New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1906-09-21
THE MUTUAL PLAN.
Is 1t Best for Life Insurance
Administration?
To the Editor Of The Tribune.

OF the large life insurance companies or TINS state
which are conducted the mutual plan has excited
so much public interest that II only proper
that attention should be called TO facts which
apparently arc overlooked IN this connection
When the legislative committee began It's invesu-
CATION IN September 1906 IT evident that there
was IN the minds OF that committee preconceived
conviction that IN life insurance companies the
mutual form OF government or government directly
by the polcyholders was the best form of govern
ment. and that by it's adoption the interests OF the
policyholders would be best conserved
In order 10 show that this form OK government
had been in practical and successful operation the
representatives OF the Connecticut Mutual Life In
suranoe Company were put upon the stand at an
early stage OF the proceedings. the Idea being.
doubtless. that this Was a representative mutual
company which had striven for remarkable
growth and which had always been conservative In
its practice. and It evidently expected BY the
committee that the testimony Of this company
would show q lively interest on the part OF the
policyhod.rs in the annual elections. particularly
In view OF the fact that in this company each year
the entire board OF directors was reelected
Mr Wells the actusry OF the company, IN his
testimony stated that the average number Of votes
cast for series OF years would probably be IN the
neighborhood OF fftyi that those fifty votes were
IN person. and that vote. so far as he knew.
had been cast by proxy since 1866. He further
stated that those people who voted were mostly
employees and agents of the company-that probably
four-hfths OF them were employees or officers He
further stated that the Connecticut Mutual had
about fifty thousand policyholders OF whom forty
thousand would probably be entitled 10 g vote.
10 was therefore. proved from this testimony that
IN this particular company, where II might natu-
rally be expected that the mutual form OF govern
rnent would be most effective. the policyholders
had never taken any interest. and that the cleo
ton had been determined each year by paltry
vote Of fifty persons mostly employees and officers
OF the company.
Testimony taken from the officers OF other NUT
ual companies developed the same apathy on the
part Of the polcyholders. and showed conclusvely
that up 20 the time OF the investigation at least
the mutual plan OF government had been inef-
fective.
sun clinging. however. 20 IT'S preconeeived
idea the COMMITTEES persisted in the belief that
the mutual form OF government was the correct
form. and went so far to draft complicated
law IN order 20 force greater interest on the
part Of the poIcyhOlders and 70 grant them great
er facilities in recording their vote at each annual
election; and another statute was passed, upon
the recommendation Of this committee. by which
TO q stock company operating under the stock
plan OF government was given a means OF being
changed into a mutual company. still following
the idea that the mutual form Of government was
the only correct one for life insurance company
Without going into too great detan the COM
mittee, further. by its Recommendation. and the
Legislature. by it's action. laid great stress upon
the responsibility OF directors In life Insurance
companies and the necessity OF their having
close and intimate knowledge of the affairs or the
company. IL being repeatedly asserted during the
investigation and subsequently that the directors
IN many OF the companies were open to great
censure because they were not familiar with all
that had been going on IN the companies in which
they were trustees.
The result OF the new law has been the forna~
ton OF several committees representing estensibly
the poheyholders Of the companies which COM COM
mittees have now made under the statute their
..The ticket nominated Jointly by, The 'Ptsrna-
holders Association contains thirty-six names,
twenty-five Of men residing in different parts OF
this country, one in Canada. one in England, one
in France and eleven in New York City. This Sc
ieyhoidersp opposed TO the present administration
Mse 56 5 IL body s OF f sy pc S sx @
all parts OF the world. may have clear kn know,
Is It possible 10 conduct corporation under the
keep these directors so thoroughiy in touch with
what is going on in the corporation that they
directors Of such vast companies as the New York
hand as their regular meetings must be frequent
and special meetings may be necessary az short
holders ticket who are thus available.
The nomination for the board Of trustees Of the
New York Lite are open to the same criticism
While at first glance it must be admitted that
feasible in a life Insurance company, ii is by no
means yet established that that idea is correct.
insurance management is essential; but, more than
Company NY which is managed by a board Of trGs-
tees VINO are willing and able 20 give their time
and attention TO the affairs OF the company
Life. The AFFAIRS OF such company must be SUI
perVised by committees who viii take active
and intelligent interest IN its business. The gem
eral administration OF the company, It's agency
department its loss department, its legal depart
ment, and, last, It's investment department, |
should each be placed under the constant and fire.
this proposed board there only eleven men |
must be borne in mind that It is paTtleusry din
cult to select finance committee sufficiently eX-
periencsd In such matters to be able successfully
TO invest and keep invested its enormous assets l
and. further. that the duties OF such committee /
are most engrossing-
II these nominations are a fair index Of the |
working Of the mutual form OF government under |
whether or not the committee was in error in as |
Stunning that government by the policyholder vot-
ing directly Is the only correct form Of government?
Is IT not likely to LEAD !ss many well posted life
tom 20 the selection OF board composed OF in |
dividuals OF excellent reputation and standing, but
like real direction Of the corporation are physi- /
After the present public clamor has subsidized IT |
may be that Il will appear that as a practical |
scheme the stock company. with its close organiza-
ton, where the directors have real and tangible
interest in the company is the best form OF gov
not yet been proved by past experience or by
these recent nominations that universal suffrage
extended 10 scattered policyhoders IS either wise,
safe or workable. The record OF the next year
may throw light on this much mOOted question.
! give below the residences OF the candidates on
the Mutual policyhoders' ticket: Eleven New
each OF the following places: HYDE Park. Vt:
y. Y; Minneapolis. Wilmington. Del;
Tallahassee, Fla; Richmond, Va: Chicago, Al
bany, Mount Vernon, n Y; Cincinnati, Atlanta. !
Washington, Boston. Indianapolis. San Francisco |
Springfield. No; Philadelphia, Quebec Yorkshire |
England; Paris, France.
WOwlr Scr COS