The Guthrie daily leader. [volume] (Guthrie, Okla.) 1893-1996, 1905-12-23
Suggestions on
Insurance Problems
tcontInued from PAGE ~


tualIy necessary to meet contract obli-
cations and the expenses. This excess
Is called the surplus and in the nature
OF things Il Is, within reasonable limits,
a necessity. In the language Of one.
Insurance writer, 1t acts as n buffer
between actual and theoretical condi-
tions" The limits within which corpo-
rations OF this kind are permitted to
build up surplus at the expense Of their
policy holders, ought to be carefully de-
fined. Under the tontine or deferred div
idend. system upon which some compa-
nies have conducted their business. pol
Icy holders who lapsed or died during the
premium paying period were denied
participation in the accumulation of sur
plus or profits. with the result that
these companies now hold MANY millions
OF collars exacted from policy holders
for which no consideration has been re-
turnod. OF course. it is claimed that
the persistent policy holder who survives
does share In these profits but expe-
rience has proven that there is no fair
relation between the amount returned
.sid the amount retained. Accumula-
tions of surplus and profits ought TO be
returned, as near as may be. 20 the same
policy holders from whom they were
taken, to the fullest cent consistent
with safety; and these distributions
should be reauir4d az the shortest in
tervals within which It Is possible 70
compute them.
We have already given an example OF
the power OF the state 70 prescribe a
rule for determining INC liability upon
q lapsed contract OF insurance, and the
same considerations would apply with
equal force to the liability upon a con-
tract either wholly or partially maiured
we have also referred 40 the apparent
necessity Of providing for some cquit-
able distribution Of surplus and profits
These questions relate more particu-
llarly 10 tho contractual relations be-
tween the policy holders and the COM
pauy There is however another im-
poriant phase OF the insurance problem
that seems equally Important viz reg
ulauons concerning the management anC
internal affairs Of such corporations. I'm
der this branch OF the subject woult
come such regulations MS might properll
be imposed concerning assets and in
vested moneys OF the corporation. Th'
Investment Of trust funds, whether o
savings or national banks. trust com
phnles or olnor uuNciAflcsi mas long peer
regarded as a rightful subject of legis
laflve supervision. and IN am OF the state
there ARE some provisions of law relat
ing 10 the investments OF insurance com
panies but We venture the obsorvatio.
that the recent disclosures in the Ney
lYork investigation have proven the mad
equacy OF the existing laws upon thi
subject, The more stable are the as
sets 81 am insurance cbmpany the les
subject arc thcy 10 nuciuqtions ia value
the less fluctuations in value, tho les
, necessity for large susplus becaus
possible nuctuatlon N value are an e'e
ment 20 be considered. along with inter
est rates and other considerations. 4
computing premium changes. Therefore
b no Insurance company ought 10 inves
. in securities Of "a speculative chaucte
8 by which Is meant such securities q
Z are sensitive 10 stock market manipu
iations. An insurance commissioner
= one OF the eastern states recently ea
e pressed the opinion % tha writer .h'
p the investments of Insurance compani,
3 ought 10 be restricted 20 goyarnmon