How History of Rotary and Insurance connect in the World and Uganda at particular

On 23 February 1905, Paul P. Harris, Gustavus Loehr, Silvester Schiele, and Hiram E. Shorey gathered in Loehr’s office for what would become known as the first Rotary club meeting. 

Harris’ desire for camaraderie among business associates brought together these four men and eventually led to an international organization of service and fellowship. 

Each of the first four Rotarians, and Harry L. Ruggles, who is often called the “fifth Rotarian,” brought different professional perspectives to the organization. 

Rotary’s founder, Harris, was born in Racine, Wisconsin, USA, on 19 April 1868. He was raised by his paternal grandparents in Vermont and attended the University of Vermont, Princeton, and the University of Iowa. Harris, a lawyer, was Rotary president from 1910 to 1912 and a member of the Rotary Club of Chicago until his death on 27 January 1947. 

Loehr, a mining engineer, was born on 18 October 1864 in Carlinville, Illinois, USA. He was a Rotarian for only a few years, never holding office at the club or international level. But that first Rotary meeting was held in his office, Room 711 of the Unity Building in downtown Chicago. He died in Chicago on 23 May 1918.

Shorey, a merchant tailor,  served as recording secretary during the club’s first year. He was a Rotarian for only a few years, too. He was born in Maine, USA, in August 1862 and died in March 1944.

Schiele, a coal dealer, served as the Chicago club’s first president in 1905 and Rotary International’s treasurer from July to December 1945. Born in Terre Haute, Indiana, USA, in June 1870, Schiele attended Terre Haute Business College and served in the U.S. Army during the Spanish-American War. He was president of the Schiele Coal Company from 1902 until his retirement in 1939. He and Harris became lifelong friends and lived near each other on the South Side of Chicago. Schiele died on 17 December 1945 and is buried near Harris at Mount Hope Cemetery.

 

Originally from Michigan, Ruggles was a graduate of Northwestern University in Evanston, Illinois, and joined Rotary at its second meeting. He was treasurer of the Chicago club during its first year, club president from 1908 to 1910, and a Rotary director from 1912 to 1913. He is known for having introduced singing to Rotary club meetings. His printing company, H.L. Ruggles & Co., printed the first issue of The National Rotarian and the first Rotary songbook. He died on 23 October 1959, an honorary member of seven clubs in addition to his home club, the Rotary Club of Chicago. 

When the Rotary Club of Chicago published this member roster in October 1905, the club had grown to 21 members, including two honorary members.

The Connection of Rotary and Insurance in Uganda

The Rotary club of Kampala is a member of Rotary International and is club number 17287. It is the oldest Rotary club in Uganda having been chartered in 1957, and is one of the most respected clubs in District 9211 because of the way it is organized, the composition of its membership and the way it conducts Rotary business. The club draws its membership from the different professions in Kampala. The Rotary Club of Kampala is a company limited by guarantee. It is led by a Board of Directors who are given the mandate by the members to conduct business on their behalf. The Board is composed of Rotarians who are members of the Rotary Club of Kampala and are appointed by the appointment committee to carry out club activities. Our Shared Vision of healthy literate and wealthy communities in Uganda.

There is no way you can talk about Rotary in Uganda without speaking about the late Rotary International (RI) President Sam Owori. Below is his tribute from the Rotary website back in 2017.

The Rotary flags in front of Rotary International World Headquarters in Evanston, Illinois, USA, and Rotary offices around the world fly at half-staff this week as friends and colleagues mourn President-elect Sam F. Owori, who died on 13 July from complications after surgery. 

With an engaging smile and a calming voice, Sam put everyone he talked to at ease, says Hilda Tadria , a member of the Rotary Club of Gaba, Uganda, and a close friend of Sam and his wife, Norah.

“I call it the ‘Sam Smile,’” says Tadria. “It made him very approachable and easy to talk to. I think his smile is one of the things Rotary and his friends will miss most.”

