The Forest Republican. [volume] (Tionesta, Pa.) 1869-1952, 1908-05-27
UNWARRANTED COST
Would Be Permitted by Insur.
anCe Law Amendment.

surance Committees Bill - Would
Open the Way to Wastefulness and
Extravaganza In Rivalry to Secure
New Business.
Albany, May 26. - In an extended
memorandum Governor Hughes states
MS reasons for not approving the bill
of the assembly insurance committee
which would have amended section 81
OF the Insurance law so to mitigate the
restrictions made by the legislation
which followed the life insurance In.
vestigation of 1905 upon the expend
ltures of life insurance companies do
ing business in this state in obtaining
new business.
The governor holds that the act
would permit unwarrantable outlays
and facilitate a return to the injurious
conditions of past years" The pro.
posed limitation of first-year commits
slons to 80 per cent, for instance, the
governor says, 'is illusory and not
real" for, he goes on to say, 1T is not
simply the rate of commissions IN
which the policyholders are interested,
but the amount which is actually paid
out under any form of compensation
In the effort to obtain new business"
Existing Restrictions Necessary.
With special reference to a pro
posed modification of the existing pro.
hibition of bonuses, prizes and addi.
tional compensation based upon the
volume OF any new or renewed bust.
ness or the aggregate of policies writ,
ten or paid for" the memorandum
says that "the abuses which had aris.
en- through the promise of bonuses
and rewards of various sorts for OBJ.
tanning a given amount of business
made 1t advisable to impose the pres.
ent restrictions. No sufficient reason
appears for a change in this policy
and In any event the amendment could
not be approved in the ambiguous
form now proposed"
Nothing was more clearly revealed
in the legislative investigation of in.
surance conditions" SAYS the cover.
nor, than the losses which had been
inflicted upon the policyholders by
wastefulness and extravaganza In the
rivalry to secure new business. I'm.
posing totals for the amount of bust.
ness written and of premium income
were paraded before the public as evi.
dence of successful management. re.
gardless OF the fact that while reason.
able accessions are desirable. the
pressure for new business at exorbit.
ant cost is positive injury to the pol.
1cyholders and makes serious inroads
upon the gains and accumulations to
which they are entitled.
The true standards by which in.
surance management must be tested
were obscured. Those who desired to
conduct business upon an economical
basis and with proper regard to the
interests OF the policyholders, were
driven by the stress of competition to
outlays which they did not approve"
The limitations opposed by section
70, the governor declares, are in the
interests of companies themselves and
OF the large number of people who de.
pend upon prudent and conservative
management for protection for their
homes.
This should not be changed hastily
or without adequate opportunity, with
proper range of experience, for de.
terminging wherein any change may
be advisable without paving the way
Tor repetition of abuses. The oppo.
site bill cannot be regarded as a mere
corrective amendment for the purpose
OF improving the law in manner con.
sistent with its purpose. It must be
tested by what it will permit and not
by what would actually be done under
1t by conservative managers"
Conservative Management the Best.
Or the much discussed falling off in
the amount of business written by the
New York companies during the year
since the present law became opera |
tive, Governor Hughes says that at
is unnecessary to attempt a statement
of all the causes which produced this |
result. 1t is desirable of course that
new business to a normal extent |
based upon normal cost, should be OBJ |
tanned. There is no sufficient reason
to doubt that it will be. But there are
other matters which also must be TAX |
en- into consideration. 1t is useful |
to note the gains which have resulted |
from economies and reduced pres. |
sure"
He then cites statistics to show that
the New York Life, Mutual Life and |
Equitable made gains of millions in
"loadings," and adds that the com
parison would be still more striking II |
it were made with the years preced. |
ing 1906. He continues:
"The gains from economical man. |
agement have already been reflected |
in largely increased amounts set
apart for payment in dividends, and |
the policyholders will reap large bene |
fits from the reduction of expenses.
Proper conservatism will vindicate It. |
self and the New York companies, as
their improved condition becomes
known, will not suffer but rather gain
from comparison with those which op.
crate more extravagantly."
Matricide Committed OF Matteawan.
Syracuse, May &C. - w. Halstead