The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-11-27
Law FOR FRATERNALS
THE INSURANCE COMMISSIONERS
DISCUSSES THE LEGISLATION
MINNESOTA NEEDS
IN HIS PARTICULAR LINE

He FavOrs the Passage of an Act
Governing FraternaI Societies in
Line with the Ideas of the Fra
ternaI Congress - New ASSESS
ment Also Needed - Suggested
Amendment for Fire Insurance.
Il am In favor Of the passage Of an
Insurance law governing fraternal So
cieties," said State Insurance Commits
sioner Dearth yesterday, that will
meet the Endorsement Of the Fraternal
Insurance congress. The men who con-
stitute that congress have the interest
of the societies which they represent
at heart, and / believe they are in
favor of laws that will insure the
There is no reason why fraternaI So
cieties conducted on business principles
should not be as sound as other in
surance companies"
But in the matter Of life assess
DeDt companies continued Mr..
Dearth, ''the fraternals should. N my
opinion, be divorced from all assess
ment companies. They want a law in
keeping with what will ensure their
future permanency ana Solvency. Every
member of a fraternal insurance as
ISOLATION wants the solVency OF his
company maintained with increasing
the cost beyond q reasonable amount
and no person wants 1t more than the
leading men in these organizations.
There 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 flaternal con-
L. II. 4
responsible fraternal societies, should
be accepted and passed by the Mime
Gotta legislature. But / think that each
fraternaI 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 ensures the stability and solvency
Of the associations.
But our present assessment law is
worthless. When fifty persons can now
file articles Of Incorporation with the
secretary Of state they are entitled
to a 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 tha ~ Iauy
governing strictly assessment, or what are
more properly called natural or stipulated
premium associations, and a separate law
governing societies operating strictly upon
the lodge or fraternal plan. such separate
enactmeDts have been passed in certain other
leading 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 repect, not only OF
our own citizens. but also those of the coun-
try az 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-cailed alsess-
ment life and casualty associations Including
traternals), | quote from statement made to
the commissioner of Minnesota by a 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 G ass Of companies
This statement coming from well known
and able insurance official of another state
Is certainly in itself alone a sufficient argu-
ment ir iaNcr 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
law should provide for and definitely fix a
standard OF solvency, whereby it 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 acceptable table OF
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-called assessment insurance associations
is fast becoming obsolete. Practically every
association now in existence, which originally
conducted its business upon this plan, is now
upon, making desperate efforts to get
upon, what is termed the natural or stipulated
premium basis, with rates based upon some
wei established mortality tables. all
tracts, as 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 a sufficient amount
is collected from the members during the
earlier years Of its existence to provide for
a 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 assess ments to be
levied, or an increase in the assessment or
premium rates, either OF which steps if too
long delayed. is bound to result in 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. 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 expectations continuance or repetition OF
this condition Of affairs still remains possible
Some such enactment as is here pro-