Mutual insurance in America, as we have come to know it, really began in London, England, in 1696 with the formation of Contributors for Insuring Houses, Chambers or Rooms from Loss by Fire by Amicable Contributionship. For obvious reasons it became more commonly known as the Amicable Contributionship and ultimately as the Hand-in-Hand, a reference to the organization’s fire mark, one hand clasping another hand, reflecting aid and assistance.
Like so many other ideas of its time, travelers from England to the colonies brought stories and accounts of various insurance plans and schemes. Probably as a result, the first attempt at a fire insurance plan in America was in Charleston, South Carolina in 1736 with the formation of the Friendly Society of Charleston (Charles Town). Unfortunately, in 1740 Charleston suffered a conflagration that is said to have consumed over three hundred houses besides storehouses, stables and several wharves. The losses sustained by the Friendly Society were far too great for its fledgling operation and the organization failed.
At about the same time that the Friendly Society was trying to get started, the esteemed Benjamin Franklin resided in Philadelphia and was continuing his long-standing interest in fire prevention. With the help of others, he formed a purely volunteer firefighting association in 1735 called the Union Fire Company. Because of the social aspects of this type association, it precipitated the formation of other firefighting associations thus to the benefit of all citizens of Philadelphia. However, in spite of the inherent value of having firefighting associations, Franklin came to realize that fire was as inevitable as death and taxes and concluded that a plan of insurance was needed to make up the losses caused by fire.
With that realization, Franklin set out to form an insurance company patterned after the Amicable Contributionship, an organization he may have become familiar with while working in England as a journeyman printer. The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire was organized by Benjamin Franklin and his colleagues in March 1752 and remains today the oldest mutual fire insurance company in business in America. The Philadelphia Contributionship selected as its fire mark four hands crossed and clasped in a form commonly known as “Jacob’s Chair.” As was the case with the Amicable Contributionship, the Philadelphia Contributionship also became known in America as the Hand-in-Hand.
Fire marks were used in England to identify the houses insured by a particular insurance company so that their firefighting brigades would know which dwellings were supposed to be protected by them. In America, however, the firefighters were volunteers pledged to the public good by responding to any fire regardless of who insured the property. Fire marks in America were simply used to identify property insured by a company, perhaps in an early effort at advertising the insurance protection they provided.
In 1784 a second mutual fire insurance company was formed in Philadelphia, The Mutual Assurance Company for Insuring Houses from Loss by Fire. The Mutual Assurance Company was organized by former policyholders of the Philadelphia Contributionship because in 1781 it had decided to no longer insure any building that had trees near it. The Philadelphia Contributionship felt that trees were a fire hazard and interfered with the firefighters’ efforts. The fire mark selected by The Mutual Assurance Company was a tree in full foliage and the company quickly became known as the Green Tree. The Mutual Assurance Company merged into the National Grange Mutual Insurance Company in 1996.
The Mutual Assurance Company for Insuring Houses from Loss by Fire in New York was formed in New York City in 1787, but the Company was chartered into a stock insurance company in 1809 and thus ceased operations as a mutual insurance company.
The Baltimore Equitable Society was formed in April 1794 in Baltimore, Maryland, and was generally patterned after Franklin’s plan of mutual insurance in Philadelphia. The Baltimore Equitable Society’s fire mark is two clasped hands. Clasped hands have been a part of many fire marks in England and America and have become something of a universal symbol of mutual insurance. The Baltimore Equitable Society remains the second oldest mutual fire insurance company still in business in America.
Just to the south of Baltimore in December 1794, the Mutual Assurance Society Against Fire on Buildings of the State of Virginia was incorporated by a Special Act of the Virginia General Assembly. Unlike the aforementioned companies, the Society was proposed as a statewide insurance company. Because of its planned scope of operation the Virginia General Assembly imposed a $3 million fire insurance subscription requirement in the Society’s Articles of Incorporation. Thus, the Society did not commence business until December 1795 and didn’t issue its first policy until February 1796. As was the case with other 18th century companies, the Society’s extremely long name became shortened through use and the Society was commonly known as the Mutual Assurance Society and the Old Mutual until its name was officially changed in 1982 to the Mutual Assurance Society of Virginia. The Society did not adopt a fire mark at its inception because firefighting capabilities developed in Virginia were for all its citizens regardless of whether or not insurance was purchased. However, on the occasion of its 200th anniversary in 1994, the Society did adopt a bicentennial fire mark reaffirming the mutual commitment of the Society and its member policyholders, each to the other. Many policyholders have elected to display this handsome fire mark on their insured homes.
By the late 1820’s mutual insurance was developing rapidly, especially in the New England area, and would follow the westward development of America into the Midwest and Plains states with literally hundreds of town and county farm mutuals being formed through the grass roots efforts of local citizens. The characteristics of a mutual insurance company are as valid today as when the first company was founded in America. A mutual insurance company is owned and operated by its policyholders. It is run for their exclusive benefit. They are the company. There are no stockholders. Each policyholder has a voice in the affairs of the company. Collectively, they elect its board of directors who, in turn, elect the officers who serve as the active managers of the business. Pure mutuals continue to operate in substantially the same manner they did when they began. Today’s economic challenges and technological changes must still be addressed, but the underlying concepts and principles remain as they always have been and forever will be.
Biography of an Idea-The Story of Mutual Fire and Casualty Insurance
By John Bainbridge, Doubleday & Company, Inc., 1952
Footprints of Assurance
By Alwin E. Bulau, The Macmillan Company, 1953
At Mutual Assurance, we are proud to have served Virginians for over 200 years. To learn more about the Mutual Assurance Society of Virginia and its rich history, open our 32-page bicentennial history “Founded Upon Benevolence.”