The Cincinnati daily star. [volume] ([Cincinnati, Ohio]) 1875-1880, 1878-06-10
Government Supervision of Life I'm
SMraMce Com paMies.

The uncertainty of life and fortune has
made life insurance necessity, and expert
ence iustiGes the wisdom of its principles.
Sixty million dollars are being paid annu-
ally to policy holders by the life companies
of this country for death claims matured
endowments. dividends, ETC., and the bene-
fetal effects thereof can not be estimated.
Not only the widow and orphan are provld-
ed for, but also the dependence OF old age.
During the past few years of financial de-
preston there have been failures of life,
companies resulting in an average loss to
policy holders of about 1 per cent. of the
total amount invested by them. which is
very small ratio as compared with that re-
allied by any other institutions or invest
ments. An investigation of these failures
does not show the causes to have been due
to any defect in the principle of life insur-
ance, but entirely to mismanagement, such
as investing in railroad stocks and other
speculative securities, extravagant expendi-
lures, careless selection of risks, and failure
to hold sufficient reserve fund.
The late official examinations OF certain
life companies showed that they had for
years been making false statements OF their
financial condition, and these statements
were made official by being published by
the Insurance Department. Such companies
ooohiSA Va
in the hands of receivers, and their confd-
ing policy holders as naturally lost conf
dence in State supervision, while the real
difficulty was in the State laws, which only
allowed the State official to examine life
companies "when he should have good rea-
son to believe that they are unsound.' The
fault was in not making it the duty OF the
Insurance Superintendents to examine the
companies at stated periods in the same
manner as national banks are examined.
| A national insurance bureau should be Gre
ated by Congress, to supervise these great
trust corporations, but until that is accom-
plishcd, it becomes the duty of each State
not only to encourage savings by life lnsur-
ance, but to protect by stringent legislation,
the interests of policy holders. The late
Ohio Legislature has taken the proper step
in this direction, as previously announced
in these columns. 1t enacted a law restrict
ing the investments of regular Ohio life
companies to government bonds Gncluding
State, county and city,, first mortgages upon
unincumbered real estate worth double the
amount loaned thereon, exclusive of build
ings and loans upon their own policies, not
exceeding the reserve value thereof, also re-
curing a reserve fund to be held upon 4
per cent. standard as in Massachusetts,,
which is the highest in this country.
The new law also requires the Superin'
tendent of the Insurance Department to ex-
anime annually each regular Ohio life com
pany, and ascertain the correctness of its
last annual statement, and also that the in.
vestments have been made according to law.
Under this law it will be all but impossible
for an Ohio company to fail, and it is to the
credit of the State that it has been the first
to enact such stringent, though wise
measure. The confidence of the public ir
life insurance, after being SO severely tried
by the shock of last year, is being rapidly
restored, and those now seeking its protec
ton will be inclined to patronize Ohio com
panies. -