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Life-Assurance does Assure
Published online by Cambridge University Press: 18 August 2016
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- Copyright © Institute and Faculty of Actuaries 1882
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page 140 note * In so widely diffused a population as ours, agents are an essential element of any successful system of commerce. The Equitable Company of London has never employed agents with their proper name, but it has district secretaries, with fixed salaries, instead of contingent commissions, to whom are entrusted local interests, and from whom is expected the increase of its business. To all intents they are the same as our solicitors. The real result of the policy of ignoring agents, and refusing to pay commissions, which has been adduced as the feature of this traditional champion and exponent of a wise economy, is easily shown. Originated in 1756, the company's funds had accumulated in 1839 to £10,689,932. But from that time the decadence and depletion have been rapid, without even a spasm of recovery. In 1849 the fund had fallen to £8,858,047; in 1859, to £6,564,671; in 1869, to £4,609,736; and in 1879, to £4,246,474. Meanwhile its policy issues have dropped to a minimum; for in 1879 the company issued only 136 policies, insuring £185,050, the new premium income of that year being but £6,357, while the management expenses were £8,307, of which directors' fees alone absorbed £2,937, or 35½ per-cent. So much for the vaunted value and economy of the non-agency, non-commission policy of the Equitable of England.
[We presume that few of our readers will require to be told that this statement is not correct, and that the Equitable of London has no district secretaries.—ED. J.I.A ]
page 143 note * There were, in 1859, only 14 life-insurance companies authorized to do business in this State, 8 of them being New York companies. In 1871 tills number had increased to 41 New York companies, and 30 from other States—a total of 71 companies. Of these 71 companies, only 31 (12 of which are New York companies) are now actively engaged in business in the State. Meanwhile 51 companies (33 New York companies and 18 other State companies) have lapsed by failure, withdrawal, amalgamation, or, as in the case of three companies, by the department's estoppel upon their taking new business. It is safe to say that, of more than 170 life companies which have had a name to live all over the United States, only some 45 survive. In fact, a standard insurance authority publishes the names of 100 life companies which have retired during only the last twenty years. Nor do we know of more than one or two life companies organized since 1868 which have survived to this time.
page 144 note * Emerson.
page 144 note † According to a railroad journal, during 1880, thirty-one railroads, with a mileage of 3,375, with £33,200,000 in stock, were sold under foreclosure. In five years, 228 roads, with a mileage of 20,000—nearly 23 per-cent of the present total mileage—and representing a nominal investment of £247,200,000, became bankrupt.
page 144 note ‡ The Losses by Failures not One per-cent!—The life companies of this country have received, from the time the business was first commenced down to the present date, the enormous sum of £247,637,000. The losses by all the companies that have ever failed here, will reach between £2,000,000 and £2,400,000, on a very liberal estimate. It is thus shown that 99 per-cent of all the money that has been intrusted to the life-insurance companies has been faithfully administered. There have been failures—large failures, and scandalous ones—but the interest as a whole has been, and is to-day, as secure as any human institution the sun ever shone on.“—The Insurance Monitor.
page 153 note * The mortality among insurance companies other than life has been overlooked in the attempt to sow distrust in the minds of life-insurance policyholders. The New York Daily Bulletin, in June 1880, published the names of 300 fire-insurance companies, representing assets aggregating £17,400,000, whose active life ended by failure or voluntary retirement , during the period from 1 January 1870 to 31 December 1879—only ten years.
page 153 note † New York Insurance Report, 1880, p. xxi.