When Benjamin Franklin and more than a dozen other men met in a Philadelphia courthouse in April 1752, they may not have known the company they founded that day would form the basis of what would become the modern-day property and casualty insurance industry.
They elected officers and the organization’s secretary spent the next two years inspecting members’ properties, examining surveyors’ reports, notifying applicants of their acceptance, writing policies and collecting payments. Importantly, they paid their first claim when fire damaged the home of Peter Bard in 1753. As noted in The Pennsylvania Gazette, “the House being insur’d, the Damage will be immediately repaired, without Cost to the Owner.”
By 1754, the “Philadelphia Contributionship for the Insurance of Houses from Loss by Fire” had issued its first 250 fire protection policies.
Symbolized by an iron seal featuring four interlocked hands, which hung on each member’s house, the Philadelphia Contributionship pioneered many principles that still guide modern insurance concepts, including property inspections, setting rates based on risk assessment, requiring insured buildings to be constructed to specified standards and raising rates for unsafe practices such as storage of combustible materials in wooden structures. The company was also the first to establish a finance reserve to pay claims.
The concept of fire insurance for property owners was not new in 1752. Almost 100 years earlier, it had sprung from the disastrous Great Fire of London in 1666. The local fire insurance companies that dotted England following that historic blaze eventually captured the attention of Benjamin Franklin, who introduced the idea in Philadelphia as a founder of the Philadelphia Contributionship.
Franklin also introduced the “firemark” idea from England – giving rise to the iron seals that hung outside the houses belonging to the Philadelphia Contributionship’s customers, alerting local fire companies that the owners of these houses had paid for fire protection.
Visible still on antique homes in America’s oldest cities, firemarks symbolize the origins of insurance protection in America.
The early 18th century was an age when fire destroyed many homes and businesses, often touched off by toppled lanterns or fireplace sparks, and bucket brigades were slow and inefficient at fighting fires, at best.
But a firemark on a house guaranteed that a local volunteer fire company would respond – often with a horse-drawn pumper carriage – to knock down the fire and save as much of the home as possible.
A firemark, usually made of iron or brass, was affixed to the side of a house in a prominent place. It symbolized that the homeowner had paid either the local fire company or a third-party insurance company to provide fire protection. Insurance companies that received such payments from homeowners, in turn, paid part of the money to the local fire companies.
As cities grew, so did the number of insurance companies and fire companies. It was common for several fire companies to arrive at a fire, but only the company paid by the insurer of the house – as affirmed by the firemark – would fight the fire.
The Philadelphia Contributionship established a capital fund to pay the expenses of the office and losses in 1763 and a few years later incorporated, which allowed for more streamlined operations and limited individual directors’ liability. The company adopted more stringent underwriting guidelines, and by 1776, many of Philadelphia’s institutions and prominent citizens insured their buildings with The Philadelphia Contributionship. The insurer was now a familiar part of the city’s life.
Notably, two hundred and seventy years later, the insurer is still in business as the longest tenured insurance company in the country.
The Philadelphia Contributionship’s unique firemark depicted four hands clasping each other at the wrist, forming a strong human chain. It was cast in lead and affixed to a pine board.
This and other firemarks are still visible on antique buildings in and around Philadelphia, symbolizing the long history of private property insurance in America.