STUMP » Articles » Memory Monday: September/October 1918 - the Spanish Flu Arrives in the U.S. » 1 October 2018, 12:38

The timing of the Spanish Flu pandemic in the U.S. is that it originated in a U.S. Army training camp in the spring of 1918… but that wave wasn’t too harsh… then the men went over to Europe.

In September 1918, as the allied powers were winning, and some soldiers were coming home.

They brought the flu with them. The peak of the deaths depended on how close to the east coast the cities were.

REMEMBERING A CENTURY AGO: WORST DEATH TOLLS

The Spanish Flu Centennial — 5 Big Cities’ Worst Weekly Death Tolls

5. St. Louis
Population: 799,9851
Worst Week: 375 (Dec. 7-13)

4. Cleveland
Population: 810,306
Worst Week: 682 (Nov. 2-8)

3. Philadelphia
Population: 1.8 million
Worst week: 4,597 (Oct. 19-25)

2. Chicago
Population: 2.6 million
Worst Week: 2,367 (Oct. 26-Nov. 1)

1. New York
Population: 5.2 million
Worst Week: 5,222 (Oct. 26-Nov. 1)

Think Advisor is an insurance industry news site, and they have a special page for the Spanish Flu Pandemic Centennial. It is the life/annuity part of the general insurance industry news company National Underwriter.

I rarely blog about what I read for my day job, but Think Advisor is one of the main sites I visit for my job.

Here are some of their coverage:

The Spanish Flu Centennial —1918 Flu Pandemic Hit Insurers Hard:

“Almost all agents have had startling experiences during the last few months of soliciting people for insurance who in a few days were stricken with the ‘flu’ and died.”

National Underwriter, Jan. 16, 1919

….
“Not so much because of the actual volume of claims, but chiefly because it took the best AND strongest of those protected with life insurance,” the editors wrote on Nov. 21, 1918, as the epidemic was winding down.

So the insurers definitely noticed the pandemic, even if it may have been kept off newspaper front pages due to World War I.

The “Spanish Lady” was different from most influenza epidemics that have struck before or since. Instead of decimating the weak the elderly, it picked out the best insurance risks. Healthy men between the ages of 25 and 35 were the most vulnerable of all.

The pandemic helped life insurers.

“You never before have had a more compelling argument for immediate life insurance, or a bigger opportunity to write a large volume of business than you have right now,” wrote R.W. Stevens, an executive at Illinois Life.

In general, most people do not want to read insurance industry items. Especially for life insurance.

You usually get two possible reactions: this is really dull, or this is really morbid.

You don’t want to know what my news feed generally looks like for work, but death and destruction (aka life insurance and property insurance) show up a lot. Any time there’s a disaster, there are loads of people trying to make a quick estimate on insurance claims — so we generally have news feeds of estimated property damage, lives lost, etc. looming large in the industry.

Fires, Congress and the War crowded most news of Spanish influenza out of National Underwriter until Oct. 24, 1918. The Oct. 24 issue carried an article about the flu infecting 82 members of the Cincinnati fire department and killing five.

The flu also slowed the Kentucky lumber trade, forced a postponement of the Southeastern Underwriters Association meeting, and killed at least six National Underwriter readers that week.

A week later, National Underwriter and its readers were treating the epidemic as a major story.

Insurance companies already were short-handed because of the War. Influenza menaced their remaining employees as mountains of death claims began to arrive.

….
By Nov. 7, National Underwriter was using the term “pandemic,” a world that combines “epidemic” with a Greek word for “all.” Scientists called the Spanish influenza epidemic a pandemic because it seemed to be attacking all the people in the world.

I find the insurance perspective on disasters very interesting. Those who have money at stake really put a lot of thought into how these disasters can be mitigated.

You would think those who would directly suffer the disasters think the most about them, but they really don’t. There’s a variety of reasons why, but the obvious one is that people generally don’t like considering their own or their loved ones’ deaths. Or their house burning to the ground. The other is that most people have a bad idea of how likely these things are to occur.

