Two Tales Of the Insurance City

WHILE SOME SHORT-LIVED marine and fire insurance companies popped up in the port towns of Connecticut around the turn of the eighteenth century, the first substantial insurance firm was incorporated in Norwich in 1795. In the best tradition of Connecticut caution, the Mutual Assurance Company of Norwich insured only those known personally to its company officers. Needless to say, it remained solvent -- and small. To the high-rollers of Hartford, like the Hartford Fire Insurance Company, incorporated in 1810, and the Aetna, founded in 1819, fell the bigger risks and, of course, the potential for higher profits or losses.
According to tradition, several remarkably similar cases of corporate salesmanship not only solidified the position of Hartford based insurance companies at times of maximum threat to their very survival, but also focused the eyes of the nation on Hartford as the unchallenged insurance capital of the United States, a position which, once established, has never been relinquished.
On the bitterly cold night of December 16, 1835, a fire broke out in a wooden building in the heart of New York City. With the temperature hovering around seventeen degrees below zero and a gale-force wind howling from the northwest, a loosened wildfire quickly spread through block after block of Manhattan real estate. Before the great fire was brought under control (by dynamiting a wide swath in the path of the flames), some seven hundred buildings had been destroyed, with property losses estimated at nearly $20,000,000.
A post rider brought news of the disaster to Hartford the following day, but details remained sketchy. Even if the area of destruction had been known to the officers of the Hartford Fire Insurance Co., a major insurer in New York City, no street maps or records existed in the home office to set forth corporate liability. One thing, however, was patently clear: some effective steps would have to be taken quickly to assess the extent of damage to insured properties and to make good on legitimate claims against the company.
Eliphalet Terry, president of Hartford Fire and a man with a well-deserved reputation as a shrewd businessman and canny salesman, came up with a plan of action. He called in the leading Hartford bankers, extracted from them a blanket promise to honor any checks he might write on behalf of his company and even pledged his own considerable private fortune as security. He then called a livery stable to send around a horse-drawn sleigh, bundled himself against the sub-zero temperatures and proceeded to make the 125-mile journey over frozen and rutted roads to the stricken city.
Once he arrived on the scene, Terry learned that most of the New York insurance companies had been bankrupted by the monster fire. While property owners whose buildings had escaped the flames muttered darkly about the shortcomings of fire insurance as an institution, owners of gutted structures wandered in despair through the smoking ruins. Sensing an unparalleled chance to strike a blow for the infant Connecticut insurance industry in general and for the Hartford Fire Insurance Co. in particular, Terry ordered a large soap box to be placed directly adjacent to some still-smoldering debris in the heart of the burned-out area. Mounting the makeshift stage, checkbook in hand, the doughty executive calmly declared that he was prepared to pay in full and on the spot all claims against his company. He proceeded to back his words with action.
Although it was later determined that Hartford Fire was liable for less than $65,000 of the multi-million dollar loss total in the great fire of 1835, the value of the good will and rush of new business which followed Eliphalet Terry's dramatic mission was beyond estimate. For it is generally agreed that the integrity of the young insurance industry and the firm establishment of that industry in the city of Hartford were secured by his legendary act.
In fact, so pervasive was the story of Terry's gutsy New York gesture that it inspired several repeat performances: by officials of the Aetna and Hartford Fire after a second disastrous New York City fire in 1846, and, again, by a prominent agent for Phoenix Mutual, another Hartford firm, following the famous Chicago fire in 1871. In the latter instance, after $140,000,000 worth of property had been reduced to ashes by Mrs. O'Leary's cow, it fell to Connecticut's Governor Marshall Jewell to play the Terry role in the devastated Illinois city. As the story goes, when notified of the Chicago disaster, the president of Phoenix wired Gov. Jewell, who chanced to be in Detroit on business. Since Jewell also happened to be a Phoenix director, the company asked him to go immediately to Chicago and authorized him to act in their behalf in settling claims. Given carte blanche, Jewell agreed to do so.
True to the Terry tradition, Gov. Jewell no sooner arrived in the Windy City than he availed himself of a large dry-goods crate and had it installed on the charred banks of the Chicago River. Clambering upon the crate and looking out over 3000 smoldering acres where once a city stood, he announced to a sullen, half-crazed crowd that the Phoenix was prepared to pay in full and on the spot for every loss insured by the company. They say the crowd cheered, then cried, then laughed by turns, as the Phoenix checks were distributed among the stricken multitude. From the upper windows of the Chicago Tribune building a huge placard appeared, proclaiming that the Phoenix of Hartford was paying its losses. Once and for all, insurance and the "Insurance City" had come of age.

from Legendary Connecticut by David E. Philips / ISBN 1-880684-05-5 / $17.95

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