New-York tribune., 1882-03-06
INSURANCE RECEIvERSHIPS
ARISES To RE INVESTIGATED.

an and tIo JnVpafI IunfIOn
has started in regard TO the management OF lnsOl-
vent life insurance companies, with view OF pro
yiding remedial legislation, have created wlde
public interest in the matter lRiBuME liz
has called upon number OF promnenI lIe
insurance to obtain their views on Lle suoyoto
generally, and particularly as 10 the pesu way IT II
wind ND the business of an insOlvent company. ii.
b. HYDE president of the Equitable Lire Insurance.
Company, answer to inquiries as to MS experience
and views, said -, ,u;1
companies NV practice has fortunately Deeh WIN
those which have been successful But OF G0uIso GS
have watched carefully the progress OF al ne III
surance companies during the past thirty years,
whether those which have prospered or those whcn
have failed and have strong convictions as to now
the business should be conducted"
"What are your conyctionsf" inquirer INC Io-
porter ,,,. ,ooo oo,nnonv
whose sOlvency is only slightly impaired anu wR1se e
assets are frstcass, might reduce the amount Oh n9
insurance each policy so that the company wota w
have surplus and be able togo on with It's Dusi-
ness again. think law that would enable the
superintendent to do this, without the laborious
task of obtaining the individual consent OF the poi
icy-holders, would be wise one" NIL. o..
But in case the company has not sufficient as
sets to make that mode of settlement Desirable
what thenW -, ,,L
considered mpO. sbe to restore 1t again 10 d SOL
vent condition. and its remaining assets are good,
II might be well to insure the remaining risks LOT
an amount which the assets would Duy III % s%o,Ie %
vent company, provided any company couid oe
satisfied that the risks in the first place had peel
taken with proper care In case OF disastIUs % in,i
ure the only remaining thing Is TO vino nP te
pany and return the assets to Iuo poi'J ''
p" Would it, in your opinion, be desirable thing
to place such companies III inc cha 30 Vi Vi0 ~
ance Department r. -, - , aor
~ think all insolvent companies should De uhder
the exclusive care of the superintendent OF llSul
ance of the State where the companies are IocaIeu
and of the Attorney General, and that their powers
should be increased for this purpose A.;
"Do you think we have passed the perlOd Oh uls-
astrous failures In life insurancel"
During the flush times that succeeded the war,
there were thirty-egbt companies organized III lhis
State, and only seyen OF tnem are now wv T5e fa
ures have occurred among companies wnlch naYe
BEEN in many cases, managed by persons P5
enced in the business and before the com % n,
attained any very great size. Inc PROMINENT Son-
nanies in this country are conducting their a1arS
successfIllly and to-day as solvent as any n5
tutions of a commercial character In the wOrld
having all of them large amounts OF surplus, consld
erinq that they would receive only per Cenu tulo
interest on their investments All new ne lhsuI-
ance companies must In their INFANCY, from tlio
verv nature of the business pass through what may
be called dangerous period and 1t Is during InIs
period that faIures have taken place. pu thi tieGr
companies have passed what may De terineu theh
majority. no failures have ever occurred ainohe
them in this country" ,r,.1 c.o.oo
T 10 Insurance COMPANY said The proper way
10 wind ND an insOlvent life insurance company Ia
nv opinion is to have the outstanding polclesr Le
insured for their value III solvent p'enSSrment
A valuation of the assets of the lnsolvent company
could be made. and then pro rata value piacot peut
upon the policies. Policyholders VINO ulu hot MaliO
70 contInne their policies could take paid-np
policy for the amount. This would avolu an ,ne e
anglements delays, losses ana excessive cIoS Va
receiyerships, and give each pOlcy nG,uJi Gj
nron,nt relief solvent company transacting Dusl,
ness could hold the real estate or securltl9fS an anu
dispose OF the assets III 'he ooSU ino'iiou Iva
What do YOU think of the plan proposed oy
Senator Jacobs, to place lnsolvent companies IN IN
Gun rftntn
charge of the Insurance ouPeIIi'onuohO "N "
Attorney General ~ -, L
"Thaf would work we'll so long as We have non ION
ost ariaIs and experienced insurance men ike Mt.
