The Negro Has the Same Risks

Besides being the victim of discrimination in housing and hiring, the U.S. Negro was long written off as a second-class insurance risk. His life expectancy was low, his income meager, his dependability in paying premiums suspect. Stepping in over the years where white agents waivered, the U.S. Negro community gradually formed its own insurance companies, which now number about 60. With the Negro's per-capita income rising, white-run insurance companies are anxious to get some of his business. They can expect a real battle from the Durham-based North Carolina Mutual Life Insurance Co., the largest Negro-owned firm in the U.S.

North Carolina Mutual has 800,000 policyholders in 14 states and the District of Columbia (including, outside the South, Pennsylvania, New Jersey, Illinois, California). Last week the firm announced that its total policies in 1963 increased by $8,000,000 to $345 million. It ranks 195th among the 1,500 U.S. insurance firms, well below such giants as Metropolitan and Prudential; but it is steadily expanding through acquisition and new-policy writing, has a consistent growth rate of at least 5% yearly. The company is erecting a new twelve-story, sculptured concrete headquarters building in Durham that will be the city's highest structure--and the nation's largest Negro-owned office building.

Out of Pocket. North Carolina Mutual had an uncertain beginning 65 years ago in the backroom of a Durham barbershop. Barber John Merrick, one of seven founders, got some useful advice from Tobacco Magnate Washington Duke (his family founded the American Tobacco Co.), who explained business practices while being shaved. But Duke's advice was of little help when the struggling company faced its first policyholder death: to cover the $10 payment due, the firm had only 290 cash on hand. Merrick and another backer dipped into their pockets for the difference, then shrewdly waved the widow's receipt around Durham's Negro neighborhood to prove the integrity of the young company's motto: "Merciful to All."

Long on mercy but short on reserves and actuarial experience, the growing business went from crisis to crisis. Then the firm hired a onetime schoolteacher named Asa T. Spaulding, a New York University graduate who had just become one of the nation's first Negro actuaries. He scaled down overly generous interest rates, introduced stiffer medical examinations and began to train Mutual's loosely assembled staff of agents. By 1943 the firm was enough in the black to make its first dividend payment--and has not missed one since. North Carolina-born Spaulding, now 61, became president in 1959.

Not Forgotten. North Carolina offers the same range of insurance policies as its competitors, but its average policy is considerably smaller (about $4,000). Conservative in investing, it keeps 54% of its assets in bonds, another 27% in mortgages. It has insured Elizabeth Taylor, Frank Sinatra and Marshall Field, but it never forgets where its real strength lies, concentrates on increasing the size of the policies held by its overwhelmingly Negro clientele. "After all," says Spaulding, "a Negro wants a house and gets sick and has to send his children to college just like anybody else. He has the same insurance problems that a white does."

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