Evening star., 1960-02-16
Senate DC. Unit
Hears of Profits
On Car Policies
BY MIRIAM GUTENBERG
Star Stan Writer

oAlO dCSIOCIlI 1IlSuI rance.
Chairman Beall of the sub
committee brought out in
questioning that certain used
car dealers in Washington are
writing the insurance for these
companies, forcing it on car
buyers and sharing in the fancy
profits. Credit insurance is
demanded by the creditor to
repayment of the debt.
Albert Jordan, the Districts
insurance superintendent, tes-
titled for a bill that would
allow him to regulate the rates
charged for credit insurance.
Buyer Has No Choice
He explained that COMPETE
tion controls other insurance
but that the buyer of credit in
surance is a captive policy
holder"
The person buying on the
installment plan doesn't want
insurance as much as he wants
credit" Mr.. Jordan said. He
doesn't exercise free choice as
does the buyer of other forms
of insurance. He has no means
of knowing what is charged"
Mr.. Jordan said that quite
a few" insurance companies
have made unconscionable pro-
fits from writing credit life in
Surance. He said that the "old
line, dignif1ed, well-behaved in
surance companies" all favor
the bill, which is now on the
books of Is States.
Maj. Harry Ehrlich, staff
judge advocate of the 1100th
Air Base Wing, Boiling Air
Force Base, pointed out that
auto finance charges would be
controlled in another pending
bill, and he warned that, un-
less the credit insurance bill is
passed, unscrupulous dealers
will further initiate their al
ready inflated credit life in
surance rates in used car con-
tracts.
Cites Abuses
"If you leave them one loop
hole to 60 through, they will
go through it," Mai. Ehrlich
said.
He cited instances where air.
men were charged as much as
$125 annual premium for credit
insurance; where the amount
charged for credit insurance on
the contract exceeded the
amount shown on the insurance
premium; where the contract
ran for "a months and the in
surance on the debt ran for
36 months; where new credit
insurance was required for re-
financing a car with no rebate
on the old insurance, and where
all insurance was Jumped on
the contract and not broken
down so the serviceman would
know what he was getting.
After hearing this testimony,
Senator Beall said he saw q
very definite need for regulat-
ing credit life insurance.
Certainly the hearings" he
said, have developed fragrant
violations of ethical business
practice. The hearings have
brought out that not only has
the public generally been hurt
but enlisted personnel in the
armed forces have suffered at
the hands of a few unscrupu.
lous business people"
Hopes for Presentation
He said he hoped that the
credit insurance bill would be
ready for presentation to the
full committee at the same
time as the auto finance bill.
Senator Beall also heard
testimony to provide for reg
ulation of the business of writ.
ing variable annuity contracts.
The variable annuity it was ex-
planned. is a contract which
provides for payments over a
persons lifetime where the
actual payments vary in ac-
cordance with the earnings and
capital gains of the insurance
company.
John D. Marsh. chairman Of
the executive committee of the
Variable Annuity Life Insur-
ance Co. of America, which was
organized here in 1855, ex-
planned that his company in
vests the annuitant's premium
payments in securities so that
the annuitant's income gives
him greater protection against
"the erosion of the purchasing
power of the dollar"
Segregated Premiums
The bill provides that the
District superintendent of in.
surance would regulate the
variable annuity companies
that the premiums from vari-
able annuity contracts would
have to be kept segregated
from other assets of the com.
pany, and these companie.
would be allowed to invest q
larger percentage Of their as.
sets in individual companies.
Assistant Corporation Coun.
sci Irving Bryan presented q
letter from Commissioner Rob.
ert E. Mclaughlin reporting
that at present two variable
annuity companies have beer
chartered and licensed in tbs
District and another is in ths
process of organization.