Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-05-29
IT'S LICENSE REFUSED
OPINION REGARDING RIGHTS OF
9.stt
Insurance. COMPANIES.
Hinges Upon the Application Of Law
to the Scaling of
Claims.

The Commissioners have received from
Arthur II. OConnor, assistant corporation
counsel, an opinion on the question raised
by Thomas e. Drake, superintendent OF IN
surance, respecting the right of an old line
legal reserve life insurance company, that
was formerly an assessment company, to
scale it's policy claims. The matter came
up on the application of the Mutual Reserve
Life Insurance Company to do business in
the District. The company has pending be-
fore the insurance department only an APP
plication for license to do business as an
assessment company. Section 653 of the
code provides that insurance companies
transac citing the business Of life insurance on
the assessment plan are relieved from COM
pliance with certain requirements of the
law applicable to life insurance companies
in general, and 1t provides further that
Such assessment companies or associations
snail be required, as condition of license
to do business in the District, to file an
nually In the month of January with the
superintendent sworn statement setting
forth that they are paying, and for twelve
months next preceding have paid. the maxi
mum amount named in their policies or
ceruncates of membership when and as the
same become due and payable
History Of the Case.
1T appears" says Mr.. O'Connor, that
partially insured a portion of the business
of the Northwestern Assurance Company
of Chicago. III. In doing that they entered
into contract with the last named COM
pany, which contract allowed them to ex-
ercise the maintenance of reserve fund
according to section Of the provisions
and requirements printed upon policies is
sued by the Northwestern Life Assurance
Company, which provided the premium on
this policy Is computed upon the actuaries'
table of mortality and four per cent in
terest. and the reserve according to said
standard shall be maintained either from
premiums paid by the insured or a lien
upon this policy for which purpose the
mortality element of the premium hereon
may be varied according to the mortality
experience of the company
I'm the exercise of this power the Mutual
Reserve Life Insurance Company, upon it's
conversion from assessment to old line or
legal reserve insurance. have charged
against the policies issued by the North
western company, in addition to the regu-
lar reserve. lien based upon the actual
mortality experience of the company; that
u.s. the mortality experience as compre-
hended within the members taken over
from the Northwestern company, treating
them as a distinct class. The result is that
in case of death they do not pay the maxi
mum amount named in the policy or certif1-
cate Of membership. In answer to the
charge made by Mr.. Drake that this was q
scaling of the policies, the representatives
of the Mutual company have submitted an
exhaustive written argument to show that
the procedure they have followed Is not a
scaling of policies. ~
1t does not appear clearly from the ar
gument and the accompanying papers that
the course they have taken is in accordance
with their contract or reinsurance, and not
in violation of the provisions and require
ments Of the policies issued by the North
western company.
Reasons for Rejection.
Passing upon the only application before
the department., namely, a license to do
business in the District upon the assess
ment plan, 1t IL clear that whether the
procedure followed in this case can be
termed scaling OF policies or not. yet the
fact remains that they cannot show with
reference to- the members they have ac
quired by the contract Of reinsurance with
the Northwestern company that they have
for twelve months next preceding their APP
plication for license paid the maximum
amount named in the policies or certificates
as required by section e5S Of the code, and
for this reason the application for license
will be rejected.