The structuring of early computer use in life insurance

Journal of Design History

Volumn 12, Issue 1, 1999, Pages 5-24

  Yates, JoAnne ^a  

^a MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

Author keywords

Business history; Business management; Computers; History of technology; Insurance; Structuration theory

Indexed keywords

EID: 35948938767     PISSN: 09524649     EISSN: 17417279     Source Type: Journal    
DOI: 10.1093/jdh/12.1.5     Document Type: Review

References (81)

1. The government and defence focus is exemplified by N. Stern, From ENIAC to UNIVAC, Digital Press, Bedford, MA, 1981
2. and K. Flamm, Creating the Computer: Government, Industry, and High Technology, The Brookings Institution, Washington, DC, 1988
3. and the broad commercial focus by J. W. Cortada, 'Commercial applications of the digital computer in American corporations', IEEE Annals of the History of Computing, no. 2, 1996, pp. 18-29
4. and S. W. Usselman, 'Fostering a capacity for compromise: business, government, and the stages of innovation in American computing', IEEE Annals of the History of Computing, no. 2,1996, pp. 30-9
5. A. Giddens, The Constitution of Society: Outline of the Theory of Structuration, University of California Press, Berkeley, CA, 1984. References to this book in the next section are indicated by parenthetical page numbers in the text
6. J. Yates, 'Using Giddens' structuration theory to inform business history', Business and Economic History, no. 1, 1997, pp. 159-83
7. see also P. Scranton, 'Giddens' structuration theory and research on technical change', unpublished draft text for Oxford conference on Technological Change, 1993
8. Technological determinism, whether 'hard' or 'soft', has been a subject of much contention among historians of technology (see, for example, M. R. Smith and L. Marx (eds.), Does Technology Drive History? The Dilemma of Technological Determinism, MIT Press, Cambridge, MA, 1994)
9. In reaction against this view that technology determines human action, historians of technology have increasingly turned to the social construction of technology (SCOT) approach adapted from sociologists of science (W. E. Bijker, T. P. Hughes & T. Pinch (eds.), The Social Construction of Technological Systems: New Directions in the Sociology and History of Technology, MIT Press, Cambridge, MA, 1987). Social constructionist accounts typically focus on influences shaping the initial development and interpretation of technology, rather than on the influence of that technology's use on social structures. Social construction has provided a useful antidote to determinism, but its focus tends to ignore the ongoing use of technology and the accompanying interactions between technology and other institutional structures
10. W. J. Orlikowski, 'The duality of technology: rethinking the concept of technology in organizations', Organization Science, no. 3, 1992, pp. 398-427
11. All quotations in this paragraph come from this article and are indicated by parenthetical page numbers in the text. Other examples include S. Barley, 'Technology as an occasion for structuring: evidence from observation of CT scanners and the social order of radiology departments', Administrative Science Quarterly, no. 1, 1986, pp. 78-108
12. and G. DeSanctis & M. S. Poole, 'Capturing the complexity in advanced technology use: adaptive structuration theory', Organization Science, May, 1994, no. 2, pp. 121-47
13. J. Yates, 'Co-evolution of information processing technology and use: interaction between the life insurance and tabulating industries', Business History Review, no. 1, 1993, pp. 1-51
14. J. Yates, 'Early interactions between the life insurance and computer industries: the Prudential's Edmund C. Berkeley', Annals of the History of Computing, no. 3, 1997, pp. 60-73. This section of the paper briefly summarizes developments documented in detail in those two papers
15. C. J. Bashe, L. R. Johnson, J. H. Palmer & E. W. Pugh, IBM's Early Computers, MIT Press, Cambridge, MA, 1986, pp. 176-7
16. A 1952 Dallas-area regional survey of premium billing and accounting methods showed a considerable increase in use of tabulating equipment for billing and related accounting functions, with over 40 per cent of the firms surveyed using tabulating equipment for the entire premium billing and accounting process. W. V. Cassara, 'Survey of Premium Billing and Accounting', Proceedings of the Insurance Accounting and Statistical Association, 1952, pp. 66-76
17. E. J. Moorhead, Our Yesterdays: The History of the Actuarial Profession in North America, 1809-1979, Society of Actuaries, Schaumberg, IL, 1989, pp. 354-9
18. Bureau of Labor Statistics, 'The introduction of an electronic computer in a large insurance company', no. 2, Studies of Automatic Technology, US Department of Labor, Washington, DC, October 1955
