Los Angeles herald., 1909-02-22
CHAMP PIONED BY
INSURANCE MEN
Los Angeles Association of Life Un-
derwriters Endeavoring to Protect
California Against Undesirable
Business Methods

Four acts now pending in the legis-
lature are being watched with interest
by California insurance men, who re-
gard them as among the first steps
toward raising the standard of insur-
ance in this state. They are aimed at
restricting practices against which the
other states have legislated already,
which, insurance authorities say, have
cost California policyholders many
thousands of dollars. One bill in par
ticular will end the operations Of num-
erous wildcat companies, many of
which cannot do business in the states
in which their home offices are located
The bills include measures to prevent
discrimination, by giving favored in
surants nominal rate on their policies
or by rebating the premiums Rebat-
ing has proved disastrous to many
policyholders by inducing them to drop
insurance in one company for a fancied
advantage through special privileges
offered elsewhere, leading to an un-
stable attitude toward insurance con-
tracts. This usually lands the insured
in a company no more scrupulous about
its other business methods than it is
in regard to discriminating in order to
obtain business.
Another measure is intended to pre-
vent Misrepresentation to the insured
1t gives the insurance commissioner
power to impose a fine of from $100 to
$500, and when such a fine is imposed
the certificate of authority to do busi-
ness in the state is taken from the
company affected until the penalty is
satisfied.
A bill of special interest to insurance
men because of methods which have
become noticeable in recent years is
designed to bar from the state COM
panies that write what are known as
board contracts" Such contracts
make the purchaser a stockholder in
the selling plan of the company con-
cerned, and he is induced to buy through
the promise of alluring returns through
the purchase Of insurance. This plan,
or variations of it, promising advan-
tages through special contracts of which
the ordinary policyholder was not sup
posed to be cognizant proved a busi-
ness getter for many newly organized
companies, but most of those which
adopted such schemes lasted but a few
years. Several have written contracts
in California contingent on the future
business secured in this state Suisse
quently they withdrew from the state.
taking with them hundreds OF dollars
from Southern California alone for
which no return has been made.
Follow Example of East
w AllG SdSI0GI STATES nave generally
prevented such practices nothing has
heretofore been done in California, and
the life underwriters associations of
Los Angeles and San Francisco took
up the matter comparatively, feeling,
as an officer of the Los Angeles asSo-
cation expressed it, ''that California
remained the insurance dumping
ground of the country" Insurance
! companies debarred elsewhere sent
some of their sharpest men to this
state to work advisory board" and
stock agency schemes.
The Los Angeles association has done
a large amount of WORT in furthering
the passage of the bills It's members
| believe that the public will be the
beneficially more than the insurance
agents, but they wish to see California
as free from dubious insurance meth
DDS as are other states On this an of
ficer of the Los Angeles Association
of Life Underwriters says:
| Periodically for the past twenty
! years, with constantly increasing fire.
quency, California has been systemat-
ically looted by bunco insurance
| schemes To the honest business man
the 'bunco' element is not at first ap-
parent. SO subtle are the arguments
used and so nicely adjusted are the
| calculations that none but a profes-
sional can detect the flaws in the in
| ducementS offered.
California Victimized
During the past six or eight years
there have been organized in the Unit
ed States about one hundred life in
surance companies: many of them Of
fering various sorts of special advan-
tages to special policyholders' Cali
fornia has been the legitimate stamp
ing ground for many of these COM
panies
ANY legislation that will protect our
citizens from repetition of the same
old game under some new guise should
receive the generous support of our
legislators and be warmly welcomed
by that portion of the insuring public
that appreciates legitimate insurance
and honest efforts of it's representa-
tives''