When we think of insurance companies today, it’s not always an image of benevolent and community focused agencies that come to mind. However, it was precisely this vision of what insurance should mean that spurred the foundation of black-owned companies across the southern United States at the turn of the twentieth century. They emerged at a time when black people struggled to be accepted by white-owned firms, for whom the high mortality rates among African Americans were too great a liability.
So how did they come about, and why are there so few left today?
Discriminated against and forced to turn elsewhere for insurance, black communities formed mutual benefit associations which would serve to provide economic aid and promote social welfare. These early black-owned insurance companies in twentieth-century America were instrumental in helping their communities grow and thrive in the face of widespread racial segregation. Ironically, however, the civil rights movement that these associations helped to advance would prove to be a factor in their decline.
Reaction to the First Black-Owned Insurance Companies
According to Robert Weems, professor of business history at Wichita State University, the improved social status of African Americans resulting from this movement made them attractive customers to the very companies who had shunned them years earlier — and it turned out to be something of a win-win situation:
“…from the standpoint of African American consumers, it became a literal status symbol that they were being marketed the same types of policies that companies like Prudential and Metropolitan Life sold to their white clients. […] we literally saw large companies able to profit from previous discriminatory practice.”
Thus began the demise of black-owned insurance companies, and with them, the opportunities and investments that sustained African American communities.
Facing Adversity and Developing a Solution
Social and financial aid had been drawn from the surpluses accumulated by such companies, so with black-owned firms in decline, funding for community development and infrastructure took a hit. Nevertheless, there were profound and lasting efforts made to support social institutions for African Americans in places where they were needed most. Durham, North Carolina, was one such place.
Founded in Durham in 1899 on principles of mutual benefit and community development, the North Carolina Mutual Life Insurance company sought to relieve the “distress of the negroes”. The company’s founders John H. Merrick and Aaron M. Moore prided themselves on their concept of the ‘double-duty dollar’, which meant directing company revenue back into the community and fulfilling their aims of corporate responsibility.
Help from Booker T. Washington
Around the same time, influential African American educator Booker T. Washington was fostering black business and enterprise through the National Negro Business league, and the two associations worked jointly to elevate the African American community into social spheres previously reserved for the white man. Washington founded the league with the belief that commercial and economic prosperity were vehicles of social change and mobility for African Americans, who could use business as a steppingstone to civil rights.
North Carolina Mutual, Social Institutions, and Social Change
North Carolina Mutual’s executives were responsible for founding and supporting numerous social institutions. These included a school, a library, a university, and the Lincoln Hospital — the first hospital in Durham to accept African American patients.
While most black-owned insurance companies could not keep up with the changing social and commercial landscape of the century, North Carolina Mutual serves as an enduring example of the principles which drove them — community development, social welfare, and “determination to serve the underserved”. It is in this way that they, and indeed all socially-driven mutual benefit companies of the time, contributed to the social elevation of African Americans in the fight for civil rights.