The central Presbyterian. [volume] (Richmond, Va.) 1856-1908, 1869-04-14

is losing game to insure-that too great
ratio of the receipts from premiums goes to
fill the pockets of the officers and agents.
The statistics of the annual reports of the
Commissioner for Massachusetts show that
the average expense of life insurance poll
cy through life is only about eight per cent.
of the premiums, while fire insurance COM
panies which do an agency business pay at
least fifteen per cent. of their premiums to
agents. Suppose president of life insur-
ance company, after long and successful
career has by his constant energy and watch
fulness raised the assets of a company from
zero to ten or twenty millions land there are
several such instances in this city, is it an
extravagant estimate of his services to regard
them as worth from $4,000 to $4,000 a
year? The same amount of talent and in
dustry in the legal or medical profession is
as we'll or better rewarded. The care and
responsibility of building up such an i'm
mense business, of property investing such
immense sums and collecting the interest due
from them, the proper supervision of an
army of agents, clerks and solicitors; the
payment of losses, averaging from 81, 900 to
So, 600 day, requires mind of no ordinary
executive ability to see that these finances
are properly managed, and that all attempts
at dishonesty and fraud are promptly re-
pressed.
PREMIUMS AND ASSETS.
"The relation between premiums, assets
and the net cost of annually carrying the
risk on the life of the assured is very little
understood, and this want of information is
apt to lead to some misunderstanding to the
prejudice of life insurance. Suppose that
every building insured by fire insurance
company was certain to Be consumed within
forty years, it is easy to see that the rates of
fire insurance would be greatly increased, and
that the company would not only have to
make charge for their annual risk, but also
keep large reserve accumulating on hand
against the certain event of future confagra-
tions This is the principle on which the
reserves in life insurance are based. Death
is certainty, which to each Individual will
happen at an uncertain period, and in order
for the company to protect itself from ulti-
mate insolvency the premiums must be high
enough to enable the company to do business
for long series of years, and stiff cash
enough on hand to provide for all future
losses. The annual cost of carrying risk
or temporary insurance from year to year
is only about one-third or one. half of the an.
nual life premium, and the laws of this State
require the remainder to remain in the hands
of the company and be invested in bonds,
mortgages or real estate. If company sees
fit to invest part of the reserves in valua-
BILE buildings which will command high and
constantly increasing rent for years to come
is not this safe investment, especially when
we take into consideration the fact that every
policy holder in these companies holds a
mortgage on these buildings and the other
assets of the company to the amount of the
cash value of his policy? If individuals
find such costly buildings on Broadway q
paying investment, why should not corpora
tions?
STATE SUPERVISION.
"The State of New York and Massachu.
setts have acted very wisely in providing
public officers whose duty it is to regulate
and control the business of insurance.
They require deposit of $1OO, O,OOOin stocks
or bonds to be made with them as prelimi
nary to transacting the business within theil
respective States, and they also require al
annual valuation of all the policies in force
and sworn statements of the expenses, in
comes and general management of the severa
companies. This rule is so strictly enforced
that all unsound and unreliable companie
are driven from these two States, and is al
effectual guarantee against all wildcat com
panies. The published reports enabled ever.
one interested in life and fire insurance t,
examine for himself the standing and bust
ness of every company, and they have don
more to place our insurance companies in
sound condition than all other causes com
bined; and it is one cause of their unexam
pied prosperity and the confidence which tn
public repose in them. In England, wher
no governmental supervision over life insur
ance companies exists, we find that any seve1
men, without single pound sterling of pai
up capital, can organize life insuranc
company, issue policies, pay extravagant sal
! aries to officers, conceal the doings and con
dition of the company in the impenetrabl
mystery of silence, and after few years q
systematic plunder 60 into the maelstrom G
the Court of Chancery and leave their vic
tmized policy holders to shift for themselve'
Within the present century we find tina
t about 800 life companies have taken thi
course or been amalgamated with other CON
panies equally insolvent, until life insuranc
there has become synonym for Swindling.
1t is probably owing mainly to the Stat
3 supervision here referred to that the bus
= ness of life assurance in this country pr
= sents a contrast so remarkable to that her
illustrated in England. The American pul
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