The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1897-11-17
IMPORTANT INSURANCE SUIT.
Rule for Making Assessments by Mu-
tual Companies to be Tested.

Col. John w. Hinsdale yesterday,
speaking of the suits against the Mutual
Reserve Fund Life Association which
are pending before Judge Allen as re-
fierce, and which were heard before him
last week in Newbern, said that the char
acter of the cases has been misconceiv-
ed by the newspapers, and that what
has been published is calculated to pre-
ludice the association. He says that
the association is absolutely mutual, and
every member is an insurer as well as
an insured.
The plaintiffs in the pending suits are
members whose assessments have been
raised. They entered the association
many years ago at rates of assessment
winch were then supposed to be suftl-
cient, but which the experience of hi
teen years has demonstrated to have been
too small. 1'ne plaintiffs claim that the
action of the association i'll raising the
assessments were illegal, as contrary TO
the constitution and by laws and con-
tract of insurance and unreasonable.
They seek by their actions to recover
back the alleged illegal excess and to
enjoin its collection in the future. The
association rests the suits upon the
ground that the contract in express terms
make the constitution and bylaws
part of it. and that they expressly pro-
vide for amendments thereto, and give
to the directors , the right, III the fu-
ture, to alter the amounts and rate of
assessments, (meaning tie ratio of the
asSeSsments.)
THE foundation of the contract" says
Col Hinsdale, ais equality among mem
bers, that there is no equality, and no
INV Of n
the rate since they joined, the burden
of their insurance is cast, in part, upon
the new members. The rate of assess
ments was changed in 1889 and the as
sessments for all ages were nearly dou-
bled. Consequently those who entered
since that time have been paying much
more than their just proportion. In the
year 1894 those who entered b fore 1889
failed to pay the losses in their class,
by over $250,000. Tbs burden fell up
on the new members, who had entere1
since 1889. This was unjust.
I'm 1895 the Commissioner Of Insur-
ance for the State of New York made
thorough examination of the affairs of
the association and found the foregoing
facts to he true. As a remedy for this
evil, he required the association
to raise the rate of assessment of the
older members, those entering before
1889. TIE association accordingly, and
by authority Of the constitution and by
laws, raised the as ment Of each Of
such members to that Of a person whose
age was half way between the age at
date Of entry and the age on January
1st 1895. Even under tbs change, the
older members viii not pay to tie asso-
citation as much ms a member now enter
ing at TIE same age at which they en-
tered If they all live out their expecta-
ton of life.
The change Of assessment has been
almost universally acquiesced in and ap-
proved by the members old and new.
The change has had the effect to make
the ASSOCIATION stronger and safer. The
new members have felt that they are
being -.,,rly dealt with. and the old
members are satisfied because they
know that they suffer no injustice so
long as their total dues for life will nor
exceed the total dues for life of those
now entering the association at the age
at which they entered it,"