Sam, who had been elected to serve as president of Rotary International in 2018-19, would have been the second African Rotary member, and the first Ugandan, to hold that office. He joined Rotary in 1978 and was a member of the Rotary Club of Kampala, Uganda.

“No matter the situation, Sam was always upbeat, always joking around and putting everyone else in a good mood,” says Tadria.

One of the admirable things about Sam, Tadria says, was his love and devotion to his wife. They met in primary school in Tororo, Uganda. Sam described Norah Owori as beautiful, well-educated, and full of character. 

“He adored Norah and always put her first.” Tadria says. “They were best friends and partners for life. It was very sweet to see them together. They never left each other’s side.”

Sam was highly respected in Uganda, Tadria says, for his high integrity and consistent ethical standards. Those qualities, she says, are important in a Rotary president. “He was a man everyone could trust.” 

She adds, “He preferred listening to speaking. It’s one reason he was so well-liked.”  

Like many members, Sam was invited to Rotary by a persistent friend. “I did not want to go,” he cheerfully acknowledged years later. “I had no interest. But I had respect for my friend, so I went. And when I got there, I was in shock. The room was full of people I knew.” 

The more Sam saw of Rotary’s good work, the more enthusiastic he became. He is largely credited with the tremendous increase in clubs in Uganda: from nine in 1988, when he was district governor, to 89 today. His friends called his enthusiasm “the Owori madness” — to which he mildly replied, “If it is madness, I would be glad if more people would catch it.”

Sam described himself as “an incorrigible optimist” who chose to see the best side of everyone and the bright side of any situation. Gentle in manner, unfailingly modest, and quick to smile, Sam is remembered as “Smiling Sam,” says RI President Ian Riseley. 

John Smarge, who was selected by Sam to be his presidential aide, called Sam a “rock star” among Rotary members. “In just the two weeks he was president-elect, you could see how much he was loved,” Smarge says. “The Rotarians in Uganda view him as a national treasure.”

Smarge adds, “He spoke with quiet confidence and simple complexity.” 

Sam brought an unyielding sense of right and wrong to his work as chief executive officer of the Institute of Corporate Governance of Uganda, to his previous work with the African Development Bank and other institutions, and to his work with Rotary. 

Sam, who was one of 15 children, attributed his deep ethical sense to his upbringing, and particularly his father, who had been a school principal and then a county chief in Uganda. “He was a very strict disciplinarian,” Sam remembered, “and when he became chief, he ran that county like a big school — with a ruler. He insisted that everything was done the right way.”  

Sam’s Rotary career spanned some of Uganda’s most difficult years, including the dictatorship of Idi Amin, who was deeply suspicious of Rotary and often sent agents to spy on Rotary meetings. “Sometimes people came as guests, and you wouldn’t know exactly where they were coming from or who invited them,” Sam said later. “We always welcomed them. We had nothing to hide.”

Prominent Ugandan Rotary members, including Sam’s own manager at the bank where he worked, were picked off the streets by Amin’s forces and killed. Many Rotary clubs closed and most members withdrew: from a high of 220 members, Rotary membership dropped to around 20. 

One day, Sam recalled, a member was taken right in front of Sam’s club. “We had just finished our meeting and were standing in front of the entrance of the hotel. He got picked up right there in front of us. Two guys threw him in the truck of a car and we never saw him again.”

Undeterred, Sam was back at his meeting the next week.  

An avid learner, Sam held a graduate degree in labor law from the University of Leicester, England; a business management degree from California Coast University; and a management graduate degree from Harvard Business School. 

He served Rotary in many capacities, including RI director, trustee of The Rotary Foundation, regional Rotary Foundation coordinator, regional RI membership coordinator, and RI representative to the United Nations Environment Program and UN-Habitat. He was a member or chair of several committees, including the International PolioPlus Committee, the Drug Abuse Prevention Task Force, and the Audit Committee. 

