New-York tribune., 1906-08-12
INSURANCE in BRITAIN.
REPORT OF COMMITTEE.
Foreign Companies Not asked to
Make Deposits -Neso Rules.

London, Aug fi.-"In view OF the evidence
they have heard. the committee do not consider
that in the interest OF British pOlicyhOlders 1t
is desirable 70 compel foreign companies TO He-
posit fEnds in this country"
THIS the select committee of the House Of
Lords. appointed inquire into and report on
what steps should be taken by the deposit of
funds. or otherwise 10 provide adequate Sc
curity To the British poIicyhoders in life insur-
ance companies which have their chief offices
outside Of the United Kingdom. but carry on
business in this country. sums up its finding.
The committee found almost unanimous
opinion among the leataing British actuaries and
gife insurance managers against compelling for
eign companies 10 deposit funds for the security
Of British policyhOlders. their reasons being
that it would be contrary to the principles IN
regard TO insurance companies which had hither-
20 prevailed in Great Britain: that il would vio-
late the principle that the whole of The funos
OF an insurance company should be available for
the claims of all pOlicyholders alike; that 1t
might lead 10 reprisals on the part OF foreign
governments; that IL might lead the public TO
believe that the solvency Of the companies max
ing the deposits was guaranteed by the gov
eminent; that such deposits might seem TO imply
a statutory basis for valuation, the teTpaeney Of
which might weaken rather than strengthen the
reserves. and that such deposit of securities
would appear 10 give an unfair advantage 10
British subjects holding policies in a foreign
company, while under such limited state OK
supervision il was doubtful whether the policy
holders would be as well protected as they are
by control through publicity and the freedom
which exists in regard 70 British companies
This evidence according to the report, TFcsuced
the committee 10 recommend against foreign
companies being required 10 make deposits
The report says that although the committee
cannot recommend that any obligations oe
placed on foreign companies 10 which British
companies are not liable, in its opinion foreign
companies should be placed, as far as possible
an the same position as British companies. They
should be made as far as possible, 20 comply
with the requirements of the Life Insurance
Companies act Of 1870. which insares a fun
measure of publicity of the accounts OF the
British life insurance companies and gives am
pie legal remedies TO policyholders.
Some amendments 10 the act might be made
in view of the great increase in the insurance
business The deposit Of S1O0,eoO which the
act makes obligatory the part of any new
company foreign British. prevented the for
mation of mushroom companies" but under
the act il is permitted TO withdraw this de-
pOsit the premiums amount 70 $40
0GO. The committee aware that 100000
would be OF little use TO meet the liabilities of
large companies. but il felt that if this amount
deposited could not be withdrawn il would af-
ford an absolute guarantee TO the pocyhoIders
OF being always able to proceed against COM
panies in the courts of this country. The COM
mittee therefore recommended that every COM
pany should be required to maintain this de-
pOsit of sl0O.th0 permanently, long its
policies continued outstanding in this country.
The committee also felt that :he appointment
Of British trustees 10 act for foreign companies
was highly desirable, lot only in the interest OF
policyhoiders. but IN the interest Of the COM
panies themselves. The committee believed
that experience had proved that the best means
OF guarding the interests OF the policyholders of
all insurance companies was by insisting on
The fullest openness in the accounts Of such
companies. Therefore the committee recon-
mended that all insurance companies, whether
foreign or British, should be required u furnish
70 the Board of Trade full revenue accounts.
balance sheets and valuation statements of their
business, showing at the same time the ex-
penses for management, and that, further the
board be empowered to vary from time to time
the forms of questions insurance companies
We're called upon 10 answer and Of the returns
made by them and also to insist that the an
sweFs be in every respect complete and accu-
rate, and also on return to make it clear
how far the funds of any foreign company are
subject to preferential claims in anv country il,
winch II transacts business. The amount of its
EoTelgn business and the business actually
transacted in Great Britain should be carefully
distinguished, but the committee did not con-
slder II necessary that each company should
make separate valuation OF its foreign and
British business. because the assurance fund IN
every country should be liable for all policies
alike.
In conclusion the committee considered +h.+
y IS most desirable 10 provide a statement by
foreign and British companies. OF the market
Falue OF the securities held by them.