, 1877-01-27
Life Insurance and Savings Banks

The Eastern press are making Il very
searching inquiry into the condition Of lif,
| insurance companies. with but slight regard
for age or repu,ed staniiDg. The New York
Herald says openly that it is evident tha. the
supervision over the affairs Of life insurance
companies required of the department by the
law for the protection of the insured. has
long been mere fare, R-Ports of some Of
rhe companies have plainly shown that they
were verging on bankruptcy yet the officers
whose duty it was 10 investigate the affairs
If such companies have permitted these sus-
piciOus exhibits TO pass unnOticed- The Her
G.d again says: Life insurance companies
and savings banks are provident institutions,
designed to benefit the dependent classes aud
not TO enrich their managers. The policy
holders and deposi'ors are tie real parties in
interest, aud they should be protected either
by an efficient supervision of such institutions
or by the courts" The Herald has certainly
stated what should be, rather than what Is
Life insurance companies and savings banks
their managers, and, with that end in view,
have been conducted with slight regard to
the interests of policy-holders and depusirors
There Is a common-sense view of the bnsi-
mesa which the public has not kept go strictly
before them as it might That view Is, that
money cannot be materially augmented in
amount by any legitimate manipulation by
which offers extra indueemets and expends
large Sums in pro, uring business, Is sure to
come to grief IN time from the operation Of
natural laws. 1t will use mp i's capital and
credit in the same way, and by the same
processes as the merchant who sys'eatically
sells goods at less then cost. The life iusur
auce is based on the principal that the train
money. Use it for hrm. and return it to him
with moderate interest. The insurance
company is not supposed TO give to policy
holders as body portion of their capital
BAT simply to put the money entrusted TO
them TO such profitable Uses that they can
return it to the original owner according TO
contract, and Yet make profit 10 themselves
by its Use. On any other principle than this,
life insurance and savings banks are palpa-
bic frand Bnr when the cost of securing
business and conduc' Ing it rise b-yOnd h
certain relation 70 the amount OF business
done, the path 10 bankruptcy Is fairly enter
ed upon. This is the trouble with SO meny
of our life insurance companies and saving-
banks. TIE expenses Of business are oat ct
legitimate proportion 10 profits. The Cont
mental Life Insurance Company recently,
collapsed, made showing as follows: Is
total premium income for 1919 was two mil
lion, one hundred and forty thousand dollars,
in round numbers, including notes, divi-
deuds, reconvertei additions and surrender
ed policies. The years disbursements by the
Continental were 500, 907, in such items as
commission, salaries of officers, medical and
counsel fees. rent, stationery and iucidrntals.
In other words it cost $Gl0 907 to handle
s., 140 900, without making any provision
for the ultimate payment of the sums en-
trusted to it, care. This percentage Of ex-
pense was so large that bankruptcy was in-
evitable. The business WIS not a paying
one, and if il was made profitable to Cfi ,ers,
agents and stockholders, it was at the ex-
pense of poiicy-holdsrs from whom the mil
lions were extracted. The present inVes;i-
gatIon into the affairs Of life insurance com
panies is not made with view TO break them
up, but to the protection of the public
against unsound ones. The principle upon
which they are based Is coed one. bat to
ensure beneficial results the utmost prudence
ami caution in their management beCOmes
necessary.-S T. CqH