Los Angeles herald., 1905-12-06
STRICTER CONTROL
OF INSURANCE
COMPANIES NEEDED

The great insurance companies af-
ford striking examples of corporations
whose business has extended SO far
beyond the jurisdiction of the states
which created them as to preclude
strict enforcement of supervision and
regulation by the parent states. In my
last annual message I recommended
that the congress carefully consider
whether the bureau of corporations
cannot ccnstitutionally be extended to
cover interstate transactions in insur-
ance." Recent events have emphasized
The Importance of an early and ex-
haustive consideration of this question.
to see whether it is not possible to
furnish better safeguards than the sew
eral states have been able to furnish
against corruption of the fragrant kind
which has been exposed. 1t has been
only too clearly shown that certain of
the men at the head of these large
corporations take but small note of the
ethical distinction between honesty
and dishonesty; they draw the line
only this side of what may be called
law honesty, the kind of honesty nee
the clutches of the law. OF course the
only complete remedy for this condi-
ton must be found in an aroused pub
lie conscience, a higher sense of ethi-
cal conduct in the community at large,
and especially among business men
and in the great profession of the law,
and in the growth of O spirit which
condemns all dishonesty whether in
rich man or poor man. whether it takes
| the shape of bribery or of blackmail.
Legislation Can Do Much
But much can be done by Legislation
which is not only drastic but practical.
There is need of a far stricter and
more uniform regulation of the vast
insurance interests of this country. The
United States should in this respect
follow the policy Of other nations by
| providing adequate national super
vision of commercial interests which
are clearly national in character. My
predecessors have repeatedly recog-
| nized that the foreign business of these
companies is an important part of our
| foreign commercial relations. During
| the administrations of Presidents
| Cleveland, Harrison and Mckinley the
| state department exercised its influ-
ence, through diplomatic channels, to
prevent unjust discrimination by for
eign countries against American insur-
ance companies. These negotiations
Illustrated the propriety of the con-
gress recognizing the national char
acter of insurance, for in the absence
of federal Legislation the state DEPART
ment could only give expression to the
wishes of the authorities of the several
states whose policy was ineffective
through want of uniformity.
/ repeat my previous recommends
ton that the congress should also con-
slider whether the federal government
has any power or owes any duty with
respect to domestic transactions in in.
surance of an interstate character
Interstate Insurance
That insurance supervision has proved
| inadequate Is generally conceded Thc
burden upon insurance companies, ant
therefore their policy holders, of con.
hicting regulations in many states i.
unquestioned, while but little effective
check is imposed upon any able and
INSCRIPTIONS man who desires to ex.
ploit the company in his own Interest
at the expense Of the policy holders
and of the public. The inability of {
state to regulate effectively insurance
corporations created under the laws o.
other states and transacting the larger
part of their business elsewhere is ais,
clear. AS a remedy for this evil o.
conflicting. ineffective and yet burden
some regulations there has been fol
many years a widespread demand fo
federal supervision. The congress ha
already recognized that interstate in
4 surance may be proper subject fo
federal legislation, FOR In creating tn
bureau of corporations 1t authorized 4
to publish and supply useful informa
lion concerning interstate corporations
"including corporations engaged in in
surance." It is obvious that II tn
compilation OF statistics be the limit o
the federal power II is wholly ineffec
\ tive TO regulate this form OF CONNER
oial intercourse between the states, AM
as the insurance business has out
grown in magnitude the possibility o
Il adequate state supervision, the con
y gress should carefully consider wheth