But insurers are out money when these things happen, and thus have direct $$ interest in minimizing these occurrances, gathering accurate data about likelihood and severity of these disasters, etc. Heck, even more than most governments do.

STORY FROM 1918: APPLICATION AND CLAIMS CROSS THE SAME TIME

The Spanish Flu Centennial — Claim Overlaps Application

This is from the October 29, 1918 issue of National Underwriter.

KANSAS CITY, MO., Oct. 29 — The Kansas City office of the Equitable Life Assurance Society has recently broken an office record in the extreme sequence of application and death claim.

A rural agent wrote the policy; the application was accepted, and a binding agreement given, but the name of the beneficiary was not correctly stated. The application was held up pending correction.

Within four days of signing the application, the insured took influenza and died.

The same mail that brought the correction, brought the notice of death.

The policy was a Liberty bond contract, and the $500 Liberty bond, with the first $50 payment less the short-term rate, was sent to the beneficiary.

There’s a reason life insurance didn’t start during the Black Death…

THE EFFECT ON INSURERS

This is from a 1950 lookback on what happened at Prudential Insurance.

As soon as the extent of the epidemic began to be clear, orders went out from the home office: Pay all claims as quickly as possible. Cut all red tape. Clear the claims within twenty-four hours — don’t let them pile up.

Across the nation, Prudential offices stayed open late into the night, and superintendents and cashiers, often wearing gauze protectors over their faces, paid out claims as fast as it was humanly possible. Field claim payments were being made so rapidly that in more than one instance there was neither time to reconcile nor time to replenish the company’s bank balance.

But the reputation of Prudential was such that even when the accounts were overdrawn, banks continued to honor checks until new deposits had been received. Only the fact that the field superintendents were able to pay a substantial part of the weekly premium claims made it possible for the company to keep up with the avalanche of claims that poured in from every part of the country.

Back in the home office in Newark, it was the same story. Hundreds of workers from all departments were enlisted in a special drive. Night after night they worked clearing the rush of claims which came in great stuffed mailbags from the field offices. The claim papers were fumigated on arrival, distributed among the workers, and matched with home office papers after tedious hours of searching through the files….

Typists couldn’t keep up with the demand for work; clerks spent entire days writing checks and records and documents in longhand…

As a result of influenza deaths in 1918 and 1919, Prudential paid upward of 85,000 claims for a total of more than $20,000,000.

I’ll do the math for you – it was about $250 per claim. Maybe less.

Using the CPI Inflation calculator, that’s equivalent to $4,500 today.

No, those weren’t large policies. An equivalent would be funeral insurance now, which are also relative low amounts (like $10,000 in death benefit).

Let me revisit an earlier story I linked:

1918 Flu Pandemic Hit Insurers Hard

Spanish influenza slipped into National Underwriter Oct. 17, 1918, when it killed George Viehmann, a New Jersey insurance company president who was on his way to address a fire underwriters meeting.

Three months later, the influenza “pandemic” had killed 550,000 in the United States and at least 22 million worldwide. Thomas Buckner, a New York Life Insurance Co. vice president, compared the pandemic to the plague and said it had killed more people than World War I. The editors of National Underwriter compared it to the San Francisco earthquake and fire [of 1906].

….
Dr. W.B. Kitchin, medical director of the Business Men’s Indemnity of Indianapolis, estimated in January 1919 that 64% of U.S. residents had suffered a mild or severe case of the flu during the epidemic.

Experts struggled to understand why 90% of the deaths came among people under 40. Some doctors recalled that many young adults who contracted the flu during the pandemic of 1888-1890 died. But during that pandemic, most infections and most deaths occurred among adults older than 45.

Smoking, drinking and general health had no clear effect on mortality. Sickly customers survived the epidemic better than the preferred risks.

One insurance doctor told National Underwriter that healthy men hurt themselves in the 1918 epidemic by forcing themselves to continue with their normal activities. “By the time they are forced to take to their beds, they are really past medical aid,” the doctor said.

