The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1892-02-19


Of tneir affairs as show the Items Of Income and
| expenditure and as would enable the public TO
| judge OF the cost al which they are trsnsaetlng
! business.
COMMISSIONS.
In the light of the revelations now being made
| TO the public OF practices existing IN certain
great conf auies Il seems proper 10 Inform our
m, mbers that The commissions paid by this com
pany for business are strictly maintained at the
conservative standard OF former years. that our
contracts with agents do not give them a future
control over these commissions when an agency
ceases the remuneration for the agent ceases
and such commissions as are then Fixed upon tile
existing business OF that agency go 10 the new
agent 10 assist him in his work; we do not add TO
the cost of paying men who are at work for Us by
paying also men who have worked for US, after
they get through; ne do not submit 10 pay enoT-
nous commissions on new business In order TO
| let an agent who las got through working con
| tiuue receiving commissions on old business; we
have no contracts for future commissions against
winch advances" or loans" or "cOmmuted
! commissions" can be made and charged NJ TO
the agent tc make rebates" out OF, or pay alb
/ surd commissions aud brOkerages out Of, on
| business which VIII presently be Twisted" into
some other liberal company by tile same compel
| hive masures, leaving old members to pay for
/ the ambitious exploit. The resources OF this
/ company are not mortgaged to anybody.
l, is tue that in these days OF fierce enterprise
! aud competition It has not been easy Tor us 10
4 secure agents against the tremendous tempta-
/ lions held out by the Racers" But we have
/ been and are slowly getting men who believe,
with US that success IN life insurance means and
/ can only mean giving pure and absolute protec-
tlOn TO families al its lowest possible cost; and
that competitive methods worthy OF lottery
/ scheme are poor credentials for a company ask
/ Ing men TO commit 10 it the most sacred OF secu-
/ lar trusts.
! 50 the agents we have and get are true men,
| and lie business they get stays aud pays.
SUCCESS.
! Insurance is indemnity against loss. Il is and
/ can b made nothing else. To give perfect iu-
| demnity al the lowest true cost Is perfeci sue
/ cess; not a brilliant success nor one gratifying
! to an ambitious manager" perhaps but II is
the only success there Is In the matter, and any
thing else that is substituted for IT, however
/ brilliantly It may succeed for the lime being and
until IL has worked Itself Out, will ultimately
| come 20 nauEht
/ THIS fact is slowly coming to the light IN the
! case Of lie great
ToNTINE COMPANIES.
/ In order 10 'bo0m" their business they ceased
/ 20 teach men the sacred duty Of projecting their
/ families by lie insurance. aud began instead 10
show them estimates Of the profits thar might be
/ made OUT OF tie forfeiture Of protection. Their
! experience had shown that, IN their companies,
/ ont OF q thousand men Of middle age taking poll
/ cies only about oDe-thlrd would pay premiums
! for say wenjy years; about one hundred Of
! them would die but arly six bundled OF them
| would lapse give up paying. SO they proposed
/ that no one should have any dividends for, say,
/ ivy MY years, but pay his premiums n fun; that
1 II any one died lie should get the face Of his
policy leaving behind all the dividends his policy
had earned; and If any man lapSed-cOuldn't
o. F-s an. o. I,-rr o. "a,
dividends earned and the reserves on his policy
| al Jbe end Of the twenty years those who had
( been lucky enough TO live and ray through
shoUld divide up what the unlucky ones had left.
This was called "TOuliue Insurance; this
/ or a mod tic tiou Of IT, as 10 The amount for
! felted. is now usually called Investment Iusur-
! auce"
/ Il took nightly The estimated profits were
/ very large, and people did nor realize, aud per
/ haps some OF them did not care, that the profit
they might make was tie loss OF other meu and
| Of their. families, and that In order TO get
! chance al it they had 10 risk their own money
ana lie protection of their own families. Tie
reckoning day was far of and agents were
tempted by Tremendous commissions and By con-
tracts that allowed Of advances" and "cOmmu-
tat0us" by mOrtgagng the cOmpauy's margins
/ OF premiums for many years ahead. Business
/ increased 10 The most brilliant manner; such In
crease became the one criterion Of success. L
was hard for plain conservatives TO make head
against the swift rush Tie glitter Of big figures
/ and The rebates quite OyerboTe such sober facts
ss the multiplication table and the moral law.
