New-York tribune., 1911-03-17
MASSES NEED INSURANCE.
Hotchkiss Says industrial Form
Is Only Kind They Can Have.
REPORT ON METROPOLITAN
Superintendent Says Company
Has Complied with Letter and
Spirit of 1906 Laws.

the Writing or Such nsuraUcc ny private
corporations IL the opinion Of William II.
Hotchkiss, State Superintendent OF insur-
ance who today made public memo
randum on IN examination OF the Metro
pol:tan Insurance Company.
Superintendent IIotchkiss says that he
has reached the same conclusion as was
apparently reached by the Armstrong
legislative investigating commttee-that
the interests ol government require that
the Industrial masses have insurance. paid
for weekly to collectors who 20 from door
To door. II must he given them either by
private corporations or by the state
Hence, the stale must permit corporations
to write Industrial insurance practically as
II Is row written, or else the state must
prohibit the writing Of such insurance ny
private corporations and write II itse0.
The state is. in my Judgment. not yet ready
10 assume such burden.
indeed. it may properly be concluded
that the present need is no: so much now
laws ON this subject a. the thorough super
vision aud frequent examination OF COM
panics of this class, coupled Win thal
searching publicity of men and methods
nov rightly dcmanded OF all corporate en-
terprscs in the insurance field.
The memorandum, after saying that the
Metropolitan is inc only Ncv York life in
surance corporation which writes industrial
insurance. and f. tho largest company IN
tho country, II not IN the world. which
makes a speciality Of this kind Of life in
demnity. Gesc.1bcs at some length this form
OF insurance and tells Of the financial stand
tn. II the corporation.
Criticiss! by Armstrong Committee.
Referring to the recent examination, the
memorandum ssys:
TIVE Armstrong report BESIDES csllns at
teniion to ccrtan inherent features oi IN
aGstTial insurance, criticised this company
for certain matters and methods 10 Nuicn
attention has bceB gwen "n TINS eNs'nl'd- :
ton Thus, the department examiners
eought to- ascertain whether there had been
q suhst9ntial compliance with both the
spirit and he letter OF the a.n"ndafory
laws of loCS 40 syndicate pariicipa'i"nS
w"rn found. the Objectionable" trading ~
real estate has ceased. While. on Sn invest
rnent Of upward of lN1 in res! estate
mortgages. this company no" hoio.
through foreclosure only ono piece of
resltr. and no other realty except its home
of'ce tudirgy and property used Tor once
purposes IN several cite, throughout the
country.
Tho tHo banks previousiv controlled have
now hncn merged into ono. which - used az
= clearing house for tho company I'm
mcnsc rsm'ttaucc and payment iranSa
tione and pays the COMPANY = per Ceni "'i
i,s balances 81 of The date of the oNanIi-
nation there was only one collateral loan
outstanding, and ;hat Of relatively Shah
amount.
The fire Insurance frm mentioned m fhc
Armstrong report s,ill wri'ec this com.
PAWS fire Insurance and tho stock anh
bond brokers mentioned in such relort 40
a portion Of the business of the colnpan'. :.
10. Incl AT
and therefore. saving and prot"cton III
its practice IN these particulars.
ON Tho COS, ~ industrial insurance the
memorandum says.
A. conpared with tho cost Of ordinsry IN
s,iraucs industrial Insurance ie expensive.
Tho Examiners report directs attention 70
reveral particulars which should NOT ne lof'
sight Of hv any one wiling 10 haN" Al me
facts The ratio Of total expense IN total
premi,Ims has in siX wears fallen from "a 'S
per cent 10 2ss1 per cont. IN 'ho same
period the benefits To no" POLICY noiders
have increased an average of ~ per nen'
ard tho hnnuees. largely 10 old poil'N
holders have amounted 10 an average of
about se-en am one-half weeks premiums
gist-. owina 10 mo pecuIiarih's "' hIus
irial insurance - IS diHicult 10 flrosS
fh&se rAdpciiors in "oft IN terms IF dollar"
and cente rut ,haf there have been sub
stantisl reduction. i- apparent
Fur'her the COMPANY claims that IN 1879
cost. Th;s seems 10 10 borne ont hv the
statement of tho examiner in discn'slng
tho gain i'm the companvs surplus from ne
romher -. Ia's 10 pccer,ber 81. 1909
Lapse Ratio Falls,
After calling attention to tho tact that
the Armftrorg report stated that tho lapse
ratio Of tho company vas eN'rscrd'ns'y'
Mr.. Ho'chkis. ssye;
Tho quarterly lapse ratio has fallen from
81 IL per cent in the Armstrong report -
81 10 per cent at proaon'. While can'elia
tions of policies issued ~ l@Ha amount fn
80 rer cent. as against sn average tpr
o" >ssr5 pres,ors TO shn ,ari,nS Maz'rSI these
ard similar figures. tho examiners con
clude
II is evident from tho above comparison
that there ~ a substantial Improvement IN
tho persistence of the business.
The report shows that the average COM
ponsa,ion Of the field force Of this com
panv is: Acente siS 20 week. assistant
suucrin,ondente. 50 = week: surnrintend
outs. IS; 20 a weok. such compensation. in
almost every case. depends upon tho a..
tivity Of the agent i'm getting husino7, and
in preventing lapsation. or. in case Of lap
.atior. in securing substitute insurance.
The examiners arc quoted as Sayins:
Tho agents average compensation. while
not large. seems 10 he commensurate with
the abilities of tho average agent There
are many agents who earn nearly double
tho average amount. The compensation Of
all agent Is determined by himself. and tho
examiners find that tho company does not
insert in it, contract nor demand comp'i
ancc with any impossible OF arbitrary con-
ditions.
Continuing tic memorandum says:
The criiiciFn Of the Armstrong report di-
rectsd 80 the enormous pr"his and rapidly
increasing surplus of this company seems
20 have hoon justified by the facts as do
veiopcd on that investigation. But EN.@D -
the s:.No.CNo of capital was paid IN IN cash.
t,to balance came from a capitalization Of
tho surplus Thus. then. as now. stock
holders received In effect a ~ per cent an
nual dividend on their original investment.
increases in capital from earnings arc 10
longer possible. and whatever he tho rront'
annual additions 60 tho surplus. to increase
tho socuritv nt i,s policyhoders. o.. in the
shape Of bonuses ana dividends, direct to
the policyholders themselves.
rompauv foY certain practices IN connec-
ton with the settlement Of claims. on" nt
which should he noted here. II ~ cl"arly
improper for All insurance COMPANY 10 ua'
tha methods Of i railroad claim agent IN
gathering evidence aeainst its poli'yhold-
ers This the company seems 10 do. IN 50
far - II permits OF au'hor7eF itS agents.
either in advance of 90 after II has do
ridod on election 81 n claim. to secure tho
signature or the claimant 10 prepared
form that can hc uscd against such claim
ant in ease litigation r"gults.
II seems incongruous ina company
writing non-divd"nd policies boasts diy-
dend distributions aGGregating 10 per cent
oi its annual premiums. Ihif, however.
exrresses- though not in tho language used
bv this company -''s practice during AZ
h.