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For Shanks, even that is not enough. Growing public desire for more security threatens his company with a new competitor far stronger than any within the industry: the U.S. Government itself, which is steadily expanding social security and other federal welfare programs. To compete, says Shanks, "we must give complete coverage—and I mean complete. We would like to give such complete coverage that there is no legitimate demand from the public for Government intervention. We would like to show that private enterprise can do the job. But to prove it, we've got to do it now."
Angry Argument. In ten years as boss of the Pru, Shanks has taken some giant steps along the road to insurance for all, has boosted the company's sales 165%, its assets 95%. He is a great believer in group insurance by which entire companies can insure their work force for far less per capita than the cost of insurance for an individual, will now insure groups as small as four. Pru is a leader in group "major medical insurance," which protects families against big doctors' bills (up to $10,000), has sold it to over 500,000 U.S. families. He pioneered the "payroll budget plan," which gives policyholders 33% discount if they have premiums deducted from their paychecks.
Last year Shanks launched his biggest innovation: family insurance for as little as $10.90 a month. It covers the lives of an entire family—father, mother, children—under the same policy, provides benefits of $5,000 for a 25-year-old father, $1,000 for the mother and up to $1,000 for each child more than 15 days old. In the first four months after the plan started, 250,000 families signed up for $1.5 billion worth of the new insurance, made it by far the Pru's bestselling policy.
Shanks touched off the angriest insurance argument in years with his proposal for the "variable annuity" (TIME, July 2), which Shanks maintains would help protect retired policyholders against the rising cost of living by putting 50% of each annuity fund into common stocks.
The variable annuity has been heavily criticized. President Keith Funston of the New York Stock Exchange fears that it may become a tax dodge because insurance companies are exempt from the capital-gains tax, therefore common stock investment might become concentrated in insurance companies. President Frederic W. Ecker of rival Metropolitan Life argues that it will destroy public confidence in insurance investments. At a recent hearing, Ecker snapped: "I don't want to be answering letters from policyholders which say: 'Last year you paid me $100 a week; now you're paying me only $80 a week.'" Answers Shanks: "I believe that people will lose more confidence in us if we fail to give them some protection against the fluctuating value of money."
Twice since 1955, Shanks has tried to get the state of New Jersey, where the Prudential is chartered, to pass legislation permitting the Pru to sell variable annuities. Twice he has failed. This year he will try again.
Billions in the Reservoir. Such an unceasing sales campaign is only half of Shanks's job. The other is investing the Pru's vast wealth.