Books
Professor: Insurers Should Address Those Affected by Historical Inequalities

• Meg Green
• March 2021
• 

Calculating Race—Racial Discrimination and Risk Assessment

Benjamin Wiggins, professor of history at the University of Minnesota, recently published a book, Calculating Race—Racial Discrimination and Risk Assessment. In it he addresses how insurers used discriminatory practices when selling coverage. Following is an edited excerpt of the interview with AM Best TV.

What inspired you to write the book?

My inspiration for the book essentially begins in my first year of college. I entered college with the perspective that racism was this fundamentally wrong thing, but it was also an individual prejudice. I perceived discrimination as this kind of individual, overt and occasional problem rather than a structural, insidious and consistent one.

I thought also that racism was largely a thing of the past and something that the Civil Rights movement had defeated. I know now this is not the case. What changed my perception of racial inequality can be summed up in one word, and that's wealth.

What did you find in your research for the book?

I traced the practice of risk assessment using racial data back into what life insurers were doing in the 19th century. For the first three-quarters of the 19th century, life insurance was this product that was largely restricted to the wealthy.

Working-class people of any race were essentially thought to be too risky to insure because of the dangers of manual labor.

The key shift for the industry was in the 1870s and 1880s when Prudential, John Hancock and MetLife started insuring workers in industrial trades. This pivot helps the 19th-century working class get policies that cover funeral expenses and maybe a bit more.

In 1880, Prudential, Hancock, and MetLife all began to recognize that a significant percentage of their policyholders were African American. They became extremely concerned about the mortality rate of the Black population and decided to drop Black policyholders, cut their benefits, or charge them differential rates.

Eventually, there were African Americans who understood the discrimination that was going on. Out of the Ninth Ward of Boston, a Black legislator, Julius Caesar Chappelle started pushing for legislation and eventually passed the first anti-discrimination legislation bill.

—Meg Green

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AM Best details the history of AM Best, credit rating agencies and the life of Alfred M. Best.

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