Life insurance before 1857

A market served from abroad

When the federal state was created in 1848, Swiss households that wished to secure a lump sum for their dependants on death, or a life annuity for their own old age, had no domestic life insurer to turn to. The Historisches Lexikon der Schweiz states plainly that the life insurance business in Switzerland was first carried on by numerous German, French and English companies.¹ A brochure on the history of insurance in Switzerland published by Swiss Re adds that French life and fire insurers such as La Nationale, Le Phénix and L'Union had been doing business in the country since the 1830s, with German and British companies following later.² A Swiss merchant who wanted life cover therefore signed a contract with a company whose capital, reserves and management were in Paris, Gotha, Leipzig or London, and whose conditions were drafted under a foreign law.

The dependence on foreign providers was the direct motive for the Swiss foundation. An anniversary article in the German trade journal Versicherungsmagazin summarised it in a single sentence: because foreigners were doing the life insurance business with Swiss customers, the Thurgau lawyer Conrad Widmer founded the Schweizerische Rentenanstalt in 1857.³ The argument had a political edge in the 1850s. It was the same argument that Alfred Escher and his circle used for railways and banking, where they sought to prevent foreign capital from controlling the new national infrastructure. Savings that Swiss families placed in life insurance left the country as premiums and were invested abroad, while the policyholders depended on the solvency of institutions over which no Swiss authority had any control.

The foreign companies were by no means marginal operators. The Lebensversicherungsbank für Deutschland in Gotha, one of the most successful German life insurers of the century, had been founded in 1827 by the merchant Ernst Wilhelm Arnoldi as a mutual institution. According to the company's own history, the ducal government approved the application within eight days, and Arnoldi, advised by a committee of lawyers, physicians and mathematicians, built the bank on the idea of mutual aid among merchants.⁴ The Gotha model, a mutual company owned by its policyholders and run by a professional director, was the form that Widmer later adopted for the Rentenanstalt. The Swiss founder thus drew on a German template while pursuing a Swiss national objective.

Actuarial science and the mortality table

Modern life insurance rests on a mathematical idea: if the probability of death at each age is known for a large group of persons, a premium can be calculated that, together with the interest earned on the reserves, will suffice to pay the sums insured as they fall due. The earliest attempts to insure lives in London in the late sixteenth and seventeenth centuries did not yet use this idea. Edmund Halley published a life table in 1693, but the mathematical and statistical tools needed for the business developed only in the eighteenth century.⁵ The Amicable Society, founded in London in 1706, collected equal contributions from its members and distributed the proceeds to the families of those who had died. The Society for Equitable Assurances on Lives and Survivorship, founded in 1762 on the basis of the work of the mathematician James Dodson, was the first company to charge premiums graded by age according to mortality. It also operated as a mutual, and its actuary William Morgan developed, over a career of more than half a century, the valuation of liabilities and the distribution of surpluses to policyholders.

Three technical elements that the Equitable established in London became the foundation of every serious life insurer in the nineteenth century, including the Rentenanstalt. The first was the level premium: the policyholder paid the same premium each year, although the risk of death rose with age, so that the excess paid in the early years had to be accumulated as a reserve for the later years. The second was the mathematical reserve itself, which made the life insurer a collecting institution for long-term savings and turned it into a significant investor. The third was surplus participation. Because the premiums were calculated on cautious assumptions about mortality, interest and costs, a well-managed company regularly earned more than it needed, and a mutual company returned that surplus to its members. The combination of these elements meant that a life insurer was simultaneously an insurer of the risk of death, a savings institution and an investor. It is this triple character that still defines the business and its supervision today.

The mortality tables on which the early companies relied came from the population statistics of particular towns or from the experience of the insurers themselves. They were imperfect instruments, since the persons who bought life insurance were healthier on average than the general population and the tables varied from country to country. A new company that entered the market needed a table it could trust and the mathematical skill to apply it. For the Rentenanstalt, this skill was soon available in Zurich. In the winter semester of 1858–1859, only a year after the company's foundation, Professor Gustav Zeuner lectured on the theory of insurance mathematics at the new Federal Polytechnic School.⁶ Chapter D.III has described this link between the Polytechnikum and the new insurance industry. It gave Zurich an advantage that no other Swiss town possessed at the time: a technical university that could educate the mathematicians the insurers needed.

Annuities and the Genevan precedent

Life annuities had a longer history in Switzerland than life insurance in the strict sense. The companion volume on Geneva describes how Genevan bankers in the late eighteenth century invested in French state life annuities that were written on the lives of carefully selected young Genevan girls. Under the arrangement known as the “thirty immortals of Geneva”, investors received payments until the death of all thirty nominees, each death reducing the payment by one thirtieth. Physicians chose girls aged between four and seven for their health and resistance to disease, and the bankers who acted as intermediaries paid for their medical supervision throughout their lives.⁷ The scheme was a financial speculation on longevity, highly profitable until the Revolution and the insolvency of the French state brought it to an end.

The Genevan annuities show that Swiss capital had understood the mathematics of mortality long before a Swiss life insurer existed. They also show the danger that Widmer's generation sought to avoid, namely the dependence of Swiss savers on the creditworthiness of a foreign state or foreign company. The name that Widmer chose for his institution in 1857, a Rentenanstalt or annuity institution, placed the provision for old age at the centre. That choice reflected the social concerns of the time. Industrialisation, internal migration and the weakening of family and guild support made the provision for old age and for surviving dependants a pressing question in the growing towns of the new federal state, long before any public pension scheme was contemplated.

Notes

1. Historisches Lexikon der Schweiz (HLS), Martin Körner and Bernard Degen, “Versicherungen”, version of 21.01.2014, https://hls-dhs-dss.ch/de/articles/014066/. The article states that the life insurance business in Switzerland was first carried on by numerous German, French and English companies. ↩
2. Swiss Re, Geschichte der Versicherung in der Schweiz (undated brochure), https://www.swissre.com/dam/jcr:c24c1c66-3045-47d5-a4ca-4829f67c59dd/Markt_Broschuere_Schweiz_DE_web.pdf, which names La Nationale, Le Phénix and L'Union as French insurers active in Switzerland from the 1830s. ↩
3. Dirk Reder, “Lebenslängliche Vorsorge aus der Schweiz”, Versicherungsmagazin 55 (2007), no. 8, p. 29, https://link.springer.com/article/10.1007/BF03245434. The preview of the article gives the sentence on foreign insurers and Widmer's foundation quoted in the text. ↩
4. Gothaer, “Gothaer Lebensversicherungsbank”, https://www.gothaer.de/ueber-uns/historisches/geschichte/lebensversicherungsbank.htm. The page dates the application to 1 July 1827 and the approval to 9 July 1827 and describes the mutual principle of the bank. ↩
5. Wikipedia, “Life insurance”, https://en.wikipedia.org/wiki/Life_insurance, section on history. Cited for orientation on the Amicable Society (1706), Halley's life table (1693), the Society for Equitable Assurances (1762) and William Morgan. ↩
6. RiskLab Switzerland, ETH Zurich, “Insurance Mathematics at ETH Zurich”, https://risklab.ethz.ch/education.html, which states that “the roots of insurance mathematics at ETH Zurich go back to the mid 19th century when, in the winter term 1858/1859, Professor Zeuner held a lecture on the ‘Theory of Insurance Mathematics’”. ↩
7. 100 Elles*, “Trente immortelles de Genève”, https://100elles.ch/biographies/trente-immortelles-de-geneve/. The entry dates the arrangement to 1778–1798, describes the selection of the girls and states that the system collapsed with the insolvency of the French state after 1789. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.