The Washington times., 1902-04-27

Ing was based upon the legal advice OF he
City Solicitor. submitted in an opinion &c
the District Commissioners on Friday, ant
approved by them.
Mr.. Drake brought the matters in Ques.
tion to the attention of the Commissioners
last week, and asked instructions under
certain conditions which he specified
The subject was thus referred TO the City
Solicitor. with the result noted. The Off
cial ruling of the Superintendent is sub
m;tted 20 the Coinmiss oners for their ao-
ton, ard is:
Mortality Table.
I'm the absence Of any statutory Pro
vision in the code OF law Of the District
Of Columbia. bearing upon the mortality
table and. rate CT interest to be used for
establishing reserve liabilities of life in
surance companies. and in view of the Off
cial function vested in the Superintendent
OF Insurance. l beg leave to submit 10 you
the following ruling designated as No 2
for your approval. which is based upon the
opinion of the City Solicitor OF the Dis
trict OF Columbia
"First-The standard of reserve valua-
tion on life insurance policies OF all kinds
shall be based on the American experience
table of mortality and per cent interest.
"Second-Reserve on all kinds of old
line life insurance policies, irrespective OF
plans or conditions OF the policy contracts,
shall begin and be maintained during the
existence Of the policy on the above stand
ard. from the time OF the issuance of the
policies to their termination, whether the
policies be issued on the regular term plan,
ordinary life plan, or endowment plan, re-
gardless OF any stipulated provision in the
applications, respecting the right of com
panies to value policies the first or sabse-
quent years as preliminary term insur-
ance.''
Based Upon Equity.
In commenting upon the matter yester-
day, Mr.. Drake stated that the action of
the department would seriously affect the
companies doing business in the District.
He stated that the matter had been very
carefully considered, and that the ruling
was based upon equity, and was in accord
with the best practice in the several
States which have established bureaus Of
insurance. Mr.. Drake said that 1t was
possible certain companies might not be
able to qualify under the ruling, but he
expressed the conviction that the stand
taken was the only one consistent with
Justice to policy holders and with good
administration of the department.
The Superintendent stated that the prac-
tiCe OF certain companies, who allow the
entire first years premium for expenses,
without retaining rart for reserve pur-
poses. was unjust to all policy holders
having policies more than a year old His
views on the subject are set forth in his
letter to the Commissioners, under date
of April %, upon which the advice Of the
City Solicitor was based, which is, in part.
rs follows:
I'm the present code OF law of the
District Of Columbia there is no provision
made for establishing the reserve liza
bilities of a life insurance company, which
is OF the utmost Importance in arriving
at the solvency of such company.
Original Law Repealed.
In the absence OF this feature of the
law ] presumed until had an interview
with the Assistant Attorney for the Dis
trict. Mr.. O'Connor, that the original law
enacted January 26, 1887, would be ap-
plicable. He informed me. however. that
all Of The original laws were repealed
when the code went into effect, except
such as were specifically mentioned.
"The mortality tables used in the United
States are the American experience ta-
bles and the combined experience table.
and the rate of interest used in connec-
fion with these tables under the various
State statutes are Az, 4, 3l2 and 3 per
cent. the AZ per cent rate assumed in
The above instances now being obsolete
The LEGAL standard of some of the most
prominent States is 3k per cent. while
number of companies voluntarily assume
n higher rate in establishing their legal
reserve liability under per cent rate,
the rate of interest in general use, how
ever, being per cent.
Standard in Question.
THE question with which the depart
ment is confronted is what standard TO
use. and also the treatment OF preiimi-
nary term insurance. which most OF the
ycu5e companies practice by embodying
tp their policy contracts the above con-
d..Ions I'm respect to confscatlng the re-
ee-ve liability of the first years premium.
~ am opposed to this method Of valu
,,ion. TO- the reason that wherever the
law establishes the basis OF interest for
deterraining the solvency Of company in
connection with either mortality table
used the insured is compelled to contrib
ute 10 the expense or surplus fund OF the
company that portion of the first years
premium that would be charged as a re-
serve liability.
"Cap I in the absence of law, establish
nv own basis OF solvency Of life insur-
ance company under. say, the per cent
standard, and decline 10 recognize the re-
serve valuations made by companies that
confscate the reserve on the first years
premium?
Needs Legal Advice.
This is a most important matter and
/ must have legal advice on ii Immediate
ly in order to issue the preliminary H.
censes 10 the life insurance companies for
admission to the District Of Columbia be-
fore May /. 1902.
Mr. Drake stated yesterday that his
fuling was supported by recent decision
of the supreme court of Massachusetts,
sustaining the insurance department OF
that State as against the contention of
certain companies.
While the stand taken may work a
seeming hardship upon some of the young
er and weaker Insurance companies. Mr..
Drake maintained that 1t was better
policy 10 take a right stand in the begin
ming than to change after a few years OF
doubtful administration. TO the embarrass-
ment OF all concerned
Entertainment for the Blind.
Little Miss Hailowell. the Sunshine
poetess. win give "An hour Of Poetry and
Song" for the blind, in the.s reading
room at the Library Of Congress tomor-
row. at 2:30 clock. The little author rem
ders her own poems. with the intermission
Of songs. The musicians assisting her on