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If the terms “weather” and “insurance” are being tossed about, it’s usually not in a positive context. It’s likely the conversation is about severe cold, storm damage, or fallout from snow-related disruptions.
Here’s a more positive tale about weather and insurance. And it involves armed guards and an envelope of cash, which adds some intrigue.
It was the Great Depression in Michigan. The state, particularly Detroit, was suffering. In February 1933 a combination of state and federal actions closed banks there for roughly three weeks.
Now during these hard times MassMutual customers had been borrowing against their life insurance policies to make ends meet. But with the banks closed, customers had no place to cash checks. So the company sent $300,000 in cash to its agencies in Michigan.
More than 15,000 policyholders came to the Detroit agency looking to borrow from their policies’ cash value, according to Richard Hooker in his history of MassMutual, “A Century of Service,” published in 1951.
“They came to us in such streams that it was necessary to have four of our agents appointed deputy sheriffs and carry revolvers, lest there be disorder,” according to a letter from the Detroit agency to the home office.
The problem was compounded by the weather. It was a tough February in Detroit, with temperatures going as low as -13 degrees Fahrenheit. As a result, local coal supplies were running low.
A coal dealer came to the MassMutual agency. The railroads had his coal, but wouldn’t release it unless they were paid. He had plenty of money – in the banks – which were closed. He needed $100,000 in cash. He asked for a loan from his $115,000 single premium life insurance policy that he purchased from MassMutual two years earlier.
This, of course, had some implications for the businessman on a personal level. Taking loans from a life insurance policy will reduce the policy’s cash value and death benefit and may result in a tax liability. But he was in a tough spot in both business and human terms.
“He was desperate with telephones ringing in every coal yard office, where people were insisting upon delivery of coal, especially in schools, hospitals, orphanages, and homes where there was illness,” the letter detailed in Hooker’s book. “It was cold in Detroit.”
The agency didn’t have enough cash on hand to help him, so it called the MassMutual home office in Springfield, Massachusetts. A series of phone calls to three central banks and one local branch resulted in the agency getting $100,000 from the local bank’s vault. It took about six hours.
“When our policyholder called at our office with satchels and armed guards on each side of him … he was mystified when we handed him a small envelope,” the letter stated. “With hands shaking, he opened it and looked as though he had just seen for the first time a $1,000 bill. He began to count, but was so nervous he only counted ninety-nine. After taking a few deep breaths, he started over again and finished with one hundred.
“Within a few hours, the coal in the railroad yards had been released, trucks started to travel in various directions through the city and countryside. Life insurance money had begun to ‘keep the home fires burning,’ to relieve suffering, make little children and elderly men and women warm, and prevent what could have been a very difficult health situation.”
And so the coal dealer’s customers got their coal. A few days later on March 4 the banks re-opened.
So you see, weather and insurance can sometimes add up to a good ending.