Slave Insurance

The most successful life insurer to operate extensively in Virginia was the Baltimore Life Insurance Company of Maryland (1830–1867). The company underwrote small numbers of slaves throughout the 1830s and 1840s. It enjoyed a virtual monopoly in slave insurance until the late 1840s and 1850s, when growing demand for such policies spawned competition from several northern life institutions and from newly established southern life companies including the North Carolina Mutual, the Mutual Benefit Life and Fire of Louisiana, and Greensboro Mutual Life, although none of these companies had extensive operations in Virginia.

Reflecting the dual designation of slaves as both persons and property, competition for slave risks during the 1850s also came from fire insurance companies, including the Richmond Fire Association and the Lynchburg Hose and Fire Insurance Company. In a letter dated December 9, 1853, the secretary of Lynchburg Hose and Fire inquired of his agent in Staunton, "What is the prospect for that kind of business with you? It is increasing here [in Lynchburg] very rapidly." By that year Richmond Fire Association had already written more than 1,700 slave policies.

By the 1850s, Baltimore Life had greatly expanded its sales of slave policies, accounting for more than two-thirds of new policies on the eve of the Civil War. Baltimore Life received its first major life insurance competition in Virginia when Virginia Life Insurance Company opened its doors in Richmond in 1860. In its inaugural brochure, Virginia Life stated that "this Company will also give special attention to the insurance of slave property" and that it hoped "after sufficient observation and experience therein, the Companies will be able to afford better terms to the insurers of slaves." The company also emphasized its local pedigree, encouraging slaveholders to "insure … at home" rather than with "Yankee Companies."

Life insurance companies had three main concerns about undertaking slave risks. First, the industry had very little information about the mortality of slaves by age, occupation, or geographic location, turning premium tables into mere guesswork. Companies made up for this lack of knowledge by routinely charging double the rate quoted on white lives of the same age. For example, the premium on a twenty-five-year-old slave was $2 per $100 of insurance, versus $1 on the corresponding white life. While Baltimore Life initially was unwilling to insure slaves engaged in dangerous forms of labor, by the second half of the 1830s it underwrote slaves engaged on steamboats for an additional $1 per $100 of insurance and those employed in Richmond coal mines for $3 more.

Second, companies were concerned that the market value of slaves in general might decline or that the value of an individual slave might deteriorate more rapidly than anticipated. Such policies created a problem of moral hazard in which the potential insurance claim rendered the slave more valuable dead than alive. The Baltimore Life thus confined policies to amounts that did not exceed two-thirds of actual value. As the company advised the Petersburg agent W. F. Davis on February 21, 1839, "The value of Slaves is fluctuating, besides we like to leave no room for fraud. For these reasons we seldom (indeed never) take the full value of Slaves."

Since slaveholders could bypass this regulation and insure a slave for her full value (or more) by taking out policies with more than one company, Baltimore Life stipulated that there could be no additional policies on the same life. Finally, although the firm initially quoted rates for slave risks covering their whole term of life, it generally refused to insure slaves for more than seven years. This allowed the company to reexamine regularly both market conditions and the health of the individual slave. The average policy length during the 1830s and 1840s was only two and a half years, increasing moderately to three and a half years at midcentury before jumping to five and a half years by late in the 1850s.

As other companies began selling slave insurance, the policy restrictions set by Baltimore Life during the 1830s became the standard of the industry. Slave policies were confined to one year with Richmond Fire Association and four years with Virginia Life. Virginia Life policies could be taken for up to two-thirds the value of the slave, while Lynchburg Hose and Fire permitted policies for three-quarters of slaves' market value. All companies charged additional premiums of $0.50 to $2.00 per $100 of insurance for slaves engaged in hazardous occupations such as on boats, on railroads, in coal pits or mines, or as engineers or firemen. Several voided the policy in cases where the employment of the slave was changed without written consent of the company, or if the slaveholder obtained multiple policies on the slave. New companies also shared Baltimore Life's concern about their treatment.

