The daily morning journal and courier., 1905-09-09
The Insurance Scandals.

The Insurance Scandals.
 To Editor of the Journal and Courier:
 An editorial in the New Haven Even ing Register in it's issue of September 7th Inst. was timely and squarely to the point aimed at, viz, officia! extrav- agance in life insurance companies.
 The editorial was open to criticism in one or two respects. however. In the first place, it failed to discriminate justly between the innocent and the guilty; hence it left, the way open to the general reader to infer that what is true of the Equitable and the New York Life is likewise true of all the other companies. But such an infer ence is neither true nor just.
 In the next place, the editorial refer red to eonfounds cause and effect. Off, ficial extravaganza in the gfeat insur- ance companies of New York is the un- questionable effect of some pre-exist- ing cause, and the editor, as well as the Investigating legislator, should make it HIS puotllGSS u lO CAPOSG Ab1 and to compel its removal.
 One thing ought to be apparent to every man who thinks at all, viz, that that cause, whatever it was, put more money in the personal control of insur- ance officials than was necessary to meet the legitimate obligations of the companies involved. What was it that did that in the case. of the Equitable and enabled it to accumulate $50 1000, ,000 of "surplus?" Surely it could not have been extravaganza" that did that. Extravagance scatters and consumes. But here we have a vast accumulation of unnecessary money, What attract ed it? The answer to this question Is very simple. Those sSO, ,000, 900 of sur plus" were accumulated by charging an excessively high rate of premiums to the policyholders and by withholding from them also the unexpended balance year by year, as provided In a clause In the insurance contract. The partic- ular clause here referred to makes the contracts, to all intents and purposes, a gambling contract. The instrument Is not called "a gambling contract" of course; it has very many nicer names than that. In the Investigation now going on, when it is spoken of at all, 1t Is usually called "the deferred dividend contract or policy, a very nice name, indeed, but it. is "a gambling contract" all the same, and we would come closer to tho heart of the truth If we were to call it the dividend-stealing contract. "
 The Equitable adopted this form of contract in 1871, 1t is said. Behold the result! Phenomenal growth, vast sur plus and a world wide scandal! Since 1871 the Equitable, notwithstanding its phenomenal growth and vast surplus, '' has found 1t necessary to advance it's premium rates twice at least. Let me illustrate. Take it's most popular pol icy, the twenty payment life policy. In 1884 it charged at the rate of $39.36 for each $1,000 of insurance to a man thirty years of age. Now 1t charges $34.76 per $1,000 for identically the same policy! Was this advance necessary? Not at all, except to meet the growing de- n1ands of needless expenditures; for another company, which was issuing
 
 $1,0O0, is still issuing it at the same rate and is returning exceptionally large annual dividends to its policy holders at the same time. How is 1t, then, that the officials of the Equitable found it necessary to advance tho rates? They found it necessary be- cause the vast accumulations of un- necessary money in their hands had be- gotten in them spirit of reckless ex- travagance and greed, which rendered 1t necessary for them to put up the rates still higher, or see their boasted "surplus' melt away and disappear. But let no one imagine that the Equi- table Is sinner above all others il this respect, for such Is not the case; for it has many imitators, and some o1 them may have outstripped her in the matter of extravaganza. Out of the seventy-two life insurance companies in the United States and Canada fifty five have followed the evil example o1 the Equitable and are to-day issuing some form of deferred dividend" o1 gambling policy. Only seventeen com. panies in both countries have had suffi. cieht moral stamina to resist the temptation and to do all in their power to carry out the self-denying, benef. cent purpose of life insurance, and tt do so at as little cost as possible to the insured. Both countries owe these sev enteen companies a debt which they never can and never will pay.
 It must not be forgotten that the in surfing public are largely responsible fol the insurance scandals now being un. covered. The great majority of the men who took out insurance policies during that past twenty or twenty-f1v years could not be induced to conside an honest insurance contract. They demanded some form of "gamblins | contract" and would not consider any. thing else. This Is the simple, naked truth in the case, and it should not b. forgotten while the offending compa. | nies are now under fire.
 T. F. DAVIES. A NOtre Dame Lady