Private U.S. insurers faced modest losses in the War because government insurance covered most of the soldiers. Losses from the pandemic were far greater. New England Mutual Life Insurance Co. said it paid more in October 1918 on influenza death claims than it had during all of World War I on war-related claims.

Life companies paid out a total of $125 million in influenza death claims. Inflation statistics from the American Antiquarian Society and other sources show the payout amounted to 0.5% of 1918 U.S. gross domestic product. Today, a 0.5% slice of U.S. GDP would be worth about $30 billion.

Before the pandemic came along, consumer activists had accused life insurers of using old-fashioned mortality tables that predicted outlandishly high death rates. Many companies held actual mortality rates to less than 90% of the “expected” rates.

The flu slowed efforts to revise the mortality tables, by causing mortality ratios to skyrocket. Prudential watched its ratio climb to 143.7%, from 86.4% in 1917. The ratio leaped to 101.7% at Kansas City Life Insurance Co., up from 44.9%.

The pandemic wiped out profits at may insurers and forced some to reduce dividend payments.

p.Those ratios are called actual-to-expected. Anything above 100% is bad.

That Kansas City Life Insurance has an A/E ratio of 45% in 1917 makes me really wonder what mortality basis they were using… something from the Civil War?

I want you to notice something, though: none of the insurers failed due to the pandemic.

There’s a reason for that.

The pandemic also tested the strength of the legal reserve insurance system.

“If it had been announced that the banks had been called upon to pay $100 million out of their coffers, it would have probably created a panic,” National Underwriter said. “Yet there has never been a stir in life insurance. No one has ever questioned the ability of the companies to meet their obligations.”

Ives & Myrick, a life insurance agency representing Massachusetts Mutual Life Insurance Co., was one of the first companies to refer to the pandemic in its advertisements.

“Spanish Influenza!” the company proclaimed in the Oct. 1, 1918, issue of The New York Times. “Can You Afford Sudden Death? If Not, Protect Your Family and Business By Life Insurance.”

Even with insurers selling insurance during the worst part of the pandemic, the insurers didn’t go insolvent. Isn’t that interesting?

Currently, life insurers reserve (that is, put up money to pay for future claims) on various bases for various purposes — statutory reserves tend to use a little higher mortality than expected, but not at pandemic levels. Pandemics and other worse-than-expected losses are quantified via risk capital, surplus beyond that, and there are even stress testing for high claims scenarios.

Think of 9/11/2001 — no life insurer went insolvent due to those life insurance claims – and given the type of firms in the old WTC, there were huge policies that got paid off. The reinsurers, who usually have a piece of every large insurance claim, did note the effects, but again, due to reserving, capital, and surplus, they were able to weather the large claims.

Some life insurers do go insolvent, of course, and I’m not going into that history. But when it’s an industry-wide type of threat (such as pandemic), both the insurers and the regulators know about it. There is a reason that life insurers have been particularly resilient, even through recessions and market instability, thus far.

SOME PICTURES TO HAUNT YOU

It’s October, so… how about some creepy historical pics?

Flashback: Spanish Flu Mask

When the pandemic raged between 1918 and 1920, medical professionals believed that the flu was caused by bacteria. It might not have mattered much if they knew it was a virus at fault—antivirals didn’t exist yet and the flu vaccine had not been developed.
….
People were asked to wear masks, usually made out of fabric, in public as a first line of defense against contracting and transmitting the disease, and were denied admittance to streetcars, offices, and other public places if mask-less. Above, a woman dons a mechanical nozzle mask in February of 1919.

People tried all sorts of secondary defenses in the event their masks failed. Pamphlets suggested chewing food carefully and avoiding tight clothes and shoes, and there was a surge of support for legislation that would ban public coughing and sneezing. Home remedies included gargling a mixture of sodium bicarbonate and boric acid, stuffing salt up noses, and eating onions with every meal.

I assume these were all as effective as the various plague preventatives in the 14th century.

In my next flu-related post, I’m going to talk about our current flu prevantatives.

GET A FLU SHOT