Arizona republican., 1907-10-31

Insurance Methods-Ths Cure" He denounced bitterly all advisory board contract schemes and stock agency schemes now being used by some com panies to secure business. Here is part of his address:
 The company which has had the longest experience with special con- tracts covering a period of twelve years. has been able to pay but 36 per cent of the promised dividends, all though it has had a very rapid growth. This 36 per cent, which amounts to several hundred thousand dollars. has been taken from the pockets of one class of policyholders and placed in : the pockets of another-simply as a re- ward in the form of rebate for talk ing insurance-and this expense is con- stantly increasing. The people who go : into this company now must pay tri- bute to fund which is used in paying
 theese rebates to people who came in
 years ago.
 In many of these schemes to induce
 insurance the consideration for the dividends or profits promised is the
 services of the contract holders or
 stockholders. who are supposed to fur ] nish names of insurables and other wise assist in procuring business. My 1 inquiries into this subject have con-
 vinced me that not 10 per cent of i those who accept these service con- l tracts perform any service what ever ! The companies using this form of con-
 tract make no effort to supervise the | holders to see that they perform the
 services for which they are paid. This
 in itself, is convincing evidence that
 the special contract or stock dividends
 are intended to be rebates.
 1 It is very difficult for our law mak-
 CTS to keep up with these gentlemen
 and it is still more difficult to head
 them off with specific laws. The most of our legislatures meet once in two years while those devising schemes to
 milk the public meet every day. and judging from results, also every night One of the late plans which has operated successfully has been to adopt complicated rebating scheme, ana
 while it is being investigated. rush the promotion and the soliciting with all | possible speed. so that by the time the plan is condemned another can be pu, in effect, or the promoters. having
 made their stake, may by that time be ready to come down to prescribed
 methods Still another plan is to sell stock in a securities company and take
 pledges for insurance. and after the
 stock is thus placed. license the insur | ance company and commence business with nice bunch of ready made in- surance. and with the stock all placed. Thus much of the deception and dam age is done before the concern comes under the control of the insurance de- partment. The public should be fully informed by commissioners of all such | irregular promotions.
 Of course. these schemes are devel- oped so rapidly and their number and variety are so extensive that it is i'm possible for q legislature to make laws fitting every offense. If we commis- sioners wait until we have statutes specifically prohibiting all the various
 wrongs of which we have knowledge in the insurance business. we know they
 Will never be corrected. I believe our duty to the public demands that we make open and vigorous war upon ali such abuses. A fake or unfair pro motion can not succeed if the insur- ance commissioners publicly and off cially condemn it.