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Mortal Risk, Climate, and Life Insurance in the Antebellum Deep South

Fri, April 12, 8:30 to 10:00am, Hyatt Regency Columbus, Marion

Abstract

In the 1850s, American life insurers adopted a new model to account for crippling losses in certain regions. The industry singled out New Orleans and its environs as a particular problem: it was a death-trap where yellow fever annually killed about 10% of the population. Mass mortality was not a problem, per se, but its unpredictability was: the region had no accurate vital data to model risk, and thus make it profitable. Abandoning actuarial science, underwriters’ solution was a “climate premium”: a 20% surcharge on all Deep Southerners policy-seekers unless they could prove they were “acclimated,” i.e. survivors of yellow fever.
 
But in designating “acclimation” the basis for determining risk, problems arose. What exactly was acclimation and how could one prove it? How could medical examiners verify a person had survived a disease that left no scars? This paper will explore, as one New York-based underwriter described, how life insurers “quantified and capitalized the ephemeral” – mortal risk in the Deep South. Many Southerners claimed climate premiums were unfair, even an abolitionist plot to discredit the region as sickly and backward. Unmoved, life insurers made a business out of quantifying the comparative risk of America’s varied ecologies.

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