19. Yates, 'Early Interactions', op. cit. My focus here, however, is not on insurance influences on the technology, but on the structuring of insurance adoption and use of computers
20. Moorhead, Our Yesterdays, op. cit
21. M. E. Davis, W. P. Barber, Jr., J. J. Finelli & W. Klem, Report of Committee on New Recording Means and Computing Devices, Society of Actuaries, September 1952, p. v. The rest of this section focuses on this report, and subsequent references to it appear as parenthetical page numbers in the text
22. The Committee also issued two subsequent reports: M. E. Davis, W. P. Barber, Jr., H. F. Rood, J. W. Ritchie, R. E. Slater & J. J. Finelli, 'Current status of magnetic tape as a recording and data processing medium', Report of Committee on New Recording Means and Computing Devices, Society of Actuaries, June 1955
23. and J. J. Finelli, W. P. Barber, Jr., J. W. Ritchie, M. R. Cueto, H. F. Rood, A. D. Murch, R. E. Slater & D. H. Harris, 'Application of electronic data processing equipment to office operations', Report of Committee on New Recording Means and Computing Devices, Society of Actuaries, October 1957
24. The firms are not named, but are clearly revealed by internal and external evidence
25. M. E. Davis, 'The use of electronic data processing systems in the life insurance business', Proceedings of the Eastern Joint Computer Conference, 8-10 December 1953, p. 17
26. In fact, no actual reduction in headcount would emerge in the industry in the next decade, but a slowing of rapid growth would be achieved. The growth rate for office staff (who comprise 70-75% of all insurance employees) declined from 4.2 per cent to 2.4 per cent a year in computerized companies between 1954 and 1964, according to a Labor Department study. Because of high business growth, the overall growth rate of employment in insurance during this decade was 32 per cent. Bureau of Labor Statistics, US Department of Labor, Bulletin No. 1468, Impact of Office Automation in the Insurance Industry, Washington, DC, 1966, pp. 5, 2
27. Stern, op. cit., pp. 295-6
28. 'Two more Univacs, but there's still a need for additional clerks', Home Office, June 1956, pp. 6-9, MetLife Archives. The model was displayed in 1956, when the firm was awaiting delivery of a second and third such system
29. Yates, op. cit
30. K. M. Hills, Insurance Data Processing, Chilton Company/Spectator, Philadelphia, 1967, pp. 137-9
31. IASA, Proceedings of the First Electronics Conference, 20-21 April 1953, pp. 9-72
32. B. E. Olmstead, 'Prudential's early experience with computers', Prudential internal typescript dated 1 February 1978; 'Univacs completed to date', 8 February 1956, unsigned typed list, Unisys Collection, 1956 chronological file, Hagley Museum and Library. In 1954 Remington Rand shipped eight Univacs, two to government agencies, two to US Steel, one to DuPont, one to General Electric, and two to life insurance companies, Metropolitan Life and Franklin Life. Franklin Life was the first life insurance firm (or commercial firm) to order a Univac (F. J. O'Brien, The Fabulous Franklin Story: The History of the Franklin Life Insurance Company, 1884-1970, Franklin Life Insurance Company, Springfield, IL, 1972, p. 143), but it received its computer later than Metropolitan Life did, probably because Metropolitan Life had finished necessary preparations for housing the large system earlier
33. Bureau of Labor Statistics, 'The introduction of an electronic computer in a large insurance company', op. cit
34. J. Diebold & Associates, Inc., 'Univac applications in two insurance companies: Franklin Life Insurance Company; Metropolitan Life Insurance Company', Automatic Data Processing Service Methods Report, Cudahy Publishing Co., Chicago, IL, 1956, p. 16
35. W. Bell, A Management Guide to Electronic Computers, McGraw-Hill Book Company, Inc, New York, 1957, pp. 281-2
36. J. J. Finelli, 'A report on the electronic activities of a large life insurance company', Transactions of the 15th International Congress of Actuaries, 1957, p. 16
37. 'A genius of sorts', Home Office, June 1954, MetLife Archives
38. Finelli, op. cit., pp. 15-17
39. Davis, op. cit., pp. 15-16
40. Quoted in 'Keeping track of Univac', Home Office, January 1955, MetLife Archives
41. Flitcraft Compendium, Oak Part, IL, 1950, 1960
42. R. H. Brown, Office Automation: Insurance, Office Automation, New York, 1959, Part III, Section D 13-1
43. H. F. Hatch, 'Installing and preparing for premium billing on Univac', Proceedings of the Insurance Accounting and Statistical Association, 1956, p. 93
44. Hatch and other executives at John Hancock apparently did not consider punched-card computers real computers, so its evaluation of IBM equipment (it also looked at RCA and Raytheon as potential vendors) included only the IBM 702 and 705 computers, not the IBM 650. References elsewhere, however, reveal that in 1954 Hancock actually purchased two or three IBM 650s for smaller jobs (E. F. Shepherd, 'Using the 650 for weekly premium insurance operations in the actuarial department', Proceedings of the Insurance Accounting and Statistical Association, 1956, pp. 146-8
