Vernon County censor. [volume] (Viroqua, Wis.) 1865-1955, 1906-12-19
INSURANCE LEGISLATION
TO CORRECT MANY ABUSES
New Laws Recommended Joy Commit
tees Report
Would Repeal All the Present RetaIiatoy
Statutes
No Companies Examined Made Cam
pagn Contributions

ENN@-N~
such company.
1t appears from the testimony that
ever since the Northwestern Mutual
company adopted the practice of
making loans upon its policies the
officers, agents, their relatives and
friends, have been making loans up
on the security of the company's poll
eies. The total amount outstanding
ON private loans made since 1901 is
s1,375,S66. These private loans were
encouraged by the officers, as they
claim solely for the accommodation
of policyholGers. The loans are made
and attended to at the expense of the
company without any benefit to the
company.
Prior to 1904 the company made no
loans upon the security of its poll
cies. The testimony shows that for
many years prior to this time the Of
ficers of the company and others
were making loans upon the policies.
The company has at the present
time. in loans approximately $19,-
100000 invested upon the security of
its policies.
Referring to loans on tontine poll
cies. the committee says:
1t appears that the officers and
trustees of the company for their pri-
vate gain and advantage pursued a
course as individuals which they in
sisted they could not pursue as Of
ficers without a breach of good faith
and contract stipulations with the
other policyholders. The officers f
this company acting for the policy
holders and under obligations to pro
tect each of them in their contract
rights with the company deemed 1t
no improperly to pursue a course
which in effect, violated the contract
rights of some of the compapZ's pol
| icyholders. In this respect they
seem to have overlooked a very ia
miliar principle of law which may be
stated as follows:
No officer, agent or trustee
should ever be permitted to place his
official or trust duties in conflict with
his private interests, because in all
such contests duty is apt to be over
thrown in the Struggle"
The officers did not notify the sol
icyholders generally of this practice
of making private loans upon the
company's policies at the companys
expense without benefit to the com
pany, nor was the fact ever reported
to the state &C -issioner of insur-
ance that 1900 policy loans amount
ing to $2,052,S22 were so made.
Unknown to the policyholders and
the public in general the company
maintains a depa "tment known as the
| inspection department" This de-
partment is conducted at an expense
to the policyholders of from $4,000
to $4,000 per annum. It's principle
functions are the sending out of in
quiTies to commercial agencies and
confidential correspondents with re-
spect to the health, character and
habits of policyholders.
Policies Written Upon Rebate.
The committee investigated the
subject Of rebating by agents of the
Northwestern Mutual, and refers to
cases and says: We are satisfied that
in each of these cases the policies
were written upon rebate, and are
also satisfied that the sub-agent help
er Is essential a rebater and select
ed by the agents with the full under
standing that he is to write policies
at rebated premium.
Condemns Campaign Contributions.
1t appars from the testimony, the
committee says, that several foreign
insurance companies operating in
Wisconsin have made it common
practice to contribute large sums OF
money belonging to the policyholders
as Campaign contributions" and the
icommittee believe that the state
Ishould place its seal of condemna-
ton on the practice of the officers of
any insurance company doing bust
ness in Wisconsin using funds of its
policyholders for any such Illegal and
immoral purpose.
Large Surplus Funds.
The investigation, the committee
says, disclosed the fact that a number
of stock companies have accumulat,
ed a large general surplus. This sur
plus is paraded before the prospec,
tive policyholder as an argument il
favor of the economy and solvency OF
the company The policyholder is
fed to understand that this surplus
belongs to the policyholders. We are