Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-05-31

NOT A NEW PROPOSAL
Federal Regulation Of the In
surance Business.
SENATOR DRYDEN'S BILL
CLIMAX OF EFFORTS EXTENDING
FROM 1864.
Effort to Obtain Government Super
vision Similar to That Employed
With the National Banks.

BY WILLIAM E. CURTIS.
Correspondence of The Star and the Chicago Record
Herald
NEW YORK, May 80, 1905
good many people think that the dis
closures that have been made concerning
the management of the Equitable company
demonstrate the necessity of having all
life insurance business under the super
vision of the federal government. Shortly
before the inauguration, whether he was
aware or not of conditions that have since
been disclosed, Senator Dryden of New
jersey, who is himself president of the
Prudential Insurance Company OF America,
introduced a bill providing for the ap-
pointment by the President, with the adj
vice and consent of the Senate, of fed
eral superintendent of life insurance, a ma
tional actuary and whatever special agents,
clerks and other employees may be neces-
sary to properly conduct the business I'M
der the direction of tie Department of
Commerce and Labor.
Provisions Of the Act.
The proposed act declares that policies
of insurance are articles of commerce
and instrumentalties thereof" the delivery
of contracts of insurance by any corpora
ton to citizens or persons located In other
states being declared to be interstate COM
merce, and all companies doing an inter-
state business of insurance, except re-
ligious. charitable and purely fraternal So
cfeties, are placed under the supervision
of the superintendent to be appointed. All
insurance companies doing an interstate
business are required to annually make full
reports of their condition and detailed
statements of their assets and liabilities
and their receipts and disbursements, which
are to be printed in book form for the in
formation of the public at least once a
year; and they may be required to make
special reports at any time that the super
intendent of insurance may call for them.
Ali these reports must be acknowledged
and sworn to by the president and secre-
tary of the company. The superintendent
also has the power whenever in his Judg-
ment 1T shall appear necessary for the Sc
curity of policy holders, to make an eX-
animation into the management and affairs
of any insurance company for the purpose
OF determining whether 1t is solvent and
trustworthy; and whenever he discovers
that a company is unsafe 1t shall be his
duty to order such corporation to make
good it's financial condition. If this shall
be not done within sixty days the certif-
cate of authority to such company to trans
act business shall be revoked and notice
shall be given to the public that such cor
pora ton is unsafe.
The bill provides also that, within sixty
days after it becomes a law, every insur-
ance company Shall f1le q statement OF us
condition and the value of all of Its assets
and outstanding obligations, and deposit
with the treasurer of the United States as
a guarantee of the faithful performance of
it's contracts. United States bonds to the
amount of 100000. Whenever the super
intendent of insurance has satisfied him
self as to the Solvency of a company and
the soundness of its methods he will fur
nish certificate to that effect and a IL
cense shall then be granted to carry on
the proposed business of insurance.
Not a New Proposition.
This bill proposes to place the insurance
companies of the country practically upon
the same basis as the national banks. 1t
is not a new proposition. For forty years
efforts have been made to secure for insur-
ance the same federal recognition that has
been extended to banks. In 1864 and again
In 1866 when the national banking act was
passed, several companies addressed Con-
gress, asking for relief from the burdens
of overSupervision and overlegislation by
several of the states. The movement has
many influential friends, and one of it's
leaders was Mr.. EliZur Wright the famous
insurance commissioner of the state of
Massachusetts. The idea was Endorsed by
nearly all of the prominent companies and
the insurance newspapers and the move
ment was progressing favorably until 1868,
when a decree was rendered by the Su-
prene Court of the United States, in the
case of Paul versus Virginia to the effect
that insurance was not commerce, like
banking. transportation, telegra phing ETC.
and therefore was not subject to federal
control. IN speaking on this subject MI
Dryden says:
THAT decision has given rise TO endless
discussion. which it would be neither profit
able nor advisable to revive at the present
time While the decision of the Supreme
Court seems to dispose of the question, 1T
In fact did not do so. 1t did not touch the
real point involved in a consideration of
the regulation of the insurance business as
interstate commerce by the federal govern
ment. This point cannot be considered
however, until after Congress has passed a |
law regulating such business in general
conformity with the interstate commerce
act. 1t is the opinion of qualified authori-
ties. who have given most careful consid-
Grafton to this aspect of the subject and
who have properly taken account of sew
eral recent important decisions of the
courts involving similar questions, that,
under the implied and resulting powers of
the Constitution, the Supreme Court would
not withhold the verdict of constitutional
ity from an act of Congress declaring in
terstate insurance to be interstate COM
merce.
Federal Protection Demanded.
There is plenty of evidence to show the
universally of the idea and the growth
of the conviction that, for the more effec-
tive protection of the interests of insurance
policy holders, the increasing importance
of the business demands it's naturalization
by Congress-" continued Senator DRYDEN
The insurance companies have never OBJ
jected to state supervision by the state
from which they derive their charters
What they do object to- and what they nro-
test against in behalf of their policy hold
ers, is over supervision and over legisla-
ton by other states, much If not most of
which is distinct hindrance, and in many
respects a serious menace to the best ad-
m In StT m M ms tttin