45. Bashe et al., op. cit., p. 171
46. 'Univac performs at John Hancock', Journal of Machine Accounting, no. 5, 1956, p. 22; see also Hatch, op. cit
47. Discussion transcript in the Proceedings of the Insurance Accounting and Statistical Association, 1957, p. 637
48. O'Brien, op. cit., p. 143
49. Diebold & Associates, Inc., op. cit., p. 26
50. E.g. A. C. Vanselow, 'Programming the electronic computer for clerical production', paper presented to the Office Management Conference, American Management Association, New York, 1954 (in the Holburton Collection, Box 23, Franklin Life Insurance Company, Charles Babbage Institute), p. 4
51. Brown, op. cit., Part III, Section D8-1-14
52. See, for example, how little space this important event received in O'Brien's The Fabulous Franklin Story, op. cit., p. 143, while the growth story dominates this section of the book
53. Letter from R. M. Hutches, Franklin Life Insurance Company, 26 March 1998. At this time, the firm had no home office magazine - only Franklin Field, a magazine aimed at the field sales force
54. Vanselow, 'Programming the electronic computer for clerical production', op. cit.
55. A. C. Vanselow, 'Programming the Univac for clerical production', Systems Magazine, May-June 1955, pp. 15-16
56. and A. C. Vanselow, 'Electronics at work in life insurance accounting', Proceedings of the High Speed Computer Conference, Louisiana State University, 1957, pp. 147-63
57. Vanselow, 'Programming the electronic computer for clerical production', op. cit., p. 5
58. Letter from R. M. Hutches, op. cit
59. Doyce B. Nunis, Jr., Past is Prologue: A Centennial Profile of Pacific Mutual Life Insurance Company, Pacific Mutual, 1968, pp. 45-57
60. R. D. Dotts, 'An approach to electronics by a medium sized company', Journal of Machine Accounting, no. 11, 1954, pp. 5, 7-9
61. W. S. Bagby, 'Deciding upon an electronic data processing system', Journal of Machine Accounting, no. 7, 1956, pp. 19-20, 22
62. R. D. Dotts, 'Univac system: a case history', Journal of Machine Accounting, no. 10, 1956, p. 23
63. D. K. Swinnerton, 'Installing a daily cycle data processing system', Proceedings of the Insurance Accounting and Statistical Association, 1956, p. 97
64. Dotts, 'An approach to electronics by a medium sized company', op. cit., p. 7
65. Nunis, op. cit., p. 61. While this training was successful, executives still needed to run the old and new system in parallel for several months to guarantee that there would be no lapse in service to its customers; to achieve this, they organized 'Project Helpmate', which called on the wives of company management to run the old, dead-end system!
66. Robert C. Goshay (Information Technology in the Insurance Industry, Irwin, Homewood, IL, 1964, pp. 40-1) makes a similar point. He attributes the clustering solely to the economics of buying a large Univac, seeing the conservative applications as being preferred by all insurance executives when it was economically feasible, as it was in large enough firms. My story is somewhat more complex than his, but arrives at a similar clustering
67. Bureau of Labor Statistics, 'Impact of office automation in the insurance industry', op. cit., p. 10
68. on the IBM 702, see Bashe et al., op. cit., p. 176
69. Davis et al., op. cit
70. Bell, op. cit., p. 288
71. E. C. Berkeley to F. B. Gerhard, C. B. Laing, R. W. Cobb and E. F. Cooley, 25 July 1947, Berkeley Coll. 3:56, CBI
72. Paul Chinitz, The Univac Conference, organized by the Charles Babbage Institute, the Smithsonian Institution, and Unisys Corporation, 17-18 May 1990, Smithsonian Institution, Washington, DC, Charles Babbage Institute Oral History 200, Session 3, p. 58
73. Finelli et al., op. cit., p. 14
74. J. A. Daley, 'Conversion to and installation of IBM 705 systems at the Prudential', Proceedings of the Insurance Accounting and Statistical Association, 1958, pp. 365-6
75. B. E. Olmstead, "Prudential's Early Experience with Computers," Prudential internal typescript dated February 1, 1978, p. 17
76. Brown, op. cit., Part III, Section D4-1
77. J. Yates, Control through Communication: The Rise of System in American Management, Johns Hopkins University Press, Baltimore, MD, 1989
78. Bashe et al., op. cit., p. 178
79. T. L. Whisler & H. Meyer, The Impact of EDP on Life Company Organization, Personnel Administration Report No. 34, Life Office Management Association, 1967, pp. 14-15
80. See, for example, G. J. Williams, 'Premium billing and related functions on the IBM Type 650 machine', Proceedings of the Insurance Accounting and Statistical Association, 1957, pp. 689-92
81. Life Office Management Association, 'EDP applications in life insurance companies', Automation Report No. 10, LOMA, 1965, pp. 4, 8