The Washington times., 1906-02-22
KING RULE DISEASE
Of LIFE INSURANCE
-ARMSTRONG REPORT
PolicyholderS Made Help
less in Manage
ment.
REVOLUTION IN LAWS
Recommendations Handed to
New York Legislature
Today.

Today.
| ALBANY. y. Y, Feb. 22.-The com
piete report of the Armstrong Insur-
| anee Investigating Committee was pre-
| sented TO the New York Legislature to-
tday. and embodies drastic remedial Iesis-
| lation which will serve TO improve the
abuses IN the conduct OF life insuran nee
| companies.
The report was signed TO-DAY by the
| fun investigating committee before its
| presentation
| The report contains q digest of The
/ findings of the conditions and operations
| Of the three big life fnsurace companies,
/ tie Equitable. the New York Life. and
/ Mutual Life. as well as the MetropoIi-
| tan, the Mutual Reserve. ana other
lesser companies. From these findings
| 1t established the foundation Of The
| proposed legislation. which is designed
| 10 remedy existing evils and more Sc
| eureiy estabicsh the business OF life
| insurance.
| Inc remedial LEGISLATION is grouped
| under the following heads:
Where Remedy Is Urged.
| Organization Of life insurance corpor-
| atoms.
Control. or the rights Of polieyholders
| in the election Of directors.
| Retirement Of stock
| Investments, including xyr3icata ,,s-
| ticipations
| Limitation Of new business
| Political contributions
| Lobbying.
Limitation of expenses.
| Valuation Of policies
| Rebates.
| Surrender values
| Ascertaiament and distribution Of sur
plus
Remedies Of polieyholders. or right to
| resort 80 the courts.
| Forms of policies
| Publicity and state sype.yisisu
| Penalties
Organization Of life insurance cor
/ pOTations.
The committee recommends that arli-
/ Gle Of the insurance law be 50 amend
/ ed as TO permit the formation there
under OF mutual corpora tions, without
capital stock, TO transact business of
/ life Insurance, and for such other par
| poses as are authorized TO De connected
! Herewith in the case of stock cor
/ porations; provided. tha- a. ieasl -
I persons have subscribed IN writing II
/ become member therein ia the aggre-
! gate amount Of at least s. ,0o0. 90 10 DE
/ insured upon their lives, and shall have
| each paid in one fun annual premium
/ IN cash upon the insurance subscribed
/ for. and. provided further, that it shal!
Inytke the same deposits with The su-
! riateDdeRt of insurance that are re-
/ quirs5 OF stock corporations formed fo-
similar purposes.
! company thus organized VIII pro-
vide all the security that is afforded on
{ the formation OF a stock corporation
and = much greater assurance of sue
/ cess through the membership with
which it begins business.
Ban or Assessment Plan.
Section zoo. permitting the incorpor-
alton of companies upon the co-oDeT-
ative plan or assessment plan should
| be amended so as not TO permit
such companies To be Incorporated
n the future and foreign com
panies OF this sort not already trans
acting business in this State should
not be permitted to enter the State.
Companies OF this class. aside from the
voluntary reserves they may maintain
afford practically no security to Their
pOlicyholders other than their capacity
10 levy assessments.
In most cases, their history presents
a record OF deception and delusion Too
frequently. they invite disaster by offer
ing insurance below its actual cost and
infiiCt Disappointment and serious Ic>E
upon those who have conddsd in an
attractive scheme for cheap insurance
and are unable to pay the readjusted
rates, which In the course of time must
inevitably be demanded.
Larger Reserve Inadequate.
To increase the reserve required Of
such companies without bringing it up
TO the full standard maintained in the
case of ordinary life corporations do
ing business upon a level premium
basis WILL the committee believes.
prove futile. Such a provision would
not only leave the reserve INADEQUATE.
but would promote Misrepresentation by
creating an appearance of security
through compliance with a new, though
insufficient. legal standard.
While. on account of the serious in
jury which thereby might be inflicted
upon innocent policyholders, the COM
mittee is not prepared to recommend
that existing domestic assessment or
cooperative corporations should be
prohibited from continuing their bust
ness and that foreign companies here
tofore admitted to transact business
within the state upon this basis should
be debarred therefrom. vet the com
mtttee IS decidedly Of the opinion that
no new corporations should be formed
or admitted within the State to do bust
ness Of this character
1t is also the opinion of the committee
that fuII opportunity should be afforded
TO existing assessment companies which
have accumulated sufficient resources tc
reincorporate under article II, of the in.
suranee law, subject TO - requirement
Tor tuu reserve with reference 10 policies
issued either prior or subsequent 10 such
reihcorporatiOn. The law should he
amended accordingly.
As the committee vas unable 10 IN
vestigate fraternal societies. il makes no
recommendation with reference to their