The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1905-10-22
HEAVY Cost OF
life INSURANCE
1Attcntion OF the Public Attracted
Thereto and the Cause
Sought.
IA DESIRE FOR NEW BUSINESS
tiThis Has Lead to Great In
crease i'll the Commits
sions Paid.
IA DESIRE FOR NEW BUSINESS
!tspecia, to The Times-Dispatch.)

especial. to \ he llHlcS-plsPhtShJ
liy$ NEW YORK, Oct. 2l.--The public eve
& has been directed to the heavy eNpenui-
lures OF life insurance companies, o"inS
Il to recent revelations as to their MANAGE
nent, ana many persons believe they
charge higher premiums than is neces-
sary.
There is no doubt that the cost OF lie
n insurance Is greater than 1t should be, ana
we may fairly say that life insurance rs
probably the only business in which COM
petition has not had the effect of redncilnG s
Z the charge TO the pubic on me oI ny
alnnd, the excess of net cost after que III
lowaiice for the dividends, Is not as great
j as often supposed. a.,
4 Transportation, great reductions IN cost
L have been made within score OF year.
~ Tho cheapening has been enecteu lsIIs
Il by cutting down til primary cost OF ane
4, materials to the producer before they are
offered for sale and partly by reduc NJ,
Il public after production.
\ i, In life Insurance. however, it is, impossi-
Ablc to reduce what may be called tne
tprimary. cost OF affording insurance 70 VIC
i public, for that depends upon the rate OF
mortality which Is very nearly uncha IL !e
company as In small company; : L -, &C.
lt.ducng the secondary elements or cost,
e, the expense Of getting the business blsi Is
= end of taxing care OF III III. lIe nolHe VI
y nee after 1t has been obta med.
Bigger Commissions.
4 AZ nractically all the business Of life in
Insurance companies comes in through
1 agents and solicitors. the competition OF
sa the companies for business is really COM
4 petition to obtain agents that will bring
a{ In the business, and the natural effect OF
" this has been to increase the commissions
4 paid to the agents and thus necessarily
y enhance the cost of the insured. While
u this is particularly true Of the companies
], that are working under high pressure IN n
i the race to obtain the largest business, all
Al accompanies, including the most conserNti-t
{ live, have been compelled to pay more
Il Khan is proper.
SS$s% In this connection it will be interesting
il to note the advance In the expense rates
Il Of the Oldest and largest company IN TINS
country during the last forty or forty.hvs
81 years, taking it as a sample OF certain
a >lng the Civil War. 1858, 1859 and 1862. the
$ kotal expenses OF the company were bareiy
&. ght per cent Of the total income, ana
4 the home Office expenses for taking care
OF the business were considerably IN eA
cess Of the commissions paid TO agent
After tho close, OF the war business m
Il creased rapidly; in the compeutiontto oD-
81 tain 1t, commissions were Increased, tne'r
!: amount becoming about, double that OF the
{ home office expenses. and the .asgresh,i. ~.
total income. BY 1870 the expenses had
Il been reduced again to less than ten per
u. cent. OF thet'total income, and they cons
tinued nearly the same for about fifteen
years. .S
After More Business.
a til Then n pretty steady increase again be-
gan, owing to the apparent determination
s OF the new managers Of the COMPANY TO
do, If possible, more business than any
s&f other company. regardless Of the expense
# andsts effect on the interests OF the poll
{ icy-holders; In this way. by 1894. the eX-&
Spenses became more than twenty per cent.
5s5 OF the income, and ever since that they
z have averaged fully as high
1t will also be Interesting to examine
z the change In the premium rates Of this
oldest and largest company during forty
years, and herewith is table showing the
Il rates charged for ordinary whole life
II policies during the periods show at the
& head Of each column. With the cxcep-
f ton Of the last column all of the pre-
miums shown are for participating poll
4 cies: