Benjamin Franklin’s Dark Side: America’s First Insurance Salesman

Benjamin Franklin has an impressive resume. Inventor, diplomat, and founding father, it’s easy to forget Franklin had a more humdrum job creating the first insurance policies in the nation’s history.

In the early 1700s, fire was a serious problem for residents of American colonies. In 1730 a massive fire engulfed much of Franklin’s city of Philadelphia. Like in London, almost all houses would have been made purely out of wood, and would be close together. Benjamin Franklin understood the problem and helped to start the Union Fire Company.

But it wasn’t enough to just stop fires. People still lost their homes and property with no hope for restitution. So according to PBS, Franklin went one step further and brought together all the local fire fighting companies to form America’s first insurance scheme called the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.

The first policies had terms of seven years and Franklin signed 143 of them. Each policy holder made regular payments to the contributorship and agreed to pay for the losses of any member hit by a fire. The success of the fire insurance led to Benjamin starting a similar life insurance scheme just seven years later.

Like far too many insurance men, Franklin didn’t pay a dime on any of those first policies; it was a very lucky year for those policy holders. He also learned to hedge his bets, denying coverage to homes that were deemed to “at risk,” or just charging them a higher rate. Setting the tone that would one day make the insurance industry a profitable, and at times hated business.

Franklin’s insurance ideas quickly came under fire for religious and ethical reasons. Life insurance was inherently putting a price tag on people’s life. More importantly, the policies led to some family members being more valuable dead rather than alive. Although life insurance led to the most heinous form of fraud, fire insurance had its own set of problems, promoting arson as a way to get rich quick.

However, once people saw the benefits of the insurance, especially how it helped widows and orphans, the criticism died down.

Benjamin Franklin’s insurance plans led to modern insurance.

As previously reported by the Inquisitr, Franklin was also considered a national security risk because of his refusal to believe his diplomatic corp in France had been infiltrated by the British. He was also a prominent voice in the abolitionist movement. It might be that Benjamin Franklin was a kind person, but still one who could turn a profit.

[Image Credit: Charles Willson Peale/Wikimedia Commons]