On 15 April 1912 the Royal Mail Steamer Titanic sank with the loss of at least 1,500 of her passengers and crew, having struck an iceberg on her maiden voyage.
Amongst the conflicting human stories of self-sacrifice and self-preservation newspaper headlines on both sides of the Atlantic soon started adding up the financial cost of the disaster, the Washington Times of 16 April read ‘Titanic insured for $5 million, half of her value — risk concerns loss will be heavy — valuable mails destroyed’.
The Times in London echoed The Post Magazine, an insurance industry publication, which referred to the ‘heartrending catastrophe … involving the heaviest individual loss that has ever befallen underwriters.’
The ship herself cost an estimated $12,000,000 fully fitted and contemporary estimates put the total wealth represented by her first class passengers alone at over half a billion dollars, so it was little wonder that the American publication, The Insurance Field, concluded ‘nowhere in the annals of Insurance is there a parallel for the loss of insured life and property occasioned by the sinking of the Titanic.’
According to the Post Magazine of 20 April 1912 the hull of the ship was insured for ‘the best part of £1 million’ in London and on the continent, and of this a substantial share, just under 15%, was underwritten by companies which are now part of the Aviva Group.
The first signature to appear on the underwriting slip was that of Richard Jones of Commercial Union who agreed to accept up to £75,000 each on the hull and machinery of both Titanic and her sister ship the Olympic, this was the highest share of risk accepted on the two vessels and was matched by only three of the other 69 underwriters who signed the slip.
Other Aviva group companies identified on the slip are Indemnity Marine and Ocean Marine, each of which agreed to take £30,000 of the risk, and Merchants Marine which signed up for £10,000. The business was so popular that over half the risk, £582,900, was taken by the end of the first day and the keenness of underwriters to take on the supposedly gilt-edged risk was reflected in the fact that it was over-subscribed so that Commercial Union was eventually required to take on only £65,000 of the cover rather than the £75,000 of the written line.
Much of the risk taken by the initial underwriters was then parcelled out in reinsurance both in the UK and overseas and Commercial Union’s casualty book records that £43,450 of her Titanic hull and machinery cover was reinsured. According to the Post Magazine ‘underwriters attached far too much importance to the theory that the liner would never sink….even insurance offices in this country not generally known to touch ordinary marine risks are credited with lines on the hull of the Titanic through reinsurance for it was argued that such business must be very satisfactory’.
In addition to the £65,000 risk taken on the Titanic’s hull and machinery the Commercial Union casualty book records that the company also covered a disbursements policy [a type of policy which was taken out by owners to cover additional expenses which could be claimed in the event of a total loss]on the vessel for £20,000 giving a total interest in the vessel herself of £85,000 of which, as has already been said, just over half was reinsured.
The final figures in the casualty book refer to yet another policy, this one covering registered post being carried on the ship for which Commercial Union’s liability was £57,778. According to contemporary sources it was estimated that the ship carried 3,423 sacks of mail and 200 bags of registered mail. Witness statements to the Titanic enquiries on both sides of the Atlantic refer to the postal clerks ‘wet to their knees’ trying valiantly to move the registered mailbags ahead of the advancing water.
Commercial Union eventually paid £60,723 to cover the registered post loss, bringing the total marine claim against the company to £145,723, the equivalent of £84,770,000 in today’s money.
Although Commercial Union faced huge claims for Titanic’s hull and her registered mails, the most common references to the disaster in the company’s committee and board minutes relate to the signing of indemnity bonds required to obtain certificates to replace those lost on the ship.
Nor was Commercial Union the only Aviva group company to be involved in the insurance of securities carried on board Titanic, as late as January 1913 Scottish Union and National was still writing indemnities to cover coupons lost in the disaster, while North British and Mercantile put its losses on the Titanic at £43,040 ‘mostly being on bonds’. Contemporary financial experts explained that any losses to company stock would be covered by the insurers who would, themselves, only lose any difference in stock value between their loss and their re-issue.
Regardless of the grandeur of the ship herself and the rumours of the treasures carried in the hold and in the luggage of the passengers, it is the human cost of the Titanic tragedy that reverberates through the decades and here too insurance companies played an important role. As early as 17 April American newspapers carried advertisements that Traveler’s Insurance Company of Hartford, an accident insurer set up along the lines of the pioneering Railway Passengers Assurance, held ‘A million dollars of accident and life insurance carried by the Titanic Passengers.’
On the other side of the Atlantic the Railway Passengers Company put out the following notice in the Post Magazine of 20 April:
‘The Railway Passengers Assurance Company, being the oldest company in the world insuring against accidents, has many prominent members of social and business circles on its books, and, in consequence, stands to be hard hit by the deplorable loss of life on the Titanic.
It has already been ascertained that some of its policyholders were on board, but until the full details are known it is impossible to say what the total liability will be. Arrangements have, however, been made to meet immediately every case on proof of loss.’
According to a report in the Insurance Field, which was taken up by the New York Sun and a number of regional papers, life and accident insurers were liable for $3,464,111 (£711,316) in respect of the disaster, with one individual being insured for $146,750. The losses suffered by Aviva constituent companies in the United States were small, with $48,000 of losses attributed to the Ocean Accident and Guarantee United States branch and £15,000 to the US and Canadian branches of Employers Liability Assurance.
In Britain the board minutes of Railway Passengers reported that ‘the company’s losses on the Titanic will be £3,200 for two deaths costing £1,000 and £2,000 respectively and one non fatal claim, of which £1,000 will be recoverable under a reinsurance treaty’.
