Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-07-26

balanced groupings under kinds aud ages.
If we had to give the present value of the
future net premiums, etc, it would entail
on Us an enormous amount of labor without
any compromising benefit, since the results
would have TO coincide with our reserves
on the net or pure valuation by groups.
Again, this society values its -partici-
pating policies on the same table as its par
ticipating, so that there is little or no neces-
sity for this reason TO make separate re-
turns of these two classes of insurance. We
mention this to show that concessions
could safely be granted without any inius-
tice to other companies, as the same LA
bility would be arrived at in either case.
First: In reference to your general QueS-
tons, we would state that the insurance
superintendent, as rule, are nominated
by the governors of states. They have TO
be approved, however, by the senate, which
affords, generally, an efficient check upon
the appointment of men against whom
there may be serious personal objection.
Should the superintendent of insurance au-
minister his office improperly, either to
further his own interest or that of any
party, the interests at stake are so vast
that the opposite party TO that in power,
combined with the force of public opinion,
would no doubt take measures that would
lead to his impeachment. Since
each state has the right to frame its
own laws on insurance, there can be lao
doubt that we are subject, from time to
time, to the introduction of many uuwise
measures, which would, if placed on the
statute book, become detrimental to the
business. These have to be carefully
watched and guarded against by insurance
managers. Their introduction, however,
emanates from either inexperienced or dis
honorable legislators; not from insurance
departments. In fact, the existence of the
latter, we believe, prevents much adverse
legislation.
. We believe that common standard of
solvency has been decidedly helpful rather
than otherwise to the assured, and has not
pressed severely on any company that has
been carefully and honorably managed 1t
possibly does make it somewhat difficult
for the establishment of new companies,
but it is not without its advantages, nor
does it hamper healthy competition in meet
ing the demand for insurance The eau
ton deposit of 100000 is sufficient bona
iide for the good intention of the promot-
ers, and Il compliance with the other de-
mands of the law checks or reveals lavish
expenditure. The capital is not considered
as Il liability in a test case of SOlvency;
therefore young company has chance to
get on its feet, if it be really needed but it
must be at the expense of its own capital.
If the law, at the outset, be considered 4
drawback, we believe its disadvantages are
more Cndn cOuuUefDd ldnceu DN the aDlDtN
to present obstacles to the floating of COM
panies simply in the interests of the pro-
moters. There are, it is shown by official
department reports, sufficient companies in
existence to meet the present demand, and
to afford full scope for wise, commendable
competition. When the necessity exists
for more companies, the present law will
not preclude their formation. This leads
us TO revert to the period about 1870 when
companies sprdng into existence like mush-
rooms, most of which came to grief
after few years. The business
was frequently unwiSely conducted,
arising from such keen competition between
weak companies. Larger credits were
granted the assured in the form of half
premium notes, than the business would
justify; commissions were greatly advanced
and agents were not held to such strict ac-
countability as they should have been.
These measures led 10 serious trouble, and
il would be rather severe TO attach all the
blame to government supervision. II is
true that some of the bankrupt companies
were permitted to exist when their condi-
ton was questionable, to say the least; it is
equally true that the insurance department
curtailed their career. Had there been no
supervision or compulsory returns, the mis-
chief would have been intensified and pro-
longed. The weak companies began to
break up about 1871, and continued doing
so for about five years thereafter. In the
whole history of American state supervis-
ion, we do not recall a single life company
that was fioated by mere spectators.
We do not think there is much danger of
! government standard causing or forcing
really solvent companies into liquidation
a company of this state cannot be forced
into liquidation till its assets fall below
that Of an American 4 per cent reserve
based on net premiums. This, or any other
net premium requirement, does not neces-
sarily mean actual insolvency as CONNER
cially understood; but the possession of
such reserve as evidence of conservative
management is regarded as absolutely eS-
sential
With respect to wreckers forcing solvent
companies into liquidation for the spoils,
we believe it almost impossible under the
existing laws. Take an extreme case:
About fifteen years ago there was an at
tempt TO reinsure sound company in an
other sound company by one who largely
controlled Doth. This was frustrated by
the intervention of the state insurance de-
partment, which found the company to be
solvent, entered its protest, and announced
its opposition to the scheme. The company
that was TO retire is a very prosperous one
to-day.
There was, at one time, an ambiguity in
the law as 10 the right of company to re-
insure. 1t was doubtless intended to allow
company to reinsure portion of any risk
IN excess OF Its maximum amount on n sim
gle life. Under it, however, blanket pol
icy was issued to cover the whole of the
risks of company. The courts, and addi-
tional legislation, have put stop to such
construction of the act, and no policy can
now be reinsured without the written con-
sent of the assured. Most of the receivers
appointed have been men with political in
fuence, guided solely by the hope of pecu-
MARY gain for themselves in the excessive
fees and commissions allowed for the clos
ing of bankrupt corporations, insurance and
otherwise. The scandals growing out of
such payments brought about rectifcation