Mccall in the Insurance Department. Inc gt glcaS
.Ihi Nth the receivership business Is the delects
in the laws which govern insurance companies, An An
nonest receiver cannot prevent eAccsSllS ' CoS.o'
i'm some cases while the opportunities loI SIiA
~ "a d;sbonrst man are almost mnumeraDle.
There is no uniformity in the laws governing ne
,nsnrance companies. Some are organized unueI
-" ~ Of IL 40 Others under the law OF 1925 ana
nthrrs under later and different laws III lnls way
Investments that are legal with one company "VTlu @
rioate the charter Of another, and rice r@sa, Inc
laws nave been continually patched up 10 sun GER
t,in interests For instance country lawyer comes
here to the loan OF some money "i make IT,
% the law prevents. lie goes 10 the LGYlsiatulo
and gets law passed TO meet ms case men e'Tn ~;
insurance company has special provisions III iCS
ontrncts which ali involve legal questions anu us
mites when it comes into the hands Oh Iecel'eL, Do
unfortunately some OF them uo Ltic e a 70 year
other kinds Of business, advances from year 10 yea,
ia changes i'm the business and methOds make tue
aiudiny ANN nm process difficult one
sThcn Won thInk the receivers are noI 81 muOH "
blame as the public DeIleEe9'
eric oroot trouble with the receivers is the law
and the Iawyers Every pOcyholder Interested IN
thc undivided assets is entitled TO be represented Dy
n LAWYER and this lawyer mas TO De served WIN
,'ntic every time there Is any litigation. Inc law
yers can easily make litigation, ana the GoSts ana
fees come out oil the receivers Iunds' Inc aiIoW-
anres made by law fOr torecloslng property
"hen great deal has to be ioreclOaed
amomnt Nom TO a very large sum in the aggregate;
The whole system - wrong anu noeuS 10 ne ediscu %
entirely, and the laws governing insurance conf
onucs shomld be coded and made to apply to all
companies alike. , ci,ioI l., oo,,,-or,o
,inr ON he same subject, said: "Somc of these re-
coivcrs seem to have been doing very queer Things
without any warrant of law. Inc law ltseH Is bad
enough but the Tlng that mas petii i.'cinS VI tiio
ossrts of these dcfunct companies Is lnilch worse
nm the law allows As to the best method OF re-
forming these abuses and winding up delunct COM
nnnIrs that is a question that needs more attention
H., | have given il In order to give a ma
turod opinion. The practice of paying intervening
LAWYERS out of the funds OF the utluhct companies
~ the root of most of the evils III the rtcelVeshps
A similar system was praCtscd when the surrogate
made allowances OUT of an estate 10 contestants OF
wills About every will was contested then. sur
ropate Calvin stopped the abuse 10 large extent,
and as a result the number of contested wills di-
minishcd amazingly. If tho judges would refuse
allowances 20 intervening lawyers a part OF the
evil as to costs of recevcr,hps would be abated"
DO YOU think ii would be "A good plan To rein
sure the outstanding policies OF an lns0Vent com
pany according TO thelr pro rata Nalue as hAeu oy
the assetsW .
"The question of reinsurance is fraughi with
great danger and has ruined every solvent company
that has undertaken il. Life insurance business
depends entirely for success upon public confidence.
II n company fails to get new business enough to
offset increasing death losses it is only question
of time when il will become insovent.
The doctors's examinations which secure
the rejection of diseased persons give good life
insurance company an advantage of from five TO
seven wears the ordinary death rate. That Is,
if the company should take no new RISKS or an in
sufficient number of good risks for period of from
five to seven years, then its death rate would reach
about the ordinary rate with the general public and
that would increase, not having sufficient new busi-
ness to offset it, until the failure ot the company