This article is one in a series of stories we are sharing throughout 2020 to celebrate the company’s heritage. All images are from the New York Life Archives.

Industrialization and transportation had fueled America’s dramatic expansion through the 1890s. On the threshold of the new century, New York Life was set to overhaul and streamline its operations to keep pace. Within a decade, the company’s grassroots network would mature into a new kind of company, one built on the Branch Office system. Little did leaders know that their innovation would forever change how insurance companies operate.

Until then, one general agent represented the company across his assigned territory. Each hired and fired his own sales staff, who worked for the general agent, not New York Life. Wildly autonomous, general agents spurred rapid development of new territories and expansion after the Civil War. But the model had its drawbacks, too.

“These general agents were all-powerful in their respective fields,” one employee recalled. “If they did not like the contracts they had with the company, they could shut off business until the company came to their terms…. Under this system the business always had its ups and downs, according to the moods of the general agents and their relations with the Home Office.”

When John McCall was named president of New York Life in 1892, he turned to George Perkins to modernize the agency system. The son of a New York Life agency supervisor in Chicago, Perkins had long evangelized the merits of professionalizing agents and piloted a new managerial model in the Western Territories. There, agents worked on commission while Perkins, their supervisor, earned a salary—freeing him to make objective decisions in service of the company.

By 1892, Perkins’s experiment had proven so successful that McCall brought him to the Home Office as the vice president in charge of all agency affairs. He asked Perkins to take his model companywide. It would become known as the Branch Office system.

A staggering success

Before long, old general agent’s territories were re-divided and administered by a series of branch offices. These extensions of the Home Office made sure that company programs and policies were implemented consistently. A cashier in each branch office handled the money, and an agency director handled field agents. Both positions were salaried, eliminating the field’s former conflicts of interest and holding all accountable to the Home Office’s standards of conduct.

The Branch Office system rolled out through 1903, and Perkins’s invention proved to be a staggering success. In the following decade, premiums more than doubled while administration and sales became more efficient. More than 40 years later, in 1935, New York Life Vice President L. Seton Lindsay called the shift “the most important agency development in the history of the New York Life.”

By then, other insurers had taken note and began developing their own versions of the structure. New York Life rebuilt itself to provide consistently excellent service everywhere it operated—and changed the insurance industry once again.

“We are the fortunate inheritors of the almost inspired work of the leaders who founded our agency system…” Lindsay said. “We may not be able to make so brilliant a contribution to the future as the Branch Office system, but we can at least conserve what has been our heritage from the organization geniuses who have made our great company what it is today.”

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Media contact
Kevin Maher
New York Life Insurance Company
(212) 576-6955

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