Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1906-12-13
State Insurance Commission
Still Unable to Formulate
Report to Legislature
DEFERRED DIVIDENDS ARE BAD
Enactment of Prohibitory Statute
Would Bankrupt Some of the Best
Companies in Iowa-commission May
Limit Amount Of Dividends Permit
ted.
Prohihitorx Statute
Special to Times Republican.

1
Des Moines, Dec 13-"If deferred
dividends are abolished some of our
best Iowa insurance companies will he
/ forced into the hands of receivers" say
some of the legislative insurance COM
missioners.
| Deferred dividends are a bad thing
and being bad thing should be abol-
lished," say other members of the COM
mission.
| The question OF deferred dividends is
the final question to be settled in the
legislative commissions report. 1t was
expected that the commission would
meet again today and finally decide up
on the report but Nate Kendall could
not be here till the first of next week
and it is now probable that the re-
port will not be filed till then.
Four distinct times the commission
has approached an agreement as to the
terms of the report Another agreement
has been drawn up and the commits
sioners have expressed pleasure with 1t
with the exception of Jamison. There
is no certainty that an agreement will
be reached Monday when the commits
sion meets.
Gravest of differences divide the
commission on this one point. Every
other point in the report has been fin
ally passed upon. The argument that
is being made now before the commits
sion against the deferred dividend will
all be made before the legislature when
1t meets next month. 1t Is claimed in
Athe first place that It. is a gambling
proposition,s that dividends are not In
surance and should not be mixed up
with insurance; that a person about TO
take out insurance is argued into de-
ferred dividend proposition on the the
ory that he is going to get a lot OF div
idends OF uncertain and indefinite
amount and that a person is frequent
ly argued into taking out insurance for
the sake of the dividends which are
a snare and delusion.
The members of the legislative COM
mission are all opposed to the deferred
dividend as an abstract proposition but
here is the Royal Union OF Iowa and
other Iowa insurance companies which
are writing 95 per cent Of their bus
mess in deferred dividends on the
promise of big earnings. If this is cut
off and they lose 95 per cent of their
business they will either go to the wall
or else be years in recovering.
If they try to write the same amout
of business in straight insurance they
will fail for without the idea that IT is
an investment a man seeking insurance
will go oftentimes to some of the ira
ternals, where he can get 1t cheap
One basis Of settlement reached by
the commission was the annual cred
iting of dividends. 1t was thought
this would still enable the Iowa COM
panies to write the business they had
been writing with the idea of getting
dividends on their insurance. But the
insurance men argue against it on the
ground that the first annual payment to
an old line insurance company goes all
to expenses and on the second years
payment there is very little if any div
idends to credit up. The third year
.here is still but a small amount, and
if a person argued into taking In
surance on the promise of big divi-
dends. gets two or three OF these an
nual statements with little or no divi-
dends credited up to him he will drop
his insurance The dividends pile up
rapidly at the tail end and this is the
one strong argument of the deferred
dividend advocates for allowing the
companies to continue in the business.
At the same time lawyers hold that
this annual statement becomes an OBJ
legation and the companies do not wish
to assume any obligation till the pol
lev is matured In New York the cam
paign contributions and legislative lob
bying expenses came from these funds
that pay the dividends, and to make an
annual statement would greatly inter-
fere with continuing these contribu-
tions and lobbying.
Still another argument is made that
if the company is to make statement
to the person insured. why should it
not continue the process and pay the
obligation over in cash or credit it on
the next premium?
So far the commission has failed to
agree on any of these plans. 1t is bare
ly possible that an agreement may be
reached to limit the per cent of de-
ferred dividend policies written for
each year till the deferred dividend
business is gradually wiped out.
JUDGE PLATT OFF DUTY.
Wife's illness Prevents Him Presiding