Sadly, surviving records for the company do not name the individual policy holders concerned and there is similar lack of detailed information given in the Ocean Accident and Guarantee board minutes of 23 April 1912 which read:
‘Titanic disaster, so far has been ascertained eight Ocean Accident policy holders were on board and the aggregate amount of their policies was £9,025 — six of these, with policies for £5,025, are reported drowned.’
The company’s minutes for 30 April 1912 report and update on the figures, ‘total number of Ocean policy holders on board up to 10 — eight of these have perished and their policies aggregated £15,625 where of £13,625 was reinsured leaving £2,000 as Ocean’s retention.’
The company held a catastrophic contract for the whole world reinsuring with Lloyds underwriters the liability of the corporation in excess of £2,000 for any one accident to persons while travelling by any public conveyance. The policy was renewed in December 1912 for a lump sum premium of £2,500.
It is fitting that the first reference in the archive to an individual on the Titanic does not relate to a financial loss through an insurance claim but to a personal loss to the board of London and Lancashire through the death of their Canadian board member Charles M Hays. According to the minutes of 23 April, Mr Hays, president of the Grand Trunk Railway, had been on the Canadian board for 13 years and had visited the London board on one of his previous visits to the country.
Listed as one of the major insurance losses of the disaster, Hays was said to have held combined life and accident insurance totalling $75,000 with American insurers. Sadly no records survive to show if, as seems likely, he was also insured with the company on whose board he served. The board minutes simply record his loss and the sympathy expressed for his family.
In spite of the lack of detail in surviving company records and the problems of positively identifying policy holders as Titanic passengers, I have been able to identify six victims of the tragedy as having been insured by our companies; three passengers and three members of the crew.
On the 29 April 1912 the board minutes of General Accident recorded their loss on Titanic to be £2,500 ‘being a policy of £1,500 taken out by Mr McElroy, Purser, and £1,000 by Mr Bell, chief engineer.’
Later secondary sources suggest that these were personal accident policies and this seems likely as the company claimed in this period to have the largest number of personal accident policy holders in Great Britain.
Both the men insured are mentioned in the testimonies of those attending the British and American enquiries into the disaster, McElroy reputedly fired a pistol to keep men from entering collapsible C lifeboat as she was being loaded and Bell was referred to by Bruce Ismay in his response to the Titanic Senate enquiry ‘Did the chief engineer of the ‘Titanic’ state to you the extent of the damage? — (A) He said he thought the damage was serious, but that he hoped the pumps would be able to control the water’.
The next claim chronologically in our records was that of Walter D Douglas of Minneapolis which was reported to the board of Ocean Accident and Guarantee on 30 April.
Douglas was the son of the co-founder of Quaker Oats and his final hours were recorded in the affidavit of his wife which was put before the Senate enquiry:
‘Mr Douglas met me as I was going up to find him and asked, jestingly, what I was doing with those life preservers. He did not think even then that the accident was serious. We both put them on, however, and went up on the boat deck. Mr Douglas told me if I waited we might both go together, and we stood there waiting…No one seemed excited. Finally… it was decided I should go…I asked Mr Douglas to come with me, but he replied, ‘No; I must be a gentleman’.’
On the 21 May the Ocean Accident board considered another fatal accident claim in the name of Henry P Hodges, an instrument vendor, who was a second class passenger and who left a wife and eight children. It says much about the generosity of the board and the reaction to the disaster that the claim for £300 was paid regardless of the fact that his policy was ‘Europe Only’ meaning that his Titanic voyage was not actually covered by the insurance.
A month later, on the 20th June, a claim for £400 was made under Norwich Union life policy number 138,156 in the name of Luigi Gaspare Gatti and his cause of death starkly recorded as ‘sank with Titanic’. Gatti, the manager of the on-board à la carte restaurant, had been a policy holder with Norwich Union since 1909 and his entry in the policy register records his changes of employment including the commencement of his role in the on-board restaurant of the Olympic in June 1911 for which he was required to pay an additional 5s 3d per quarter in view of the increased risk to his life.
Finally, on the 3 July, the last and smallest claim, £114 8s, was paid on Norwich Union policy number 75570 in the name of Austin Partner, a stockbroker and first class passenger, who had held his policy since 1899.
A headline in the Evening World (New York) for Wednesday 17 April read ‘Those who voluntarily went down to death with the Titanic gave the most splendid demonstration that in supreme moments of life the race lives up to its highest ideals.’
Any disaster shows people and organisations in their true colours and the Titanic story is no exception; contemporary accounts and newspaper stories made heroes of captains of industry who refused to take up valuable places in lifeboats and vilified those, like J Bruce Ismay of the White Star line, who according to the American (New York) ‘survives to tell how 1,400 lives committed to the care of his line and on his ship perished while he escaped’.
My research into the role of Aviva’s constituent companies in the aftermath of the disaster shows them living up to the first and highest insurance ideals — those of protecting individuals and institutions against the results of changes in fortune. Commercial Union’s share of the largest ever marine loss was paid up within 30 days and individuals and companies were compensated for the loss of items of registered post and other securities.
Most importantly, the insurers provided for the families of those who died just as their policyholders had intended, from the substantial sums for the widows of Purser McElroy and Chief Engineer Bell to the £300 paid to Mrs Hodges despite the limitations on her husband’s policy.
There is one further interesting footnote to our Titanic links which probably says as much about public opinion in 1912 as it does of underwriters’ attitude to risk; when Commercial Union was approached a month after the tragedy with a preliminary proposal on the life of Mr Bruce Ismay the minutes record that it was ‘not entertained’.