But 10 order 10 get lapses aud fOfeItues
enough hey bad tc force tie speed. and to force
the speed they have had TO burn their own cargo.
They competed with each other for business By
Increasing rebates, and they competed for each
others agents by increasing commissions aud
bonuses, and this sort OF thing has gone on until
IL swallows up practically all Of the nrst pre-
miums, leaving nothing TO cover the cost OF IN
surancei the forfeitures to the Tontue or
investment fund are drawn on to pay death
losses and provide reserves in place OF the pre-
NUNS swallowed up In competition; lie settle
meBts of TOntne profits now being made are less
than one half what they were estimated al and
they are decreasing nearly every year; and yet
they ar advertised as results sufficiently tempt
| ing 10 warrant men Ia betting their own money
and their families protection TO get chance al
/ the diminishing pool Great as are the figures Of
surplus advertised by these companies, they are
/ less lhan haf what they were expected to be-
The SS2 settlements are at notable reduction
! OF those OF 1891. IN certain companies at least
! Eut hundIe eds Of thousands Of policies have con-
tribUJed their earned surplus and reserves,
which ought 10 have gone 10 protect families TO
/ pay the growing expenses and tile dwindlIng
! settlements.
! The mole lbeir business grows tie more their
| expenses must grow. and the greater must be
| the mortgage On The future by way OF "ad-
| vsnces," etc, TO come out Of policy holders
The managers Of lie great racers recognize this (;
and Will IN one breath they gOrlfy themselves
! over their great volume OF business, in tile next
they accuse each Of compelling The other to raise
! the commissions 10 keep agents from being
stolen, 10 enable them stl 10 steal gents aud 10
| keen up the rebates. Each c0nfesses the abSO-
Lutte necessity Of reform the last phase Of which
! Is the proposition 10 ask tie Legislature OF New
| York 10 interfere and forbid any Of them TO go
| beyond fixed limit Of amount al risk, so that no
! one can get ahead Of the others.
What mole startling suggestion can be made
! Of the tremendous strain which they ind them
/ selves under, and OF their own conscious inaDi-
/ Jy 10 reform II reminds one OF the d bauchee
! who asks 10 be Put under restraint until he can
recover sobriety and self-conlrol.
! So tie world learns again by slow and painful
experience that the dull, plain truin is true and
alone is abiding; ana that tie only thing IN In.
surance worth paying for, and the only thing
wOuh tying 10 get cut Of il, is insurance and
nothing more.
! CONDITION OF THE COMPANY.
The real strength Of tie company Is not fully
| stated IN the figures Of IT'S assets and surplus,
/ large as these are and certainly worth as they
are their full face. On the one hand, our assets
| are conseTYatyely valued; on the other our
! liabilities are computed by Tar stTicter stand.
aid and at much larger relative amount than is
| The case IN any other company. Our reserve la
bility OF all business written since APRIL 1892 is
| computed on the assumption that we VIII earn
! only per cent interest, instead OF per cent,
| as Is assumed by all other companies aud by
| the several State Insurance Departments. We
carry as liability, therefore. in reserve for the
| future protection Of our contracts, some $780,
| 600 more Than any other company would DO on
their present basis, and more than The law re-
qures; and this difference In our strength Ia.
| creases rapidly each year. When II Is remem.
| bered that many Of the contracts we make
to-day viii not mature for fifty, sixty or even
! seventy years hence, the importance Of baslng
them on rate OF interest that Is certain to be
earned all that time cannot be overestmated
| Nor can the forecast Of the chances OF adverse