Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-07-20
Would Investigate Insurance
Companies
IN NEW YORK STATE
.DVICES SENT TO THE LEGISLA-
TURE AT ALBANY.
Goes Into Details Fully and Makes a
Lengthy Statement on
the Subject.

AA%pA-N l. ~ L. JuiS &p-frUN. tiIEklDS
this afternoon sent to the Legislature
message recommending for Its cons.dera-
tion the appointment OF a joint commits
sion to investigate the business Of life in
surance as carried on in this state
In calling the attention of the legislature
to the insurance matter the governor says:
THE unfortunate scandals recently made
public by the internal dissensons in :he
Equitable Life Assurance Society and by
the comprehensive investigation of Its af-
fairs by the superintendent of insurance
nave not without Just cause aroused feel
ing OF intense alarm in the breasts of the
thousands of our citizens who have invested
tHelr money in policies of life insurance
ana or the thousands of non-residents who
have been taught 10 respect the New York
companies as safe and secure. While ;he
business of life Insurance as at present
conducted, Is subject to state supervision
END regulation for the purpose of guaran-
teelnS solvency and the fulillment of con-
tracts on the part of the panies IT js
evident that evils and abuses NAV exist
under our law, that earnings which should
he credited 10 the policy holders may be di-
NeTted to other purposes. that expenses of
operation may be eXtraVagant and waste
iui, that unwise investments may be legally
made and that trustees may deal indirectly
with the trust funds for their personal ad-
vantage. That such a condition OF affairs
can exist IeHectS diScredit upon the state
Legislation No Panacea.
Legislation is no panacea for the Ills
OF the bodypolitic that rise from a dis
ordered moral sense The MULTIPLICATION
OF penal statutes does not diminish the
spirit OF laWleSsneSs but is rather a
symptom OF its growth But il is arnar
eHt that our insurance law is in some
particulars, obSolescent and inadeouate
ana that the management of the funds of
th0Se great companies is not sufficiently
SdteSudrded.
The state owes duty to policy hold
ciS and beneHCiarieS beyond that of COM
larlng assets with liabilities and permit
ing The companies to Justify their ex-
tSiencs by the exhibition OF a satisfactory
haIance sheet and the prompt payment OF
4psSes- investments must be restricted
salaries must be limited to amounts hear
ing a clear relation 10 the commercial
value OF the services rendered: trustees
must be held to q stricter accountability.
and the pciiCy-hOlderS must he given a
more eEectlNe share in the government of
The companies 1t may well be that the
harsh and arbitrary remedy of dissolu-
uon and receivership should be made not
only a penalty for insolvency. but also a
summary check upon "A solvent company
when II becomes irredeemably the play-
thing OF lawless greed. The state cannot
permit the subjects of its supervision to
exist as licensed prodgals of other peo-
PIES money without becoming an ac-
complice to the offense
We cannot judge all life insurance
companies by the sins of one.
We should not destroy the edidce TO rid
ourselves Of the vermin that infest it. nor
should we Kill the patient to stop the prog
OF the disease A revision OF our in
surance law is necessary, but 1t should he
made with calmness. deliberation and intel
lgence. and after careful study and inyes-
tigatlon.'
Speaking Of Superintendent Hendricks, in
vestigation OF the Equitable, the governor
says that within the scope of his authority
and the limits of his time the superintend-
cnt has performed his duty with impartial
thOrOughness Although he has informed
ne that, by reason Of the statutory limita-
tions on his inquisitOrial powers and by
reason Of the magnitude of tie task Inn
posed upon him, he would welcome the aid
OF legislative investigating committee /
have been Of the opinion that he with his
STAN OF experts and with the authority
vested in him to conduct Investigations at
the expense of ;he companies examined was
Wen quat'fed to collect all necessary evil
d"nce on which 10 base new legislation and
that no other investigation outside the
courts OF justice was necessary or desirable
pending me investigation now being con-
Quoted by him.
1t is. however Of the highest Importance
that a revision Of the insurance law should
be enacted as promptly as Is consistent with
"a thorough knowledge of the subject 1t Is
proper and necessary that the legislature
should determine for itself how the infor
nation upon which TO base such a revisiou
may best be obtained.
In order that you may he free 90 oor
slder anc act upon the subject at this Sos
SION, / therefore. pursuant to the constitu-
ton. DO hereby recommend for your CON
slderaIion the question of the appointment
of joint committee of the senate and 90
sembly. with The usual powers OF such corn
mlttecs 20 investigate. after your adtourn-
mcnt. the operations Of life Insurance com
panles DONG business in the state for the
purpose Of preparing and recommending r.
the next regular session of the legislature
sich proposed legislation as may be ade-
Guajc and proper to restore public conf
Hthce and 10 compel life insurance com
IaHlrs To conduct "A safe. honest and omen
business for the benefit OF their policy hold
Resolution introduced.
In the senate Senator Armstrong immedl
ately introduced a concurrent resolution
nLnN-dInc for tha anrnlntr,oa. - q -,