The Montgomery advertiser., 1906-07-07
HAVE VIOLATED LAW
INSURANCE COMPANIES WRITING
 SPECIAL CONTRACTS.
Attorney General Wilson sends an Opinion to Cemmissiener McDa-
 yfd Covering the
 Points Raised.

According to an opinion rendered by Attorney General Massey Wilson yes terday at the request of State lnsur- ance Commissioner E. R. McDavid. in- surance companies cannot offer induce ments to special policy holders.
 Some of the Advisory Board Con tracts used by insurance companies m this State. the Attorney General de- clares. are in violation of the law and suggests to the Insurance Commission CT that he draw the attention of solic- itors to these violations for the purpose of prosecution.
 Special contracts the Attorney Gem era1 regards as violation of the law unless there is no discrimination and everyone is allowed the benefits of such contracts.
 The Insurance Commissioner had found that certain insurance compa- nies were writing this class of special contracts which provide certain con- sessions to the policy holder infiuen. tiaI in securing other policies for the
 MT. McDavid called upon the Attor- ney General and yesterday he received the following exhaustive opinions:
 Montgomery, Ala, July s, 19906 ~Hon. E. R. McDavid, Insurance Com
 missioner, Capitol:
 Dear Sir-Pursuant to your request ! have examined the following statute:
 NO fife, nor any other Insurance company. nor any agent thereof. shall make any contract of insurance nor agreement as to policy-contract, other than Is plainly expressed in rhe policy iseued thereon; nor shall any such com pany or agent pay or allow or offer to pay or allow as indueement to insur- ance, any rebate of premiums payable on the policy nor shall any particular policy holder of the same class be all lowed any advantage in the dividends or otEer benefits to accrue thereon or any valuable consideration or induce ment whatever. not specified in the poll t.4r- nf nf tnEnrnnFa
 sYou wish me to advise you whether or nor the contracts comm only called Advisory Board Contracts, which are used by some of the insurance compa- nies doing business in this State, are in violation of the roregoing statute
 'If the contract is purely and simply a contract to secure the services of the other party to it, and Is not a part of any policy or insurance, and it Is not used az an inducement to the other party to the contract to take policy of insurance the contract IS not m violation of the statute above quoted At least one of the sample copies or the contracts you submitted to me. Is fin form unobjectionable. for the rea- sons just stated. If, however, the real purpose of his arrangement Is to in- duce or permit the holder of the con- tract to take insurance, and the bene- fits he received under contract are Tn fact applied toward the payment of lis individual insurance. the statute would be violated notwithstanding the contract Is in form within the statute. The purpose of the statute IS to guar class and equal expectations of life equality In the cost of insurance IT in practice the transaction amounts to c benefit. rebate of discrimination in favor of an individual policy holder or d class, not enjoyed by all others ot fhe same class, and is not carried out as bona fide contract ot emrioyympsnS yp Sa,; have facts tending to show that any company which has an advisory board m this State under such contract as, sn form Is not offensive to the law, IS ir practice carrying into execution the arrangement in such a manner as to make 1t violation of the law; l sug- gest that you communicate such intor. iration to the solicitor of the circuit where the offense occurred and re- auest that he have the grand jury tn- yestieate the matter. If the facts war sant 1t 1t will be the duty of the grand i1rv to indfct for a misdemeanor.
 .asome of the Advisory Board Con- 4racfs' show on their face that they are used to induce the holders of them to take insurance. are m faet fo De considered as a part of the poll ~ of insurance, and the benefits ac- cruinr are to be used toward the pay nent of the ind,XiduaI pre,usI tsa'n T.ieariy 1I this is benefit. or valuable consid- edation. or inducement, given 70 tna noIicy-holder who has this contract. is attached tn. and made part of ey- cry policy of insurance Issued In thls state, and given alike to every policy holder. If 1t is attached to every noiicy issued in this State. and ofYered to every policy-holder, l 6o not think such practice is yiolatfon of the statute. Tn such case. there would be equality among policy holders in cost and benefits. which " is tbe aim of the statute to secure. 70 "Very respectfully.
 Massey wilson
 s4 "Attorney General"