The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-05-18
Eject Of Legis7ation On Insurance Ceuas
panies.


the question of Legislative interference in re-
gard to our life insurance companies, and the
recent entire failure, in the State Senate, ofthe
only bill which perhaps embodied any really
good features bearing upon the management
Of these companies, convinces us that our law
givers at Albany have yet much to learn before
they can master the subject.
1t is true that this bill, which was introduced
by Senator Bradley, vested more power in tho
head of the Insurance Department than we are
accustomed to see given to any one man In this
country; but had it passed it would at least
have relieved the public mind and the compa-
MES themselves from the uncertainty which
necessarily exists when so many have hand
in directing the law.
The insurance code Is already stringent
enough In this State and in the State of Massa-
chusetts, and offers strong contrast TO the
condition of the law that governs the insurance
companies Of Great Britain. In these States
jealous watch is maintained, requiring sworn
annual statements from all the companies and
a strict compliance with the statutes. 1t is only
in those cases where the affairs Of o company
are on SO limited scale that the occurrences
of a few months may create disaster that any
danger is to be apprehended.a
In the requirement that much larger de-
post should be made with the department by
all newly organized life companies direct
blow was aimed at the establishment of such
institutions by irresponsible parties. This in
itself was an excellent feature. We cannot,
however, help regarding life insurance as still
in its infancy, and, as experience is the best
teacher, we feel that Improvement is not to be
made by hampering with too much legislation
the companies engaged in the business
So far the system has worked we'll when
conducted with fidelity. But as no law can be
framed which will entirely protect the COM
respect to the business of life insurance COM
pany or that of any other institution in which
trust must be placed, we come pretty much to
the conclusion that men must judge for them
selves of the integrity Of those into whose
hands the administration Of such enterprises is
Insurance Company and other similar COM
panies have met with disaster in consequence
of malpractices, it must not be inferred that
no men are honest, or that it is the fault OF
existing laws that the community has been
deceived.
The insolvency Of life company will arts,
from any one of the four following causes:-
First from on excessive expenditure in OBJ
tanning or conducting the business second.
from the declaration OF excessive dividends
which the profits do not justify; third, from
loss on investments, and fourth, from an ex-
cessive rate of mortality.
Mr.. I. B. Sprague, M. A., Vice President
of the Institute Of Actuaries, in London,
says, in abiding to these four causes,
''there seems little doubt that the sys-
in preventing insolvency from the first
of these causes. If the expenditure Of
an Office has been excessive forNa number Of
years it will be observable, year by year, in
the reports made by the Insurance Commits
sioner." Mr.. Sprague adds that ''simlar re-
by the declaration of excessive bonuses" or
dividends. We have quoted the words OF Mr..
Sprague, inasmuch as he is leading life in
surance authority in England, and because
they accord with the result of our own Obser.
walton.
As regards loss on investments, this depends
in great measure upon the watchfulness Of
the Insurance D apartment, the simple duty of
which is to see that a company's charter has
not been violated nor its assets placed in IN
available securities. Excessive mortality will
depend upon whether q company, either from
fraud or from ignorance, has accepted to .
dangerous extent proposals on unsound lives,
or has accepted at inadequate rates proposals
on lives exposed to extra risks from residence
or occupation. This can always be deter
mined by reference 10 the annual
statements made by every life company in the
State and published by the department.
As much protection, therefore, as can DO
reasonably expected, is now given to the pub
lie by our insurance laws, if these laws are
faithfully administer ed and a proper watch
is kept on the proceedings Of our insurance
companies. It then becomes the duty of the
public to see for themselves to the honesty as
well as to the executive ability that dis
tinguishes the management OF a company's
affairs. .
In the case of the Knickerbocker Life Insur-
ance Company, it should be reassuring to
know that certain vague complaints indus
triously circulated Of late asainst this old and
very popular company have been slenced by
the official report Of Mr.. G. W. Miller, the
"i"ilant and energetic sunerintenden! 81 the
Insurance Department OF the o.~-.
York. After prolonged and thorough
Knickerbocker has honorably and promptly