Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1879-02-11
Life Insurance Bill.
AUGUSTA, Feb. 10th, 1879.

AUGUSTA, Feb. 10th, 1879.
To the Editor Of the Kennebec Journal:
A bill has been introduced in the legislature
which among other things, proposes TO make
the statements of applicants for life insurance
simply representations and not warranties.
In other words il forces the Life Insurance
Companies, if they desire to issue any more
policies in this State. to do so on a very inse-
cure and hazardous basis. Whether good and
responsible companies will continue to issue
policies in this State under such law is very
doubtful but should they do so, what must
be the effect upon the present policy holders!
In order to make it reasonably certain that n
life insurance company can fulfil its oblga-
tons, two things are necessary.
First, that only sound lives, with no heredi-
tary faint should be taken, and second, that
the interest on the reserve shall net the COM
pany at least per cent. interest. Now the
nature of the risk is always determined in a
great measure by the representations of
the applicant. A medical examination is a
very important safeguard, but it cannot fur
nsh all the information necessary. In fact,
the medical examiner himself relies in a
great measure upon the answers to his ques-
tons. Now under the proposed law is it not APP
parent that applicants may so misrepresent the
facts as to induce Life Companies to issue
policies on impaired or uninsurable lives,
when there is no penalty for such misrepre-
sentationf Many applicants are every year
rejected who are anxious to obtain policies.
and whose admission to membership would
be source of weakness to a company, and
tend directly to increase the cost of insurance
to old members.
One of the chief causes of the failure of
some of our life companies has been their ac-
ceptance of bad risks, and will this Legisla-
turc force our life companies to assume this
risk against their will or debar them from do
ing any more new business in this State? Will
it offer a premium for fraud and impair the
confidence now reposed in our sound life
companies, simply to make it easier for an at
toTney to collect resisted claim when the
record proves that only II per cent of claims
are resisted? Are there any petitions coming
in from the policy holders in this State PRAYING
for this legislation? Does any one complain
that our Life companies are not in haste to
pay honest claims even before they are due?
Is is for the interest of policy holders to pre-
vent their companies from successfully re-
sisting fraudulent claims?
II this proposition to do away with guar
anteed representations by the assured should
be proposed or adopted by any of the Life
Insurance companies, our Insurance COM
missioner if he did his duty would immedi-
ately rule them out of the State.
1t is not the amount of assets alone which
renders a Life Insurance Company safe, but
good management and adherence to we'll
established and fundamental principles. The
object of guaranteed representations is not to
enable the company to successfully resist pay
ing just claims. If this was so the proposed
law would be advisable not otherwise
Let our Legislature consider well before
they act on so important matter.
NJ. w. r.