The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-02-18
WHAT OTHER PEOPLE THINK
A Needed Reform in Life Insurance.

u
To the Editor Of The Journal:
Will you kindly permit few words re
garding pending insurance legislation IN
France which ought to be of public inter-
est in this country.
recent issue of the Spectator contains
a letter from the Paris correspondent OF
that paper, giving a synopsis of the pro-
posed changes in the insurance laws OF
France now before the French parliament
and which the letter states will undoubted-
~ be enacted. Regarding the provision of
special interest in this country, the let
ter reads as follows:
Second-Article deals with the ques-
lions Of distribution of profits under the
accumulation plan.
When the profits are not payable at
the end of each year the companies will
be under obligation to keep accounts
showing the amounts distributed yearly
to the various classes of policies and to
publish the conditions of the division be-
tween the different classes as we'll as be-
tween the individual policies in each
class as-.@
Probably most business men know in
general way that most of the insurance
written by several prominent American
companies is the deferred dividend or
semi-tontine plan, and these are the plans
to which the proposed French legislation
refers. Under these plans the dividends
instead Of being paid each year in the
form Of cash or additions to the policies,
are held back for long periods, usually
| twenty years, with a provision in the pol
icy that if the policy holder either dies or
| lapses his policy, the dividends are for
| feited, The idea Of such plan is that
the persistent policy holder shall profit
| to a certain extent out of the nom persis-
! tent.
! Without entering into the perennial dis
cussion regarding the wisdom and pro-
priety Of such a provision in a life insur-;
| ance policy, it must be apparent to every
I one who knows anything about account
ing, that, when there are such provisions
+ in policies, the dividends accruing yearly
thereon become a liability on the COM
pany in favor Of the class of policies on
i which they accrue. This is so plain and
elementary a proposition that there ought
not to be much discussion about it, and
therefore it may occasion surprise that
most American companies doing a deferred
dividend business treat these liabilities as
assets through all the varying periods dur
ing which they remain in the company
I funds.
/ For many years there has been an agi-
ta-tion in Insurance circles to prohibit this
I obviously unjust and unsafe practice, and
to compel every life insurance company
doing a deferred dividend business tc
make a definite settlement with each pol
icy holder annually, either paying him
obligation for the amount. Four years
and a half ago it was my privilege to urge
this point in an address before the Ma.
, tional Life Underwriters association il
4 convention in this city, and the matter
4 was quite generally discussed by the in
n surance press at that time. In an address!
which [ was permitted to make to tn,
1 Minneapolis Bank Clerks association re
/ Gently, emphasized this same point; an,
Z now l wish to bring it again before tn
public through the columns of T h
4 urnal. The Importance of this re
form in life insurance management ca
hardly be overestimated. The only real
dangerous factor in life insurance man
agenent in the United States is this prac
2 tice Of treating liabilities as assets, an
q it ought to be prohibited by law in ever
4 state in the Union.
The proposed legisla ton in France bear
d directly upon this point and there is al
i ready a somewhat similar law in Prussia
\ No doubt other European countries wi
} soon follow SO rational a precedent. Mos
3 of our United States deferred dividen
4 companies do large business in Europe
! and this European legislation applies
j the foreign business of our companies
4 This means that whatever our proverbi;
4 American laXity permits a t home. OF
companies abroad must do business on
4 yearly cash basis. Our benighted foreig
/ brethren do not seem to take kindly
to year to meet the emergencies of a
\ India rubber expense account.
I This situation ought to powerfully Unfit
i ence public sentiment in the Unite
4 States. If any of our readers are III
sufficiently versed in insurance matte
to see the full significance of this situs
4 ton. let me state it in another way. Ho
Y do o,lr American insurers like the idea
\ our home companies selling twentyye
\ adjustable estimates at home, and gvir
d cash or an equivalent in Europe? Is II
4 the cash likely to invade the estimate
4 the long. run? Every business man, eve
insurer in the United States, ought to II
III all his influence in favor of legisati,
\ which will give an annual accounting
every American policy holder. This is t
only just and the only safe way to tire
h the trust funds held bysour great Ii
zH insurance companies.
= .3s.. &C. w. Van Tuyl.
Minneapolis, Feb .16.
TO KILL THE KAISER.
:, Barcelona. Spain. Feb. ls.z-The newspapt
y, to-day publish account of an anarchist me-
ID ing recently held here. at which a German
sil gineer. who had been in Barcelona for TO
"A night and who has started for England declar
y he pledged himself to make an attempt on
~ life of Emperor William of Germany.