Evening star., 1941-02-28

companies be required to submit to
Federal examination.
Mr.. Pike asserted that these, to-
gether with other recommendations
offered by himself and Gerhard A.
Gesell, who conducted a study of
life insurance for the Monopoly
Committee, would. provide some
slight supervision over certain pri-
marily interstate aspects" of life in
surance. The business already is
subject to regulation by the States.
At the same time, Mr.. Pike de-
clared that the Federal Govern
ment should not supplant the States,
nor should it interfere with their
regulatory processes"
Wants Gaps" Plugged.
Mr.. Pike declared, however, that
IF some steps are not taken now
TO plug the gaps where State regu-
lation cannot do an effective job
or where standards may become un-
duly relaxed, the weaknesses in the
existing State regulatory system may
lead to its eventual decay and pub
lie clamor will then arise for an all
inclusive Federal regulatory system.
Mr.. Pike also suggested that the
Government encourage "the gradual
disappearance and eventual elimi-
nation of industrial insurance"
through system of lump-sum death
benefits under the social security
system or by providing Government
insurance of similar type through
postal facilities.
He described industrial insurance
as the type sold in small amounts
primarily to persons of little means
and under which premiums are paid
weekly or monthly to collectors who
call at the homes of the insured.
Mr.. Pike asserted that the question
of limiting the size of insurance COM
panies was one for special govern
mental study.
Would Liberalize Laws.
The States, Mr.. Pike contended,
should consider nberalizing their
investment laws to permit life in
surance companies to invest a por-
ton of their funds in common
stocks.
State action also was asked to
abolish what Mr.. Pike termed Clan
destine conferences" among life in
surance companies to fix rates
through intercompany gentlemens
agreements"
Mr.. Pike recommended that the
States also assist policyholders to
participate more directly in the
arrangements of their companies"
He suggested, as one method, ap-
pointment by State Governors of
public directors to membership on
the boards of life insurance COM
panies.
Nothing" Mr.. Pike said, should,
Of course, be done in this field which
would enable irresponsible groups
acting from improper motives to
seize control of life insurance COM
panies."
Besides the recommendations with
respect to life insurance, Mr.. Pike
proposed that Congress or some
Federal agency be directed to con-
duct "a thorough investigation of
all forms of fire. casualty and ma
rine insurance
Wouldn't Control Policies.
In making his proposals for Fed
eral regulation, Mr.. Pike said there
was mo desire on our part to place
Government in position to tamper
with insurance investments, to con-
troll investment policies, or to inter-
fere in any way with the companies
free exercise of managerial judg-
ment."
In addition to asking for reg
istration of insurance companies with
the Federal Government and their
examination by some existing agency
or a new commission, Mr.. Pike sug-
gested these new Federal activities
in the field:
!. Empowering some Federal
agency to prevent companies from
using the mails, the telephone, the
radio or other means of interstate
commerce to sell insurance in a
State where they have not been law
fully admitted to do business.
2. Amendment of the National
Bankruptcy Act to permit any State
insurance commissioner or Federal
agency to apply to the Federal courts
for liquidation or reorganization of
an insurance company with impaired
reserves.
g. A Federal prohibition against
officers and directors of companies
operating in more than one State
from using their positions for i'm
proper personal gain"
Would Create Council.
T. Creation of an insurance ad-
visory council composed of repre-
Sentatives of the Federal Agency
handling insurance matters, three
State insurance commissioners, three
company officials and three policy
holders. Such a council, Mr.. Pike
proposed, might aid in integrating
Federal and State examination Sys-
TENS, make recommendations for
standard accounting practices and
suggest State legislation.
Mr.. Pike outlined a l0-point pro-
gram for eliminating what he termed
administrative weaknesses" in State
insurance regulation.
These suggestions included non-
political appointments of insurance
commissioners. longer tenure of
Office and higher pay for commits
sioners, increased personnel and
more funds for insurance law en-
forcement, placing insurance ex-
aminers under civil service. more
effective examination machinery,
closer regulation of agency prac-
tices, and efforts to reduce the num-
her of policy forms.
Statement by Equitable Head.
In a statement issued in New
York, Thomas I. Parkinson, presi-
dent of the Equitable Life Assurance
Society, asserted that "life insur-
ance funds we're never intended. to
be risked in new and unproven en-
terprises."
The Equitable. Mr.. Parkinson said,