Sam and Norah became Paul Harris Fellows, Major Donors, and Benefactors of The Rotary Foundation.  

Sam is survived by his wife, Norah; three sons, Adrian Stephen, Bonny Patrick, and Daniel Timothy; and grandchildren Kaitlyn, Sam, and Adam. Condolences can be addressed to Mrs. Norah Agnes Owori, c/o Institute of Corporate Governance of Uganda, Crusader House, Plot 3 Portal Avenue, Kampala, Uganda or via sam.owori@rotary.org. 

“Optimism is what brings us to Rotary. But Rotary is not a place for those who are only dreamers. It is a place for those with the ability, the capacity, and the compassion for fruitful service.”

Sam F. Owori, 1941-2017

The story of Insurance in Uganda is very much like that of this great Rotarian who was only lost the battle to dear in the year he had been elected to the highest office in the Rotary International echelon.

Being an insurer who only just joined Rotary in 2019- the Inspirational year under the arms of PP Rtn. Adrian Rutaroh of RC Bugolobi, and became a beneficiary of insurance a year later on 13^th March 2020 when I underwent a head surgery at Case Hospital, I felt that this connection was worth being written about for the sake of institutional memories.

 

 The Insurance Story since 18^th Century

Since the 18th century, building insurance on solidarity, business acumen, and the logic of calculation has proved an almost unbeatable business idea. It was to conquer the world over the next centuries.

Trade and emigration became the two most important enablers for creating a global insurance safety network.

As every history, that of insurance has been exposed to challenges. Many were inherent to the industry. Some large catastrophes proved too big to deal with for some companies. From the San Francisco Earthquake in 1906 to Hurricane Betsy in 1965 or the attack on the World Trade Center in 2001 the industry had to cope with unexpected enormous losses. But challenges also came from the economy and its recurring crises which at times caused bigger losses than the worst insured catastrophes. Also monetary issues caused difficulties with floating exchange rates and fluctuating interest rates.

 But overall the insurance industry has proved remarkably resilient to all these challenges. Even in the recent crisis insurance was less affected than other industries. A long history of prudent reserving and risk awareness had taught insurers to act cautiously.

In antiquity, risk was often seen through the lens of fate and met with acceptance rather than defiance. Protecting against misfortunes was perceived as tantamount to interfering with divine providence.

For millennia, prayers, pilgrimages and donations outperformed insurance premiums. Indeed, as late as the 19^th century, insuring against death was likely to arouse controversy among clerics.

But there were acceptable ways of alleviating losses, such as sharing risks within social and business communities.

Risk mitigation based on solidarity was widespread among guilds, trade associations, and village communities.

Most seafaring nations distributed cargo onto different ships to hedge against storms and pirates while fraternal organizations provided ex-post, and thus morally acceptable, forms of solidarity.

Spreading risk in such a way had its limits, however, and as a business model it faced many difficulties. Ship owners sailing the same route would often experience accumulated losses, as would certain communities, such as mine-workers.

A single disaster could far exceed the capacities of a burial club.

Also, early forms of mutual insurance, whereby premiums were paid ex ante, lacked the sophistication of modern enterprises. Operating costs had to be financed out of members’ contributions and hardly any such societies had ways to invest the capital professionally. For modern insurance, spreading risk and managing finances was to become vital.

One more element, however, was to be at least as influential. 

In 1654, the French nobleman Chevalier de Mere was vexed by uncertainties in his gambling pastime. He wanted to know what the chances were of rolling a six in a certain sequence. The mathematicians Blaise Pascal and Pierre de Fermat used an old pyramid of numbers and eventually were able to prove that a mathematical probability could be determined.

This triggered a revolution in the development of probability theories and mathematicians all over Europe cooperated and applied their findings to calculate life expectancy.

This attempt at predicting the future was in direct opposition to Church doctrine but, ironically, it was the Church whose mortality tables provided some of the input used in those early probability calculations. Mortality tables were often the work of clerics who wanted to discover the role and plans of a divine creator and prove the clear regularities and divine order behind the apparent randomness of mortality.

