Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1905-11-17
INDUSTRIAL INSURANCE.
Cost of the Insured, PROFITS of the
Insurer.


Insurer.
Springfield (Mass.) Republican.
Why are the poor poor? The turning OF
the New York insurance inquiry into the
matter of so-called Industrial insurance
brings out facts helpful in answering that
question. Industrial insurance differs in
no essential particular from ordinary life
insurance 1t insures for small sums
among people who cannot afford so much
as a 5000 policy, and who think they
cannot AFFORD to pay premiums in quar-
terly, semi-annual or annual Jumps, but
must make payments in weekly driblets or
nickels or dimes or quarters. This insur-
ance among very poor people is further car
ried to the point Of insuring the lives OF
little children under 10 years of age, which
have no economic value and hence no in
surable interest. This infantile insurance
is offered on the plea of providing for the
funeral expenses of the child in case OF
death. II has been frequently and warmly
opposed on the ground that, among very
| poor people, struggling to get along and
| overburdened with children. the tempts tion
| to the parents of mone:' value is placed
upon the death of the child. and IL down
| right murder is not invited. neglect leading
| to death is apt to be. Time and again
! American legislatures have considered bills
TO prohibit child insurance, and among
| them the Massachusetts legislature In 1895,
| but the companies interested have geper-
| ally succeeded in defeating them. So the
business goes on in expanding volume. and
! along with 1t the small insurance of adult
lives which is paid for in weekly premiums
collected by agents going about in person
among the insured.
1t can be readily inferred that such In
surance is very expensive. Bad as ordi-
nary life insurance has been shown to be
in this particular. Industrial insurance is
| much worse. To an expensive agency
system of getting new business Is added
a premium collection system nearly or
equally as expensive. The result is that
while well-to-do people pay far more than
is necessary for their insurance, the very
poor pay nearly twice as much. It is the
difference. says President Hegeman OF the
Metropolitan Life company. which is the
largest of the Industrial companies, be.
tween wholesale and retail transactions
It is the difference between buying Goa
by the ton and the bucket.
Take his own company, 1t has an ex
pense ratio OF some IS per cent against q
per cent for ordinary life companies, and
the % per cent is so needlessly excessiv,
as to raise a great cutlery among well-to
do insurants. Think, then. OF a So pei
cent expense ratio for the very poor. Fo,
example. this same Metropolitan Life will
sell a 1900 policy on the ordinary plan
according 10 President Hegeman's testi
mony. for S16.55 a year (age 22), but viii
charge $40 on an industrial policy 10
1854. weekly premium payments; ant
smaller policies are proportionately ex
pensive-justifying the assertion that tn
? very poor pay about twice much 10
their insurance as the well-to-do. an,
the latter pay some 30 per cent more thai
p is necessary,
Take again Mr.. Hegemans company
: Last year It collected $50 900 from polio
? holders, mostly Of the very poor or weekl
premium payment class and IT returne
to policy holders, in death claims, divi
bends. etc, only S16560.O00. II expended &
D salaries. commissions and other expenses
almost $aoOOoOOO. or a good deal more tina
was returned 20 policy holders. What
fearful waste OF the substance OF the poo
In the one matter Of insurance! The laps
percentage in this insurance is enormous
and last year the Metropolitan compan
: gained over 10000 from this source. az
eording to Wednesdays inquiry. Eve
| WIN NNehAy pieinluhl payments AZ
parenty a majority of those insured thro'
up their policies within two or three year
and so lose all collected from them Il
d, reserve. And the poor will have Il S,
says Hegeman: they win not come to n
!, company with their premium payment
= the company must go TO them through a
army OF collecting agents
But Il Is a great business TO those el
gagged in II. Mr.. Hegeman's company
a stock concern OF 10000. paying p
l. cent dividends. The whole establishmel
y might have been bought out years ago 4
p $3.50, 900. said Mr.. Hsgeman yesterday. b
Al now $4,000 600 would not buy It. Al
" small wonder. when we hear from hi
further on that his own salary is Sl00C
year. that OF Vice President Fiske. wi
50 ably defended infantile insurance befo
the Massachusetts, legislature ten yea
IN ago. y75.Oo0 a second Vice president ST.
~ and a third vice president n6,6o. It's
gold mine for the managers, II not I
the stockholders-an immensely proftat
thing. this OF insuring the very poor a.
collecting their pennies and dimes "A
you making any serious enOrt 70 redu
expensesT' was asked yesterday, and \
he Hegeman said solemnly: I'VE are alwa
Al doing So" And 50 with the other
he life cOmpanles-aiways trying 70 do
re but never sueeeeding. and never by a
IN manner OF means extending the trial
r. their own fabulous salaries, which
or crease right along as the trial for eeonoi
lot proceeds.