Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1905-07-12
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FEDERAL SUPERVISIONANDP PUBLICITY
The widespread distrust and misap-
prehensiOn among policy holders OF
American life insurance companies by
reason Of the recent disclosures Of spec
ulntion and peculation in the Equitable
Of New York emphasizes the imperative
necessity Of efficient government super
vision OF insurance companies, both
state and national
More people are vitality interested In
the safe and honest management Of life
and fire insurance companies than of any
other institutions, not excepting the ma
tional, state and savings banks. More
than 100000 policy holders are con
tributing more than S4OO,OO0,OOO an
nually toward the fund that is held in
trust for their families by the life in
surance companies. More than 100000
home owners are contributing constantly
toward the fund held in trust by fire in
surance companies to protect them and
their families from loss by fire.
To surround these institutions by all
the safeguards that can be devised is
the undoubted function of government.
While all the states that have granted
charters to insurance companies exercise
more or less supervision over them, pub
lie sentiment is rapidly crystalllzing in
favor OF national regulation and super
vision. In the language Of Walter Well
man:
II Is not alone in Equitable that the 'in-
side crowd" have run things to suit them
selves, took their rakeoff and perpetrated
their reign through the proxy system. IL
is not alone in Equitable that men have
sat as directors upstairs and voted to de-
post company funds in this or that trust
company and then gone downstairs and sat
as directors in the trust company and voted
to lend the money which came from up
stairs to outside corporations or specu-
lators in which they are shareholders.
Mr.. Wellman might have added truth
fully that it is not alone in Equitable
that directors have made millions out Of
purchase and sales of bonds and other
securities.
These impositions Of insurance trus-
tees upon policy holders could not have
been perpetrated had there been pub
licity exacted by law in all investments
Of life insurance funds. Even volun-
tary publicity would go far toward pre-
venting further insurance scandals and
restoring popular confidence in insur-
ance management. Reorganization alone
will not do it. What every life and fire
insurance company should be required
to do is to take the public into its conf
dence on broad lines.
/. Each company should be required
at least twice a year to publish in news
papers Of general circulation statements
covering every item Of their assets and
liabilities.
2. Every insurance company contem-
plating investing insurance funds should
be required before making the invest
ment to invite proposals a reasonable
time prior to their purchase for securi-
ties that would be acceptable to its man
ayers and after making the award to
publish to whom it was made and at
what rate the securities were purchased.
The same course should be. pursued in
the. sale OF securities and an equal
measure Of publicity should be given to
investments in real estate and loans
upon real estate so that policy holders
and the public generally should be con-
stantly kept Informed concerning the
financial transactions and financial con-
dition of each company.
When such publicity is supplemented
by governmental regulations similar to
those now in force in Germany and
other European countries with regard
to investments of insurance funds and
periodic inspections Of the books and
securities OF each insurance company by
experts are enforced the American peo-
pie will feel secure in investing their
savings and earnings with insurance
companies and not until then.