The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-08-14
IGNORANCE CAUSES
ENORMOUS LOSSES
Insurance Law Bar Association
Proposes Legislation
SUPERVISION lNEFFEC TIVE
State Insurance Departments Are Po-
litical Slneeures Which Cannot
Give PoIicyholders the Re-
lief They Must Have.

Omaha, Neb. August 1S.-The report of
the commission of the Insurance Law
Bar association, to be submitted to the
convention of the association, which meets
at st. Paul August 29-S1, was made pub
lie today by Ralph w. Breckenridge of
Omaha, chairman of the committee. The
report goes into the subject very ex-
tensively and the conclusion is summed
up In the following recommendations:
l. That the insurance commission be
recommended to draft and report to the
annual meeting of the association, a bill
that shall safeguard the life insurance
companies and their policyholders. but
which shall require deferred dividends on
life policies to be biennially apportioned,
credited and certified to the holders of
such policies
2. The repeal of the so-called reciprocal
or retaliatory tax laws.
B. The repeal of the valued policy laws.
4. The creation in each state of the Of
flee of fire marshal.
g. Strlcter Incorporation laws in the sew
eral states with particular reference to the
in insurance companies.
Forbid Use of Mails.
g. The enactment of federal statute
forbidding the use of the mails to persons,
association, partnerships or copora-
lions conducting any kind of insurance
business in the United States who are
not licensed to transact such business by
ia ST
co-partnership or corporation are doml-
ciled, or under whose laws any such cor
porations are created.
T. The enactment of a federal statute
providing for the supervision of inter-
state transactions In insurance.
These recommendations are signed by
Ralph w. Breckenridge of Omaha, chair
man; Burton Smith of Atlanta, Ca, and
Rodney A. Mercer of Tonawanda Pa.
Appended to the report is a copy of a
bill proposed for enactment by Congress
to establish In the department of COM
meree and labor bureau of insurance
This committee made recommendations
on insurance laws at the last convention
but the matter was referred back for fur
Their consideration.
Immensely of the Business.
After giving figures to show the inn
mensity of the insurance business in the
United States, the report says:
| More people are therefore concerned
| with insurance than any other institution
of modern life, and the public interest in
insurance is intense but the almost uni
versal ignorance with regard to it, and
| a nrD nj
has made possible through legislation os-
tensibly supervisory. but actually de-
struetive in its tendency a greater men,
ace to the interests of the policyholders
than they have suffered through the mis-.
judgment and dishonesty of company Of
ficials and the incompetence of unfaithful-
ness characteristic of the majority of the
state insurance departments
Armstrong Work Conspicuous Failure
The most conspicuous exhibition Of
legislative unwisdom is found in the bills
| proposed by the Armstrong committee
| and passed by the New York legislature.
| The most conspicuous because 1t has the
widest advertisement and because of the
things which the committee might have
done, but failed to do so, and its ignorance
of the subject confessed
The opinion is expressed that the accu-
sponsible for corruption, developed in the
conduct of life insurance companies.
Government supervision of insurance
companies is urged as a necessity but
the burdensome taxes levied against the
companies by the various states are de-
clared to be unjustihable. These taxes
which are said to amount to $25, 600, 900
a year, are ultimately paid by the policy
| holders.
The policy of some states of taxing out
side companies more heavily than home
companies, the report declares, is hostile
to the spirit of the federal compact"
OF state insurance departments, the re-
port says;
Departments Are Sinecures.
1.-The trouble is that the state insurance
departments are snecures. They are po-
litcal prizes Knowledge of the insur-
anee business is the last thing required.
They are mere collecting agencies They
offer the most seductive opportunities for
fraud and graft that exists in the United
! States"
State insurance commissioners are
quoted as saying that they are power
less to accomplish the objects for which
their offices were created, and the re-
port adds;
las a matter of fact the system of
state supervision as administered under
the laws now in force Is miserable
failure. The honest and intelligent com
missioner is barred from effective super
vision by the very laws he is bound to
enforce, which afford golden opportunities
that dishonest officials have been quick
, to grasp"
After Analysing many supreme court
decisions with the purpose of showing
that they do not have the effect attributed
to them by opponents of federal super
| vision the report says:
1.-THE real opposition to the federal SUI
pervision of insurance does not rest upon
the absence of congressional power, but
rather in the dissemination to exercise It..
That objection is political in character
and has no solid foundation"