The Washington herald., 1906-12-02
Supt. Drake, in Report, Still
Begs for Reform.
SINGLES OUT FIVE COMPANIES
Declares There Is Pressing Need for
Stringent Law Giving Local De-
pnrtment More Power I'm RevOkinE
Licenses of Those Concerns that
Do Not Comply with It's Rules.

the jurisdiction of the Districts depart
ment of insurance, and making ii posi-
BILE to regulate the life companies that
are now disregarding its rulings with i'm
punity, are urged In the fourth annual
report of Supt. Thomas K. Drake to the
Commissioners, made public yesterday.
He says there is pressing need that the
bill now pending in the House be passed
at the next session, as many of the
abuses. particularly in the industrial as
sessment life associations, have not been
corrected. and viii not be until his hands
are strengthened by statutes. The report
declares:
''The questionable methods some of
these associations practice work injustice
and hardship upon their certificate hold
ers, who are mostly poverty-stricken ne
groes and ignorant white people.
Complete exposure was made OF the
business methods and plans of these asso-
Citations at the hearing on May l9. 1896,
before the Judiciary Committee OF the
House; without effect. however, so far as
their being brought under surveillance by
enactment"
The Delinquent Companies.
In this connection the superintendent
mentions the Mercantile Fire and Marine
Insurance Company. the Western Indus
trial Association, of Missouri; the Ameri-
can Fraternity. of Virginia; the United
Americans. OF West Virginia. and the
Modern Workmen of the World. OF Vir-
ginia, all domici!ed in Washington. and
continues:
Il submitted convincing. written. and
printed evidence Of violation Of the pos
tai laws in connection with their business
on December %, 1905. with the request
that their cases be submitted to the Chief
Post-office Inspector for investigation.
which you did: but no action. to my
knowledge, has been taken against any Of
them; some Of which. I believe. are not
authorized under their charters to do the
kind Of business GraternaD that they arc
protesting 10 do
The superintendent continues that out
of the III companies that submitted an
nual reports this year under the new pro-
visions in the District code only sixty
four were found TO be correct.
''Of the fifty-three statements which
were corrected by this department-som
erros having, of course, crept In unlnten-
tionaily-before licenses could issue. the
sum of s.. .595. 1876 was deducted from the
assets as being worthless or. for other
reasons, they were not admitted
Need of General Reform.
The report again calls attention TO the
need of a larger working force in the
department. and says that an auditor
is absolutely necessary. and that the su-
peTintendent is underpaid
The superintendent enters in detail into
the ethics Of the life insurance business.
saying that it differs from all other com
mercial lines. IN that It has to pass
through experimental stages. covering a
generation or thereabouts. very much the
same as the constitution Of a human be-
ing Is subjected to. by invasiOns and
ravages Of infantile diseases. that are
made upon II before attaining maturity
He says policy conditions ara one-sided.
as the policy holder has the right to dis
continue his part of the contract when
ever he chooses, without loss.
Instead of the necessary experience.
coupled with sufficient surplus con
tributed by stockholders-for promoting
purposes before commencing business
that a life insurance company must have
had before 1t can be considered safe be
yOnd peradventuTe, within the last dec
ade preiiminary-term insurance has been
introduced as Il substitute for these essen
tidls. Every company that resorts TO this
means of calculating its reserve liabUl-
ties throws the expense of the expert
mental stage Of the company's existence
upon the individual policy holder. which
is unjust and wrong. and should be for
hidden everywhere by law.
Following the civil war. scores upon
~ ms moo
organized in this country, principally for
speculative purposes and to provide posi-
ttons, too. for ex-army officers who had
distinguished themselves. either on one
side or the other Nearly all Of these
compa nies, however passed out of exist
ence either before or Immediately after
the financial panic OF 1873.
Urges a Reserve Fund.
ITO prevent a like experience, although
the conditions that are now incident to
the business are entirely different from
what they were then, at the outset the
stockholders of all new life insurance
companies, in my judgment, should be
compelled to contribute working capital
for promoting purposes. the same as is
required OF fire and casualty insurance
companies; also other commercial enter
pTises; and they should maintain from the
beginning a reinsurance reserve fund on
every policy issued, and the companies
should be administered, too, only by ex-
perienced. mature. honest, and time-tried
men, who have been trained in that par
ticular business"
The superintendent says the drastic
stand taken by the department has result |
last three years, and that there is but one |
legal reserve life insurance company now
in the District that has not complied with /
all his rulings. He explains that Il Is I'm |
possible TO revoke its license because Of |
his lack of discretionary powers.
After reviewing the recent life insurance |
scandal and the investigation which shook /
the business to its very core, he SAYS:
Both the new and the cid business Of /
many Of the life insurance companies /
have suffered on account of the sensational
heralding of the scandal through some
unscrupulous newspapers of the country.
but the effect of this is already passing /
away. and. il is thought, the time is not
far distant when the business OF life in
surance will be greatly benefited by the
results of this investigation and the busi-
ness will thereafter have greater prestige
than ever.
One Hundred and Five Driven Out.
The superintendent says 105 insurance
have been driven out of the
District since the installation of the de-
partment in January. 1902, and that there
has been proportionate increase Of le-
gitimate business. He quotes the in
crease Of premiums as showing the bet
ter conditions. In 1906 they were greater
by SS5S. .Os5 than in 1902 He saws otbor