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INSURANCE COMPANY OF TEXAS
INSURANCE COMPANY OF TEXAS. The Insurance Company of Texas was founded in Dallas in 1950 as a fire and casualty firm by Ben Jack Cage and became the most spectacular insurance company failure in the state's history. The thirty-three-year-old Cage established the firm with a $200,000 bank loan. In 1951 the Texas State Federation of Labor and representatives from hundreds of local unions agreed to purchase controlling interest in the ICT, which was to be managed by Cage for a 15 percent cut of the premiums. This "new plan" of management and labor in business was supposed to be operated primarily by and for union members, with policies sold at reduced rates. As union leaders continued to sell stock to thousands of union members, Cage drastically expanded the operations until 1954, when he controlled a bewildering network of seventy-four insurance, investment, and miscellaneous companies with an alleged $19 million in assets in twenty-three states. Responding to rumors and fears, the state federation's executive board called a halt to the empire building in December 1955, soon relieved Cage of his management contracts, and futilely attempted to salvage the company. In February 1957 the Texas Insurance Commission declared the ICT insolvent, with a nominal shortage of about $1 million. Legislative and grand jury investigations uncovered mismanagement, embezzlement, and attempted bribery of insurance commissioners. Cage fled to South America in 1958. In 1959 he was convicted of embezzling $100,000 from the ICT and sentenced to ten years in prison. The investigations into the collapse of the ICT and other insurance firms were followed by a strengthening of regulations and laws governing the Texas insurance industry.
BIBLIOGRAPHY:Austin American-Statesman, September 9, 1979. Dallas Morning News, April 17, 1953, November 23, 1975, May 19, 1979, October 7, 1982.
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The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.Handbook of Texas Online, George N. Green, "Insurance Company of Texas," accessed April 24, 2017, http://www.tshaonline.org/handbook/online/articles/dgi01.
Uploaded on June 15, 2010. Published by the Texas State Historical Association.