Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-08-12

resolutions.
This year there is no minority report
of the committee The recommendations
and scorings are given to the association
without a dissenting voice for the first
time in the history of the committee. The
personnel of the present committee is: R.
w. Breckenridge of Omaha, chairman;
Burton Smith of Atlanta. r. A. Mercur,
Towanda. Pa: w. r. Vance. Washington,
D: c.. and Robert Dunlap. Chicago.
In the way of Introduction the report
says:
American People Indignant.
THE American people are Justly indig-
nant at the corruption, incompetence and
reckless extravaganza disclosed by that
greatest inquisition of modern times,
which followed close upon the heels of
the Equitable controversy. A general nom
discriminating distrust of insurance COM
panles and their management was there
by generated. much of which is unreason-
able and unmerited and due to the ignor-
ance of the public respecting the prin-
o1ples upon which insurance is based and
supervising It, There Is no occasion for
general distrust of the life insurance
companies of America, though it may we'll
be doubted whether all of the schemes Of
life insurance which enjoy current popu-
larity will bear scrutiny; and it Is certain
that the sentiment of fraternaiism Is
widely prostituted by the dishonest and
extravagant management of some of the
so-called fraternal orders"
After telling of the magnitude Of the
insurance business, calling attention that
the public pays $1,000 DOC, 900 every year
for insurance, the report goes into rea-
sons why insurance breeds corruption.
Some of these are
Why Corruption Exists.
The system of state supervision in
vogue. but back Of that in the opinion
OF the committee. the responsibility for
corruption by company and state officials
with respect to life insurance, lies In
the extravaganza, manipulation Of in
vestments. excessive commissions or riot
Gus desire FOR 'bigness' which was de-
yeloped out Of the failure to apportion
frequently and account for the immense
surplus accumulated through the de-
ferred payment policy These
been regarded as spoils by insurance man
ayers, whose consciences have been COM
mercialized according to modern stand
ards by the state insurance departments
and their hangers-on. and worst of all
by number Of state legislatures which,
with less knowledge and less scruple,
have treated as legitimate loot these
moneys raised by voluntary taxation to
provideaRgainst disaster and calamity.
1T is just as dishonest to steal under
the protection of the law as without 1t:
1t Is Just as dishonest for the state to
lay unholy hands on trust funds as for
an individual. and the states commit a
monstrous injustice when they seek even
partially to maintain themselves by legis-
lative raids upon trust funds: moreover
1t Is the climax Of cowardice to commit
extortions In the name Of police power,
but most Of them are doing 1t, and thus
commit the Identical offense they con-
denim and punish In the Individual" says
the report.
But we have not risen above the idea
that money in sight belongs to him who
can get hold Of It and keep out Of iaiI.
and until that dishonesty, which is a part
Of the foundation upon which our pres
ent insurance legislation rests. Is pulled
out Of 1t and the American people ouit
cheating themselves they can have no
absolute protection against the evils I'M
der consideration.
''The American people should wake I'D
to sense of their responsibility,
Defects of Supervision.
Under the head Of Defects Of the sys-
tenn Of Insurance Supervision" the re-
port says. in introduction: THE other
chief cause of evils which infect insur-
ance Is the incompetent or corrupt adj
ministration Of the unsatisfactory fnsur-
ance laws in force in the several states.
Your committee does not wish to be I'M
derstood as charging that all state in
surance commissioners are dishonest, or
that all of them are incompetent
The trouble Is that the state insurance
departments, always keeping in mind the
few exceptions. are sinecures. They pro-
duce rich. ripe political plums. Knowl-
edge Of the insurance business Is the last
thing required. They offer the
most seductive opportunities for fraud and
graft in the United States"
Under the caption The Need Of Sane
Legislation" the report says in part:
But the legislation demanded must not
only prevent future evils. but correct those
now existing. The fire Insurance contract
in common use is about as complex docu-
ment as was ever devised and it ought to
be very much simplif1ed."
Fully 1000 words OF the report are de-
voted to the deferred dividend surplus as
one of the two producing causes of the ex-
listing evils which must be cured. To the
end that the cause be removed, the report
insists that dividend SURPRISES be treated
as a liability and not as an asset and to
make more accurate public reports with re-
spect to their liabilities, actual and con-
tingent than they have done.
Under federal supervision the committees
report says that interstate transactions in
insurance should be regulated by an act Of
Congress under the commerce clause of the
federal Constitution; interstate transactions
In insurance are commerce and a fed
erat insurance department with Jurisdiction
over Interstate transactions in Insurance
would furnish the American people higher
degree OF protection against incompetency
and fraud than is possible under the ex-
listing system of state supervision.
Recommends Resolutions.
The committee recommends the adoption
of the following resoiutions:
Resolved, That this association disap-
proves and condemns the prevalent custom
which makes state Insurance commissioner
ships political prizes to be distributed as
such without regard to fitness or knowledge
of the insurance business.
SecOnd-That all companies created UNI
der the laws of foreign countries be re-