Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1905-07-21
TO PROBE LIFE INSURANCE
New York Legislature Orders Investigation
Of All Companies in the State.
ACTION RECOMMENDED BY GOVERNOR
Special Joint Committee VIII DO the
work and $4,000 IL ApproprI-
Rted for the Elk
penses,

ALBANY, N. Y, July 2O.-There Will be
legislative investigation Of the life in
surance business as carried on in this
state, both by New York state corpora
lions and by those Of other states doing
business within this state. This investiga-
ton will be made by special Joint com
mittee with ample powers, Of which the
chairman will be Senator William W. Arm
strong of Rochester, republican. The other
senator's on the committee will be william
J. FULLY OF Corning, republican, and Daniel
]. Riordan OF New York City democrat.
Senators Armstrong and Tully are lawyers,
Senator Riordan is a real estate and in
sura1ce agent The two republicans are
said to have been selected by Governor
Higgins and Senator Ralnes, republican
leader in the senate, Senator Riordan by
the democratic senator's. The FIVE assem-
blymen members Of the committee will be
named by Speaker Nixon within the next
day or two.
Chairman Armstrong said tonight that
while the actual hearings by the COM
mittee would probably not begin for some
time, the preliminary preparations, calcu-
lations and so on. necessary in prepara-
tion5 for the inquiry, would be set in mo-
| ton as soon as possible, and the organ
ization of the committee would take place
as soon as the assembly members had been
appointed.
The institution OF the Committee followed
hard upon a message of Governor Higgins
to the legislature which came as a COM
| plete surprise. The message was received
in the senate after the conclusion Of the
Hooker case, and was not read in the as
sembly until late in the afternoon session.
Its effect may be described as sensational.
Governor Higgins Message.
In his message Governor Higgins said:
The unfortunate scandals recently made
public by the internal dissensions in the
Equitable Life Assurance society and By
| the comprehensive investigation Of its
anairs by the superintendent of insurance
nave, not without just cause, aroused
feeling Of intense alarm in the breasts of
the thousands of our citizens who have in
| vested their money in policies of life insur-
who have been taught to respect the New
| York corporations as safe and secure.
Though the business of life insurance, as
at present conducted, ts subject to state
| supervision and regulation, 1t is evident
| that earnings which should be credited to
! the policyholders may be diverted to other
purposes; that expenses of operations may
! be eXtraVagant and wasteful; that the un-
! wise Investments may be legally made ana
! that trustees may deal indirectly with the
| trust funds for their personal advantage.
| That such condition of affairs can exist
| reflects discredit upon the state. 1t is APP
! parent that our insurance law is in some
| particulars inadequate and that the man
| agement of the funds of these great conf
panies is not sufficiently sateguarded.
The state owes duty to policyholders and
! benefciaries beyond that of comparing
\ assets with Liabilities and permitting the
/ companies to justify their existing by the
| exhibition OF satisfactory balance sheet
and the prompt payment of losses. Invest
| menss must be restricted and salaries must
| be limited to amounts bearing relation to
| the commercial value to the services rem
dered, trustees must be held to strlcter
DO given more effective share in the gov
| eminent of the companies. 1t may well be
! that the harsh and arbitrary remedy OF dis
| solution and receivership should be made not
! only a penalty for insolvency, but also a
summary check upon solvent company
/ when 1t becomes irredeemably the play
! thing of lawless greed. Tho state cannot
| permit the subjects of its supervision to
exist as licensed prodigals OF other people
money without becoming an accomplice TO
We cannot Judge all life insurance COM
panies by the sins OF one. A revision OF our
| Insurance law is necessary, but 1t should
be made after a careful study and investi-
CATION
Speaking of Superintendent Hendricks
Investigation of the Equitable, the gov
ernor says that within the scope Of his
authority and the limits Of his time the
superintendent has performed his duty with
! impartial thoroughness. 1t Is of the high
est Importance" says the governor, that
a revision of the insurance law should be
! enacted as promptly as is consistent with
a thorough knowledge of the subject.
'In order that you may be free to con-
slider and act upon the subject at this time,
therefore, pursuant to the constitution.
do hereby recommend for your considera-
ton the appointment of a Joint committee
| of the senate and assembly with the usual
| POWERS Of such committees to investigate
after your adjournment the operations of
life insurance companies doing business in
the state for the purpose of recommending
to the next session of the legislature such
1 proposed legislation as may be adequate
and proper to restore public confidence and
20 compel life insurance companies to con-
duct a safe, honest and open business for
the benefit of their public policy holders"
Senator Armstrong introduced a resolu-
ton providing for the appointment OF a
Joint committee to investigate and exam
inc into the business and affairs of life
insurance companies doing business in the
state Of New York. with reference to the
investments OF said companies, the rela-
tions of such companies to subsidiary cor
porations the government and control of
said companies, the contract relations Of
said companies to their policy holders, the
cost Of life Insurance. the expenses of
said companies, and any other phases OF
the life insurance and reporting TO the
next session Of the legislature such laws
relating to life insurance in this state as
said committee may deem proper.
This was adopted by both houses with an
appropriation of $4,000.