New-York tribune., 1874-03-06
INSURANCE LEGISLATION.


The Governor of Massachusetts has within a
few days sent to the House of Representatives
q special report of the Commissioners OF lnsur-
ance of that State. concerning project for
An entire change of the system of fire insur-
apce. The proposition, which originated in the
Legislature. contemplated the transfer of the
insurance business from private hands to the
State or tho Municipal Government The
report points out that a change OF such
radical character could only be justified by
some great exigenCy. The existing system has
been. as a whole, honestly and fairly CON
Quoted. The sharp competition OF business
mas kept the rates down to q reasonable profit,
and there can be little doubt that sell
sustaining system of insurance, conducted
by Government officials, would have
been far more costly. Should the Gov
ernment attempt to dispense insurance
at less than cost, the door would be thrown
open wide to fraud. The Commissioner justly
saws that under such a system, the moral
=" hazard of the business of insurance will at
"once assume appalling magnitude. Indeed
"it requires no stretch of imagination to ap-
"prehend that, under tho unprecedented
"tcmptation thus created, the torch of the
"incendiary would be kindled with boider
defiance in every hamlet and city through
"out the length and byeadth of the Common
wealth" Municipal insurance is even moro
Objectionable than that of the State, since
great fire would impoverish the municipality,
without, as in the case of Portland, Chicago,
and Boston, drawing from distant cities the
means of rccuperaton.
We arc glad to see these views thus plainly
and forcibly put forward, because the scheme
which they oppose crops out and Is advocated
| from time to time in different parts OF the
| country and the high rates now consequent
| upon past losses in great fires, being felt as
| burden by insurers, cause such projects 10 be
regarded with some favor But moments
| consideration should set them aside For
every dollar saved in insurance by such
system there would be two added in taxes. a
new army would be added to the hOrdes OF
| officials and oflice-seekers. Another step would
have been taken toward crushing private en-
| terprise and free Institutions; another step
| toward transferring to political control vast
interests and sums of money; another step
toward the vice of Europe. patcrnal govern
ment.
We view with suspicion the annual crop of
| v, v
Assembly on the nth inst, "To Simplify and
Regulate the Business of Life Insurance." IS
| a sample. The leading feature OF this bill Is
| a provision to compel companies to guarantee
a surrender value according to fixed scale Tor
| lapsed policies. The amount TO be PAID by the
| company upon surrender in any year during
the existence of each policy is to be indorsed
| upon it at the time Of its issue. Then there Is
a provision making it criminal oifenSe, with
a penalty of fine or imprisonment or botn, Tor
any person in the employ of a company to
receive commission, direct or indirect upon
any loans made by tho company. Finally,
&" it shall not be lawful for any life insurance
company doing business in this State to issue
| Z" any policy of insurance on life, when thelr
| aggregate risks amount TO the sum OF $780,
" 000, 900"
The first of these measures would hasten, by
compulsory legislation, change In the prac-
lice of life insurance companies. which will
probably be sooner or later forced upon them
by their own necessities. The business has
already passed through several distinct stages.
In its youth it had to struggle hard against
popular prejudice. Before tho war 1t had
developed into vast proportions. during the
war an immense number of policies lapsed,
and as a consequence certain companies were
able to pay unusual dividends to remaining
policy holders. This gave fresh impetus
to the business, and new companies sprang
I'D in every direction. Basing their hopes on
the experience of older concerns, they prom
ised through their agents large dividends. An
unhealthy business was thus created; men
everywhere took policies not so much because
they needed insurance as that they hoped to
make money by insuring When it gradually
became apparent that the new concerns could
not pay the expected dividends, many people
who had taken policies let them lapse before
they had begun to yield profit to the COM
panies Then came the present PERIOD in
| which the small concerns are winding up and
| being consolidated into the larger ones, and
the ranks of dscontented policy-hOlders are
| largely increased.
The Hon. Eizur Wright has frequently
pointed out in THE TRIBUNE the true remedy
for this dissatisfaction of polcy-hoders He
believes, and it certainly seems probable, that
policies which distinctly state at the time of
their issue, what they can be surrendered for,
wear by year, are farer to both parties and
would be moro popular with the public than
the blind, One-sided bargain which is custom
ary. If the public, in taking insurance, would
insist upon this guarantee, it would soon be
conceded 1t would be cause for regret if
the failure of measure of this kind should
detract from the growing popularity of the
sentiment which 1t represents, but to compel
the companies by law to do that which the
Duhlic does not yet care for enough to ask,