Life insurance was slow to adopt the new science. Various forms of annuities prevailed, resembling gambling more than assurance. For some time so-called “tontine” schemes, named after their creator Lorenzo Tonti, had enjoyed great success, especially in Italy and France.

Subscribers could buy a share in a kind of life annuity based on the mortality of an appointed nominee. With nominees grouped by age range, interest was shared out and paid to subscribers annually.

When a nominee died, the associated subscriber’s share in the annuity became void, and the remaining subscribers within the age range received an increased share of the interest. Many tontines were fraudulent or badly under-subscribed and eventually were turned into simple life annuities.

It was only later in the 18th century that life insurance was put on a healthier footing. James Dodson, a 45-year-old English mathematician, was refused insurance because of his advanced age.

This annoyed him so much that he searched for a mathematical solution in order to form a more equitable base upon which to calculate premiums as a percentage of life expectancy.

This principle was to be adopted by the English Equitable Life Assurance Society in 1766. On this basis, the Welshman Richard Price later developed a cost and accounting model. In 1774 he calculated profitability in life insurance or the Equitable Life based on current and expected mortality, so that the current state of the operations could be assessed more precisely.

From then on, life insurance no longer relied on speculation. 

The Age of Reason or Enlightenment of the 17th and 18th centuries provided the grounds for accepting actuarial science as a rational means to conduct better business. Insurance, and especially life insurance, resonated with the search for laws, the statistical recording of natural events and the calculation of future developments. Behind this innovation was the conviction that the world, and its possible future states, could be predicted and computed.

Insurance was thus an ideal laboratory for enlightened business ideas. The process of collecting different types of institutional and personal information and using underwriting to transform it into quantifiable costs was important. It created a vital counterbalance to the new and potentially destabilizing forces that were transforming the division of labour, urbanization, and the economics of trade.

Insurance also helped money become the means of communication within the economy and contributed to more and more problems being expressed in terms of costs and time.

Not all cultures adopted such thinking from the start. In Southern Europe, it took a catastrophe to change the perception of risk and the views on destiny. The Great Lisbon Earthquake in 1755 challenged the traditional interpretation of divine omnipotence. Almost the entire city was destroyed, including churches and municipal buildings, but, much to the concern of many survivors, the red-light district was left intact. How could a benevolent God allow this, and why did an all-powerful God not prevent it?

Was mankind really meant to take destiny into its own hands? Rational thinkers were increasingly seen to be on the winning side of the argument, and although the Earthquake did not immediately boost the idea of insurance in the South, it gave rise to modern seismology. 

In England it was the Great Fire of London in 1666 which had changed public opinion. Hardly any of the 70,000 destroyed homes were insured.

One Londoner, Nicholas Barbon, made a fortune out of rebuilding the city and then turned to insuring the houses.

His main motive was not solidarity but business, pure and simple. His rational approach and his experience as a banker and mortgage provider made him realize that his insurance company needed to be built on a different financial foundation, and so, in 1681, he created the first known joint stock insurance company.

Shareholding was to become essential for modern insurance as it allowed the separation of operating capital from risk capital and provided funds to expand business into new lines and beyond the home market. 

The immediate success of such joint stock corporations was, however, dealt a significant blow as it led to speculation and subsequently ruin, as happened in the South Sea Bubble in 1720. The rational business ideas of the Enlightenment also tempted many investors to abuse the sound concepts of insurance to bet on the most unlikely risks, such as the outcome of wars, the danger of dying from excessive consumption of gin, or the date of birth of heirs to empires. The government subsequently banned some forms of insurance. A ban on reinsurance had already come into force in 1746. Still, it seemed there was an inevitable logic in developing insurance further.

The economist Adam Smith praised it as a rational invention and even a moral obligation. Not to insure oneself he considered a “thoughtless rashness and presumptuous contempt of the risk”