount.

About six months after Pearl Harbor, RFC replaced WIC with the War Damage Corp., which took over the same type of insurance but charged premiums of $1 a $1,000. WDC has had to pay out only trifling amounts, has $220,000,000 of untouched profits to balance in part the huge losses of WIC.