The Birmingham age-herald., 1923-03-25
COMPENSATION LAW MUST BE COMPULSORY SAYS LEWIS BOWEN
Points Out Difficulties in State ConStitu-
 ti0nS
By LEWIS BOWEN

Minimum RequlrementS-The com pensation law should be compulsory unless it conflicts with the state constitution.
 Present Status.-Of the 42 compen- 50 are elective. Many of the states enacted elective laws to overcome constitutional difficulties.
 nt.-Compensation laws may be either compulsory or elective. A compulsory law is one which re- quires every employer within the scope of the compensation law to &C., cept the act and pay the compensa- ton specified. An elective act Is one in which the employer has the option of accepting or rejecting the act, but in case he rejects the injured cm- ploye may sue for damages and at the same time the employer loses his common law defenses. In other words, the employer is penalized if he does not elect. If compensation law Is desirable then it should apply to all employments. Permitting the employer the option of accepting or rejecting the act defeats in a large measure the purpose of the compen- sation act. In most of the states having elective laws, a large propor- ton of the employers have accepted the act but in some comparatively few have done so.
 INSURANCE
 Minimum Requirements.-Ever em- ployer should be required to furnish adequate security to guarantee his compensation obligations under the law.
 Present Status.-All but three states Alabama, Arizona and Kan sas) require the employer to secure insuring his risks in an authorized private insurance carrier, or in a. state fund where such fund is pro- vded, or in the case of self insurer to deposit bonds or other collateral se- curity and to furnish financial statements showing assets and lia- bilities.
 in private carriers. Thirty-two states permit self insurance. Seven states have an exclusive state insur- ance fund in which the fund becomes the sole insurance carrier, no private company being allowed to operate. Nine states have competitive state insurance fund in which the fund op- crates in competition with other forms of insurance.
 Comment.-There has been much discussion as to the relative merits of different types of insurance. The department of labor recently com pleted an ivestigation upon the sub ject. The results of this investiga- tion showed that the state funds could operate cheaper than either the mutual or stock companies. In fact, the average exclusive state funds can do business about 25 to 30 per cent cheaper than the average private stock company. There is consider q ble variation in the quality of serv- ice furnished by the several state funds. However, comparing the state funds as whole with the private companies as whole it was found at the state fund furnished slightly better service than the private com panies. As regards security state funds are on pair in this respect with private carriers. Thus far no injured workman has lost his com pensation because of the in. olvency of state funds nc. has any large mu- tual company become insolvent. On the other hand there have been dis astrous failures of private stock com panies during the last three or four years. These failures have resulted in hundreds Of thousands of dollars in unpaid claims.