, 1877-01-02
LIFE.|NSURANCE.

10 thA Editor n Th1 Tribune.
CHICAGO, Jan. LIN THE SUNDAY TR1nCSE
"W. q. c." discusses the "Fatlure Of Llie.lr-
suranco Companies" mud concludes that the
legal restrictions thrown arounl the business
"nrc not sufficient to fully protect tho interests
oltile ro'!cy.holdcrs," and suggests as remedy
that the reserves or sclf-Insurancc deposits
should not be retained by the companies, but
he deposited ssiu the vaults OF the stato Treas
usy," invested In Government securities. "W.
o, c." thinks TINT the interest might be drawn
by the companies, provided II WAS without pref
ulice to tic rcservc. "Thc failure Of two prom
tncns companies recently" remarks your
correspondent, "has shown TINT there Is vast
difference In tho character OF available
assets when they arc required TO be converted
ss i Sas nexur ussa ossarIsd ~ 10 10 e. that ts
law does not measure tho solvency 1f Insurance
companies ns such, but simply as Trustees 0f
funds entirely independent ii insurance. the
sole function Of which Is to reduce tho insurance
liabilities they assunlci II Is admitted that tho
primary Ait! solo object for which ltfe-tnsurunro
buslnrss Is tho payment Of death losses. To do
this they collect from each pollCy-liOldCr, ut
stntcl periods. a sum whlrl. III tbs aggregate
will cuab,e them to make such payments. In
functions of life-lnrurance, which arc all uIn-
GEacel In tho collection OF money 10 pay aud tito
payment Of policies maturing 6y death, thcse
companies rtQuisu each l0Etey-Ao!der to de-
reserves, and to be- applied To the naysncMt OF
their policies whcu they bocunls clalins. THIS
resrryo has always been considered the security
for thu insurance which the company contracts
companies strangely enough. is not dster.niaed
by their abtty to pay death losses, hut by their
ability to Keep the scif-insurancG funds belong
Ing - their pollsy.bollcrs. The term ''acup" ls
10 uay claims; they n'ust be kept. 1t viii be
seen, therefore, that tho law simply pruyklea
III sxrcs. ot the eost 4 ti1ei. insurance, md
il they, ure properly kept. these fund. can
only bo applied to tho payment Ut
thu policies o,l which they wers contributed,
and no other, aud therefore the only security
holder = TO secure tbs payment OF 70 much u
his policy a ho lives to pay httnself, provided
thu COMPANY |. honest und keeps his money for
lin. Ii ailotls no sesur1ty that tho company
the Maryland lns,if.nee Commissioner IN hls
lato report, that no LIE company has ever failed
moi meet its current lfahllltirs,-but because IL
sls ,el!ey:hollers 8 pay shelE own policies, and
the nldlfional fuct that the two prominent cum
pantcs which recently fal!ed collected four times
thu amount OF their death.lossea during tbs
Isatl;lossea Up to thu tl!ue o! theL o!lapsr,
should be sufficient u call public attention to
the necessity Of providing some new ana more
proper test OF aolvency than ability to ksrp
tnooey not necessary in conducting tho insuf.
ancs part Of tbs business. Under The existing
statutes, companies that arc able to Pay aud ara
paying the!r current claims are sent Into tho
hands Of Receivers because they don't keep The
money they dU not need for that puEpoae. 1t
Eat 9S 70 ts
,in the State Treasury; but the question hlze
arlaes, Would IL not 10 still better II The policy
holders were permitted 70 keep thts money IL
thelr own poeketai II tho law requiring com