The Montgomery advertiser., 1906-12-14
STOPS THE POLICIES
INSURANCE DEPARTMENT GOES
 AFTER "tGsECLALs."
Forbtds Companies to Write aAdvIsOry Boarar Coneractssim Aiabama, and Refuses to Isaue Licenses-
 Regarded as Rebates.

The State Insurance Department of Alabama will forbid the writing of Special" or advisory board contracts" with policies. after the first of Janu- ary onncial notice to this eftect was sent out yesterday by Deputy Insurance Commissioner A. c. Sexton to all companies in Alabama writing such contracts.
 The law isga bit indefinite as ito whether the Insurance Department can prevent the writing of these special contracts" but the Department will presume that it's right to forbid them is clear until 1t Is directed otherwise by the courts. The Department will welcome a ruling on this question from the courts, but in the meanwhile no license will be issued to a company that continues to write such contracts.
 "speeIalr' or advisory" board con- tract is a contract sometimes given with a policy, to favored policyhold- CTS. The contract may promise to the polieyholder that he will be given S1 on every S1.000 worth of business writ ten in the State, or that he will be given 10 cents on every $1,000 worth of business written in the entire country. This money may be deducted from his premiums as he pays them to the com pany, or 10 may be handed him in a lump sun.
 The ordinary run of policyhoIders never sees one of these special con tracts. They are claimed to go to men with political pull, or men with some influence. The company issuing them hopes through the acquisition of this particularly favored poiicyhoider to get additional business. As can be easily seen. the whole proposition is very close to a rebate Rebates are in- terdicted by the Alabama law, but the companies Issuing the special contracts have contended they are not rebates. .fa.. \. A.-tm A.. naea would have the insurance departments of the various States believe that they were cash dividends.
 There Is reason to believe that a majority of State insurance commis- sioners are opposed to them, and in Tie point is made against these "spe- ciaT contracts, that while cash dtvi. dends are based on actual earnings, the
 special" contracts are based entirely upon estimates. Therefore, to Deputy Insurance Commissioner Sexton the Specials" look more like rebate than they do a legitimate dividend.
 The matter ia not a new one to the Insurance Department Companies do' ing this kind of business have been the subject of no little complaint. Cap tain Sexton has determined for the best interest of the insurance business of the State that the specials in the future shall not be issued.
 His letter sent out to each of the companies in Alabama doing that kind of insurance business was brief. II only notified them that in the future no license would be issued to compa- hies which granted 'special' or lad
 vIsory board' contracts, unless the company agreed to the abandonment oi 1 the policy in the future
 Nor Is there any need for any con- cern on the part of the holders of those aNacial contracts No aftau1nt will he ] made to deprive the holders of such contracts. There is no ex post facto feature to the Deputy Insurance Com
 missioners ruling. It seeks only to prevent the continuance of any such insurance business in the State.