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National Life and the 1918 Spanish Influenza Epidemic

Times were dramatically different at National Life in 1918. Farming was the leading occupation of our customers. Tuberculosis was a leading cause of death in the U.S. Our average policy face amount was $3,135 and America had 66% of the world’s known supply of oil. National Life was having an excellent year with far fewer death claims than had been expected. It all changed in a very few short weeks.

In the Fall of 1918, the Spanish Influenza epidemic raced around the globe killing humans by the millions. Hundreds of thousands of Americans died. It happened in the closing weeks of World War One and covered the entire planet with incredible speed in the days well before routine air travel. Even seemingly remote and isolated tribal villages were struck.

This strain of the flu killed indiscriminately – young, old, healthy, sick, poor, or wealthy. For reasons that remain unclear, the group most likely to die was between the ages of 20 and 40. Although there were survivors, this strain was unquestionably a killer. In fact, according to The Plague Year by Gina Kolata, it was about 25 times more deadly than any “normal” flu virus. It acted quickly and humans had little natural defense and this was compounded by the lack of any effective treatment.

So many people died so quickly that, according to Kolata, the average life span in the United States fell almost instantly by twelve years!

National Life was impacted on many levels. In just one example, apparently fearing meetings in close quarters, the minutes for the Board of Directors of October 8, 1918 stated, “The directors had been notified that an adjournment would be required on account of the prevailing ‘spanish influenza’ epidemic.” Although the epidemic still raged, the Board returned to regular meetings 14 days later – business must go on.

At a time when telecommuting simply was not an option, the company decided to remain open for business. No evidence has been found that this decision lead to any adverse impact on Home Office employees. On the other hand, it did allow for the timely processing of routine business – including the mounting claims.

For reasons that remain debated, the epidemic vanished as quickly as it had appeared. Within several weeks, millions had perished and the disease simply disappeared from every corner of the planet.

How did the relatively young National Life stand up to the financial pressure of increased death claims from the 1918 flu epidemic? In short, the answer is “amazingly well.” Keep in mind that National Life had decided to waive the War Exclusion and we were already paying full benefits to widows and family members of young soldiers killed on the battlefields of Europe.

In its 1919 Comparative Statement, the company showed that because of the dual impact of war and epidemic, National Life saw its death claims skyrocket by 21%. According to the 69th Annual Report, our mortality ratio had been at 62.85% but in 1918 alone it exploded to 84.05%. One company document concluded that this was “the most important item in the year’s business and [therefore] demands special analysis.”

As issued on January 21, 1919, the very first line of the 69th Annual Report stated, “In 1918 life insurance was subjected to the severest test ever imposed on the business in a single year.” It continued, “Death losses from the war and the influenza epidemic brought the mortality to a point never before experienced.”

Company officials were especially concerned because the bulk of the deaths were for individuals between the ages of 20 and 40. These policies had been in force for such a short period that reserves had not had sufficient time to build. None-the-less, the annual report stated, “…the National’s substantial surplus has enabled the Company to easily meet this unprecedented strain….”

Every level of the company was impacted. Agents and clients fell sick. One has to imagine that sales appointments were much harder to obtain as people vigorously shunned human contact. Our General Agent in Denver, Walter D. Karcher died at age 45. It is unclear how many agents and home office staff perished from the disease – it was probably several.

The first claim related to the epidemic was apparently on U.S. Army Captain William M. Bunting of Swampscott, Massachusetts. He was insured for the princely sum of $10,000 under policy #239740 and had died September 28, 1918. The claim was received on October 10 and payment issued to his widow on the following day.

At least into the late Spring of 1919, claims continued to come in on insureds who had died during the epidemic months earlier. It is an educated guess that Carl H. Snyder, holder of policy #292549 was at least the last insured soldier to die of the flu. He passed away in France during October of 1918 – only days after his policy had been issued.

So how did the company survive the double impact of drastically higher death claims pouring in over several short weeks and months? Unlike many companies who found it necessary to liquidate valuable investments to cover their claims – railway securities being the most valuable to be sacrificed – National Life had more than enough surplus to weather the impact without selling any valuable assets. In fact, according to the January/February 1919 issue of the National Messenger, “The National Life Insurance Company…did not have to sell any of its securities during the crucial year though which we have just passed.” The company’s surplus actually increased by a significant amount even after paying all of the death claims and full dividends.

Were there any positives to come out of this dangerous time for both National Life and the industry as a whole? Very definitely, yes. The value of a conservative investment portfolio added clear strength to the company – a business philosophy that continues to serve us well nearly nine decades after the last lethal epidemic.