While a small number of slaveholders solicited policies on large groups of slaves, these inquiries were exceptional. Most policies sold during the 1830s and 1840s were to urban residents who sought insurance on one or two slaves employed as blacksmiths, carpenters, clerks, butchers, shoemakers, brickyard workers, or house servants.

The Richmond bricklayer Peter Glinn obtained a seven-year policy worth $1,000 on the life of his assistant bricklayer, whom he referred to, in a letter dated February 16, 1852, as "a very valuable hand." Two years later, the Richmond boot- and shoemaker David B. Franklin purchased a policy on his assistant Edward, who, the owner insisted on August 5, 1854, "would sell in the market for 11 or 1200 dollars. He is very Valuable on that account they hire for 200 dollars good boot makers." Ranging in age from seventeen to forty-five (and averaging twenty-nine), these slaves were a vital part of their owners' businesses, but—unlike with field hands—their skills made them both difficult to replace and highly valuable at older ages. The knowledge, experience, and trust that many house servants possessed similarly made them prime candidates for insuring.

Virginians also sought policies on slaves engaged in dangerous occupations such as mining, railroad construction, or work on steamboats. Late in the 1830s Richard Bagnal of Norfolk sought to insure a carpenter and a barber employed on the steamship South Carolina, while Wilson Winfree of Chesterfield wished to insure two slaves working in the coal pits of Swan and Gwathmey. Baltimore Life initially complied with these requests, yet increasing numbers of steamboat and mining accidents (such as the explosion at Cox's Pit near Richmond in 1850) led to a temporary moratorium on such risks by midcentury. "We have no objection to insure Negroes working in the construction of Rail Roads, but w[oul]d. decline those working in Coal pits," wrote one company correspondent on December 9, 1851.

In response to the changing economic conditions of the state, Virginians increasingly hired out their slaves to other employers. In cities such as Richmond and Lynchburg, hiring arrangements employed one-half to two-thirds of male slaves by the eve of the Civil War. The scholar Jonathan Martin's work on slave hiring cites life insurance as one means of "protecting the long-term value of a slave" when in the possession of the hirer. Virginians also began employing slaves in the nascent industries of the state. The coal mining and iron manufacturing regions near Richmond and throughout the Appalachian Mountains relied heavily on slave labor, as did the cotton mills emerging in the 1840s. By the 1850s, laborers in the growing number of tobacco factories of Richmond, Petersburg, Lynchburg, and Danville were "almost exclusively" slaves. The historian Ronald L. Lewis asserts that "by the 1840s, insurance for slave miners was commonplace."

Baltimore Life increasingly began to hear from people wishing to open Virginia agencies dedicated to slave policies, including solicitations from the county clerk Frederick Johnston of Roanoke, and insurance agent Frederick Slaughter of Fredericksburg. Each served as an agent for various fire, marine, and life insurance companies who refused to underwrite slaves. Baltimore Life was wary of having its sales dominated by slave policies and declined both of these requests. However, in 1853, the Richmond slaveholder John Darracott and Dr. Thomas Pollard both petitioned the company for a slave insurance agency in that city. In a letter dated March 26, 1853, Darracott wrote that he believed "a good business could be done" in slave insurance, while Pollard was confident that the changing composition of the Richmond economy— where slaves dominated the labor force of both the tobacco factories and iron foundries of the urban center as well as the coal pits of the periphery—made it particularly conducive to slave insurance. By 1854, the company had opened a Richmond agency dedicated to slave policies.

Approximately 59 percent of all Baltimore Life policies written between 1854 and 1860 underwrote slaves, peaking at about 70 percent of all new policies by the eve of the Civil War. More than 80 percent of these slave policies were sold through the new Richmond office—mostly on slaves employed in the city's growing industrial enterprises. More than one-third of the policies sold through the Richmond office in 1854 were on the lives of slaves hired out to railroads, including the Southside Railroad in Petersburg (built 1849–1854), the Richmond and Danville (1847–1856), and the Virginia and Tennessee (1850–1856). Factory slaves would account for one-quarter of all policies during the second half of the decade.

