Year: 1871

Mr.. Flagg's insurance bill has passed third
reading in the New York State Assembly, and
may possibly become law. 1t provides that
after the payment of the third annual pre-
MUM all policies shall be absolutely indsput-
able, whatever fraud may have been perpe-
trated by the assured through misstatements
in regard to his health and family record or
through any breach of contract, and that, how
ever much he may have deceived an insurance
company in his application for policy, such
company has no defence at law. In the prac-
tical working of the insurance business, both
at home and abroad, it is found that the pay
ment of policy is very seldom refused, and
in the few cases where any dispute has been
brought to legal decision the leaning has
usually been in favor of the policy holder, out
Of sympathy, perhaps, for widows or orphans
as against large moneyed corporation.


We have report from one of the principal
insurance companies of this city which states
that out of an issue Of nearly sixty thousand
policies only three have ever been disputed in
court.


The bill of Mr. Flagg is thus, perhaps, of
little import to our leading companies; but it
is suggestive Of something in the future which
may well be worth consideration. We are not
prepared to admit that dishonesty is entirely
confined to the officers and managers Of life
insurance companies. May not, then, such a
law, if passed, open the door to many grossly
fraudulent applications for insurance, the ma
ture of which those accustomed to the details
Of the business know that it is almost impos-
sible to detect? The family record and the
past history Of mans life are in this country
almost beyond the power Of any company to
verify. 1t is perhaps only at his death, and
when the cause of it has been ascertained,
that the truth of his previous statements can
be judged Of Would not, therefore, the re-
suit of such legislation as that proposed by
Mr.. Flagg be positive injustice to the four
hundred thousand persons already insured in
our New York companies2 1t is the policy
holder who is the real sufferer by such frauds
upon his company. Losses incurred by
such means would be felt by our
large mutual companies in the dimin-
ishcd returns or dividends to the assured
duu ~ IA lHlS SOIb VI uoCcptlOH WHlCu ~ 10 uOW
sought to lcgalize by special enactment. Lord
Mansfield has ruled that insurance is con-
tract on speculation, and, therefore, the spe-
cial facts upon which the risk is to be COM
puted lie chiefly in the knowledge of the
assured only The insurer trusts to his state
ment and proceeds, upon confidence, that he
does not keep back any circumstance within
his knowledge to misead the insurer into a
belief that the circumstance do not exist.
The keeping back, therefore, of such circum-
stance is fraud, and the policy becomes in
valid, because the risk run is really different
from the risk understood and intended to be
run at the time Of the agreement" If then,
as it appears, the point in question requires
no further legal interference, why offer pre-
MUM to acts of dishonesty which may only
serve the purpose Of clogging the wheels of
life insurance business in this State, and check
ing the healthy progress of an institution which,
for over century, has been considered one
of the greatest boons to society?