The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1905-07-11
ADNANCEs no AGENTs.

The society's agents are employed
under contracts which provide that
they are to receive as commissions GER
tain percentages of the first premiums
ON policies placed by them and certain
other percentages of renewal premiums
for stipulated number of years.
Under the tenth bylaw of the So
ciety, the supervision of the agencies
is vested i'm the second and third vice.
presidents, under the direction and
instructions of the president. AS a
fact, the society's dealings with it's
domestic agents have been mainly
through the second vice-president.
The typical agents contract allows
him so per cent. of the first years
premiums, 20 per cent of the second,
~ per cent of the third, 10 per cent
of the fourth and ~ per cent of sub
sequent premiums up to and including
the tenth. No commissions are earn
ed nor are payable until the premiums
have been actually received by the
society
Circumstances frequently arise which
make it desirable from the agents
standpoint that he be permitted to
or unearned commissions. All life
insurance companies have to a great
err or less extent been in the habit of
advancing money to their agents, taxi
ing as security for the sums advanced
an assignment from the agent of his
future commissions.
AS the agents renewal commissions
are contractural stipulation on the
part Of the society, loans to him which
are secured by an assignment of those
commissions are apparently safe if
the extent of the loan is always less
than the total of the agents future
commissions.
In calculating the amount of future
commissions, the uncertain factor is
the unknown percentage of existing
policies which may be allowed to lapse
in future; for, after a policy has lapsed
no more commissions can accrue upon
it. From past experience the prob
able percentage of lapses in individual
agencies can be predicted with rea-
sonable accuracy; but no such es-
Inmates can guard against such dis
turbing influences as a change in the
character of persons insured, though
changes in the personnel Of the solicit
ing agents, or against an increase in
the proportion of lapses resulting from
great financial depression, or against
an increased ratio of lapses resulting
from a sudden popular distrust of the
society or its methods of conducting
business.
While the practice Of making adj
vances to agents has been almost uni
versal, such advances have never been
recognized as assets by the insurance
departments, and there has been a
very general inclination on the part of
most compnies to cease the practice
and to close out these accounts as
rapidly as possible.
on December 81, 1904, the Mutual
Benefit Life Insurance Company had
outstanding in advances to agents the
sum of $70,419.77; the Northwestern
Mutual had outstanding $17O91 O2 and
the Connecticut Mutual carried but
S65S "a in this account The North
western in it's reports says: 1T has
been the policy of the company for
some years to make no advances or
commute commissions for agency pur-
poses
Up to November, 1894, the Equitable
Society had made advances to it's
agents to the extent, then outstanding,
of $2S09,0O 600. The insurance commits
sioners of New York, Massachusetts
and other states, refused to admit
these loans as assets and i'm order that
so large a sum might not be excluded
from the society's statements, the
larger portion Of the loan was sold. on