Both Pollard and Darracott also believed that it would be profitable to target domestic slave traders. In a letter dated October 20, 1860, Pollard recommended Lucien Lewis as the firm's new Richmond agent precisely because he was an "agent for hiring Negroes, and is Establishing a good business in this line." Upon accepting the agency, Lewis suggested on December 26, 1860, that the company aggressively market slave insurance policies by placing advertisements in local Virginia newspapers from where large numbers of slaves were hired out, and putting up placards "in the Auction Houses, Hirers Officers, tobacco factories, Tobacco Exchange &c, and send[ing] some to be hung in the principal Depots on the roads leading into the City." By late in 1860, the company was upholding the success of the Richmond agency as a model for other cities and strongly encouraged all agents to improve sales through better advertising and by targeting slave traders. Even as sectional tensions worsened, the company exhorted its Petersburg agent on December 24, 1860, "We wish if possible to increase the number of Slave risks this year, & have to beg that you will make every effort to secure them," and, on the same day, advised the Lynchburg agent, "In view of the financial pressure & general distress pervading the Country we are anxious to make this Co[mpany] more useful if possible to southern insurers." The war arrived before Baltimore Life could fully implement its new marketing campaign, but not before it had fatefully reorganized as a company primarily dedicated to underwriting Virginia's slaves.

In a few important instances, life insurance became a means of raising capital for the purchase and emancipation of individual slaves, particularly in cases where a bondsperson was about to be taken away from his family and sold in the Lower South. Judges, mayors, and professors, as well as free blacks and ex-slaves, all solicited policies on recently purchased slaves whom they intended to free. The insurance was to serve as a type of loan collateral until the slave was able to earn his own purchase price. While life policies for the purpose of manumission only accounted for a small percentage of all slave insurance, they represented a novel attempt to prevent the family breakups commonly associated with the slave trade.

In his autobiography A Narrative of the Life of Rev. Noah Davis, A Colored Man, the Baltimore resident Noah Davis recounted three separate instances in which he needed immediate funds to purchase the freedom of family members who were still enslaved in Virginia. In 1851, he borrowed several hundred dollars for the purchase of his wife and two youngest children, using an insurance policy on his own life as collateral for the loan. Four years later, he learned that his eldest "boy was in one of the trader's jails in Richmond, and for sale. The dealer knew me, and was disposed to let me have him, if I could get any one to purchase him." This time, he convinced a "friend" in Baltimore to advance him the money, insuring his son's life as collateral. Finally, in 1857, his daughter was on the auction block in Fredericksburg. Davis convinced two gentlemen to purchase her and allow her to work off the price, securing this loan with a $1,000 policy on her life.

The majority of these cases involved slaves who were in danger of being sold to distant locations. William H. Miller of Alexandria purchased a $500 slave policy. On July 14, 1836, the agent noted: "He represents that the Slave was about to be sold to the South, when Mr. Miller, who knew his good habits & faithfulness, and to prevent his separation from his family, paid the residue of the purchase money, which the policy is intended to secure. The motive is represented to be purely benevolent." Also in 1836, the china and glass merchant Hugh C. Smith of Alexandria paid $600 to prevent the breakup of another enslaved family. The wife and infant son had been sold to the infamous Washington-area slave trader John Armfield. Smith wrote to the company on April 30, 1836, "My only object in insuring is to secure myself against all risks until the money is repaid me." Charles Herndon, a young lawyer from Fredericksburg, bought Thomas Gibbs, as he wrote in a letter dated December 7, 1855, "for the purpose of allowing him to buy his freedom but wishe[d] to protect himself from loss & therefore insure[d] his life."

By the 1850s, the life insurance industry was firmly established in Richmond—underwriting the lives of slaves engaged in dangerous occupations, valued as artisans or house slaves, or hired out for work in factories and railroads—and was expanding rapidly into the other industrialized areas of Virginia. With the purchase of insurance, urban slaveholders confirmed their confidence in both the longevity of the slave system itself and the value of slavery for the future of southern industrialization. Demonstrating a sophisticated grasp of the capitalist system, urbanites of the South promoted insurance as a means of mitigating the untimely loss of their most valued slave property, while creative southerners of both races adopted insurance to alleviate some of the most evil consequences of the slave trade.