The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-11-28
SPLIT Up THE LAWS.
COMMISSIONER DEARTH DISCUSSES
THE INSURANCE LEGISLATION
NEEDED IN MINNESOTA
ONE LAW FOR FRATERNALs
Which Should Be Framed I'm Har.
mony With the Ideas of the Fra.
ternal Congress Another En-
actment Necessary for the Regu-
lattOn Of Life Assessment Com.
panfes-The Fire Business.

IattOn of Life Assessment Conn
| panies-The Fire Business.
J am In favor OF the passage Of an
insurance law governing fraternal So
! eieties." said State Insurance Commas
sioner Dearth yesterday, that will
meet the Endorsement Of the FraternaI
insurance congress. The men who con-
stitute that congress have the interest
| or the societies which they represent
| at neart, and I believe they are in
| rayof OF laws that will insure the
permanency Of their organizations
There Is no reason why fraternal So
cleties conducted on business principles
should not be as sound as other in
| surance companies
But in the matter of life assess
ment companies continued Mr..
Dearth, the fraternals should, IN my
opinion, be divorced from all assess
ment companies. They want a law in
Keeping with what will ensure their
future permanency and solvency. Every
member of fraternal insurance asso-
citation wants the solvency Of his COM
pany maintained without increasing
|. the cost beyond a reasonable amount.
and no person wants 1t more than the
leading men in these organizations
Ihere is nc reason why a fraternal
shouldn't be as sound as an old line
company l am also OF the opinion,
as said, that bill framed in harmony
With the opinions of the fraternal con-
gress, which Is composed OF leading
responsible fraternal societies. should
be accepted and passed by the Mime
Gotta legislature. But think that each
fraternal should have some reserve
fund to provide for the increased
mortality rate that may be expected
to come.
There is no necessity for any such
reserve fund as is carried by some of
the Old line companies, that is, for the
protection of fraternals These re-
serves keep accommodating until they
are beyond any possible demand that
might ever be made On them. A frater-
nal society should simply have such
A MODERATE RESERVE
as would be actually required to meet
the contingency of an unusual death
rate. or such increase as may naturally
be expected to come sooner or later.
That insures the stability and solvency
OF the associations
BUT our present assessment law Is
worthless. When fifty persons can now
Tile articles OF Incorporation with the
secretary Of state they are entitled
TO certificate allowing them to do
business. The record shows that only
small number of them have lived to
any length Of time. Here Is what l
say about the subject in my report:
l would suggest the passage of law
governing strictly assessment or what ara
more properly called natural or stipulated
premium associations, and a separate law
governing societies operating strictly upon
the lodge or fraternal plan Such sensrsta
enaetments have been passed in certain other
!eaolng Eastern states, and Minnesota should
leave no stone unturned to place upon her
statute books laws covering these different
classes OF associations or societies which, shall
merit the confidence and respect not only Of
our own citizens, but also those of the coun-
try at large
As an illustration of the opinion enter
tanned by the Insurance officials of other
states relative to the efficiency of the Mime
sofa statutes governing our so-called assess
ment life and casualty associations Including
fraternals), quote from a statement made to
the commissioner OF Minnesota by certain
state official:
"A certificate from your department, to the
effect that a Minnesota assessment life or
casualty association has fully complied with
the statutes of said state carries no weight
whatever with the insurance department OF
my state. as your laws practically afford no
protection whatever to the policy holders of
this class of companies"
This statement. coming from well known
and able insurance official of another state
is certainly in itself alone a sufficient argu-
ment In favor OF an immediate passage of
GOOD AND SUFFICIENT LAWS.
that shall afford ample and full protection to
all members or prospective members. OF this
class Of associations and societies Such a
law should provide for and definitely fix
standard Of solvency, whereby 1t shall be re-
quired that the actual cash funds OF any
such company or association are sufficient at
all times to cover the net value or future in
creasing cost OF its outstanding policies as
calculated upon some acceptabIe fable ~
mortality, and should it ever fall below such
an amount an assessment upon its policy
holders should be Immediately levied to make
good such deficiency
The old post mortem or-''pass the hat''
plan, originally followed by practically all
so-ealled assessment insurance associations
is fast becoming obsolete. Practically every
association now in existence, which originally
conducted its business upon this plan is now
upon, or making desperate efforts to get
upon, what is termed the natural or stipulated
premium basis, with rates based upon some
well established mortality tables all con-
tracts as a matter OF course. containing a
safety clause providing for additional assess
ments. should such additional funds be re-
Quired on account of an epidemic or other
unusual causes. The plan of simply requir-
ing the members to pay barely a sufficient
amount to take care OF the death losses. as
they accrue, together with management ex-
penses. has resulted sooner or later, in
NO END OF FINANCIAL TROUBLE
for the company. Unless sufficient amount
is collected from the members during the
earlier years of its existence to provide for
reserve fund sufficient. at least, to cover
the constantly Increasing mortality expense
the only alternative is a very material in
crease in the number OF assessments to be
levied, or an increase in the assessment or
premium rates either Of which steps IL too
long delayed is bound to result I'm disaster
and many poor people who have in meeting
their assessments, denied themselves the ac-
tual necessities Of life, presuming that they
were providing for the future protection of
their families are shocked upon being
brought to realize that the protection which
they have made such sacrifices to secure Is
null and void. Under the provisions OF the
present Minnesota statute governing this class
OF associations continuance or repetition of
this condition of affairs still remains possible
Some such enactment as is here pro-
posed may be presented to the legis-
latUre this winter, but Mr. Dearth says
so far he has not given the matter any
attention. law was introduced in the
last session, but certain features were
too burdensome for the bill to carry
and live
Mr.. Dearth was asked who drew up
that bill, but was unable to say, as it
was drafted before his appointment to
the commissionership.
FIRE INSURANCE LEGISLATION.
Mr. Dearth went on to discuss what
he considers necessary or advisable in
the line Of fire insurance legislation
this year. In general the law govern
ing fire insurance is good. but Mr.
Dearth thinks it needs some amend
ments. The commissioner would throw
up a stronger line of protection
around the agents Of the state in the
matter of reinsurance of large risks
Under the present law a very large
risk may be written in some foreign
company by it's agents in Minnesota
but when the time for which the risk
has been written expires the property
rnoU ha raiuSIlr0d in fanf ic