, 1872-12-14

doTn1cnt policies. 4nls announceuent mas pro-
duced intense e<itcment in life insurance cir
cles, md varn:ontroversy is now going on,
the object Of vEh seems to be to compel the
Mutual Life retract and withdraw it's nn-
nouncement. hreo gentlemen, n,-aossrs Elizur
Wright, shepsrd Romans. and D. P. Fackler,-
well known insurance business as consulting
actuaries, h,e Published card in which they
pronounce 70 proposed reduction of rates ns
"unwise, ;dcient in security, unjust to exist
ing policyolders, prejudicial to their rights and
interests, nd deserving our unqualified disap-
proyal."H is proper to state, however,
that the gentlemen do business for all insur-
emp1oilent upon the patronage Of the compa-
MES. STILL their regulations are deservedly
high. It is also stated that one Of them, Mr.
Homls. was for many years actuary Of the Mu-
tua1ife, and that the severance Of his relations
witthat Company was the result of unpleasant
difrences Of opinion between him and tho
| prent management. II wo can correctly gather
II facts from tho yoluminous and wordy publi-
cions on the subject, they are substantially
fese: That the Mutual Life, of New York be-
an business upon a most careful and pruden-
ial estimate. It established it's premiums,
which, taking the ordinary tables Of mortality,
hnd estimating the rate Of interest on invested
money at 4 per cent would yield, after pay
ing expenses, profit, and afford unqueatloncd
security to the insured. The business was
very large the actual profits were greatly in e1~
cess of the estimate the rnte of interest was
one-third greater than they had assumed, and
tho losses on selected lives fell far short Of
the losses based upon tables OF Average NOR
telity. Under these circumstances, the diVl~
dends or returned premiums to Insurers grew to
such proportions that the Company, some years
ago, reduced its rates. The increase Of busi-
ness, however, the high rate of interest on in
yestment, and the caro taken in risks, soon pro-
duced another, and, what WAS considered OK
cessive, dividend. The Company, therefore,
about five years aso, With the approval and By
tho advice of 1Ir. Homans, its then actuary,
made another and larger reduction Of itB rates
Inc a1IA8 84EAGAlbO u SAClEoa NA'A
ness Of the Company since the second reduction OF
rates, the Company now propose tomake d third
reduction, taking care to retain margin OF pre-
MUM and Of Investment to render any loss to tho
insured, even under any extraordinary season Of
pestilence and calamity, an impoaaibllity.
The three incidents to life insurance which
are Of the most importance to the insured are !:
l, The rate Of insurance; 2, the annual percent
age Of surplus; and 8, the percentage Of ez-
penditure, besides losses, to the amount OF pre-
uiums received. The last of those incidents
goyernB, to a great extent, the former tTo The
company must charge rate Of insurance that
will, in addition to covering the chances OF 1oss,
pay all the expenses involved in salaries, agents
commissions, and travelling expenses. The
company whose expenses for these purposes are
60 per cent of its receipts, must Of necessity
charge higherra rate Of insurance than company
whose percentage Of expenses is from 20 to 2i
per cent can afford to take the same risks for.
| The larger the business Of 3 company,-f it be
| weu and economically managed,-the less ought
to be the percentage OF it's earnings distributed
among ita own officers and agents. The New
York Mutual Life claims that it can afford tt
return to it's insured dividends of 40 per cent
or, it can reduce to all new customers the rate o.
insurance, which cannot be done by companies
which distribute from one-third to one-haH the11
| annual receipts from premiums among then
own officers, clerks, and agents.
During the last ten years there have beer
several new life insurance companies started
which have begun business by making 3 reduc'
ton of rates from the old standard tho specla
feature Of their business. Several OF these com
panies, by saving in tho item Of e1per
diture for salaries and commission
to agents, have been able to give their custom
ers well-secured insurance at less rates thai
they could have done under the system Of ex
trayagant expenditure for new business. seVer1
other Of the old and long established life com
panies have from time to time voluntarily reduce
their rates Of insurance, and this has been don
without attracting any special attention, c
creating any apprehension or alarm. Not one c
these companies has lost credit or standing; O.
the contrary, the careful, economical manage
ment which enabled them to mako the reductio
of rates, being continued, has, with the increase
business, tended to increase tho aggregate pro
its, and the ultimate security Of the insured.
An attempt has been made to excite an alar7
among the poicy-holders OF the Mutual Life, Q
. tie ground that the new insurers will obtai
policies at less rates than the old ones hay
| paid; but it is to be remembered that the gres
bulk Of the present policy-holdors in that Con
pany are themselves policy holders under one
: both of the previous reductions of rates, an
that no mora ia offered to new insurers tha
| present policy-holders are now enjoying to tt
exclusion Of tho holders Of policies under tt
original rates.
One effect Of this controversy will be to dra
the intention Of the public to the condition
the various companies. Insurers will probab
inquire, What is done with the premiums tht
nay7 How much OF each hundred dollars iB il