« السابقةمتابعة »
statement for the first time of the business of the Baltimore Mutual Aid Society of Baltimore City, which formerly conducted upon the assessment plan, was during the past year reorganized upon the stock plan under authority given to it by Act of Assembly. The amount of insurance effected in Maryland reported by this company, $1,735,849.75, very closely corresponds with the increase in the amount of industrial insurance, while the number of policies issued exclusive of those reported by this company (33,320) shows an increase of about nine per cent. The average amount of policy issued by the Mutual Aid Society appears to be but $52 and, with its business included, the average amount of insurance under industrial policies issued in this State during 1898 was but $100 as compared with $128 during the previous year.
The decline in the rates of interest obtainable upon investments of the class to which life insurance companies are restricted, is a subject that has during the past year received the most serious consideration from those charged with the responsibility of the management of those companies. It is generally conceded by those most familiar with the financial situation that low rates of interest may be expected to prevail in this country for many years to come, probably permanently. With the increase of wealth and accumulation of capital seeking investment, the same conditions have arisen here that have long existed in older countries of Europe, and corresponding results in decline of rates of interest follow.
Fifty years ago the business of life insurance first began to be developed in this country. The few companies then existing, with remarkable prudence and farsightedness, adopted four per cent. interest as the rate to be assumed for the future increments of their sinking funds. During the greater part of the half century that has since elapsed, very much higher rates of interest were easily obtainable, so that a large margin for surplus earnings was derived from interest receipts; but, under the changed conditions, numbers of companies have been adjusting their premium rates for new business upon the
basis of three and one-half per cent. or even three per cent. as the rate to be assumed for future interest earnings. This has naturally involved an advance in rates of premiums, for a decrease in receipts from interest necessitates an increase in premium revenue, if the total receipts from interest and premiums together are to be kept up to the amount requisite for meeting current and maturing claims under insurance contracts.
With the advance in premium rates there has developed a disposition greatly to broaden the scope of the insurance contract, in the removal of restrictions upon travel, residence and occupation, reducing to a minimum the conditions under which policies may become forfeited, and especially in the introduction into policies of guarantees as to the amount of cash obtainable for them in the event of surrender. One company has since the first of the year announced a policy absolutely incontestable, for any cause, from the date of its issue. When surrounded with proper safeguards for the company, this liberalizing of the form of the insurance contract is no doubt a great improvement, especially in eliminating the harsh features by which not many years ago policies of life insurance, upon which premiums had been paid for many years, used sometimes to be forfeited through accidental neglect or oversight on the part of the policyholders, and the benefits of careful savings lost to those for whose protection they had been made. The business of insuring lives is, however, likes all forms of insurance, a business of assuming risks, the risk of death; and prudence would suggest that it may be unwise to complicate with this risk obligations that involve other risks, such as agreements for the purchase of policies upon demand, as such demands may be most frequent in times of financial stringency, when, if the sale of securities were made to meet such demands, they would have to be sold upon a depressed market, and consequently at a loss. But with proper reservation, such as savings banks ordinarily adopt for their protection, the terms upon which surrendered
policies will be purchased by the company can no doubt be safely embodied in the contract. The guaranteed cash values are now much larger than those formerly given by companies generally for similar policies, thus considerably reducing the amount of compensation to the company for the withdrawal of a risk below the figure which was formerly considered no more than adequate.
When the Insurance Department was first established in this State, and laws enacted prescribing the method for ascertaining the liabilities of life insurance companies on acconnt of outstanding policies, it was provided that policies should be valued according to the American Experience Table of Mortality with interest at four and one-half per cent. This was in accordance with the existing laws in a number of States. Since then, however, the standard of valuation has in most States been changed to the Actuaries' Table of Mortality with four per cent. interest; and a number of companies doing business in this State have asked to have valuations upon this higher standard accepted by this Department, so as to avoid the cost of a double valuation. These requests I have felt justified in acceding to, as the authority under the law seemed plain for the Insurance Commissioner to accept valuations upon any sound basis not less than the one prescribed in this State (Code, Art. 23, Sec. 122, Par. 3).
Legal valuations, imposed as a measure of solvency should, in my judgment, be somewhat lower than that adopted in the usage of the most prudently managed companies; but with the tendency on the part of the companies now to adopt the assumption of lower rates of interest, three and one-half or three per cent., it seems as though the time has come to change the legal standard of valuation in this State to the four per cent. basis, as has been done in the States in which most of the life insurance companies in the country are situated.
Two or three companies, organized in this State, grant insurance against sickness, guaranteeing a certain weekly
indemnity in the event of disability from sickness. The authority for conducting this business by corporations formed under the General Laws of this State, is not to be found in that part of Article 23 of the Code, Sec. 14 to 37 inclusive, in which the purpose for which corporations may be formed are enumerated and classified, unless it be included in Class 4, Sec. 27, which provides for the formation of fire, life, marine, accident, cattle, live stock and other insurance companies. Sec. 115 provides that every corporation formed under the provisions of this Article for the purpose of life insurance is authorized also to insure individuals against accident, but this would seem to indicate that authority for insurance against sickness was not included in the powers of a life insurance company formed under the provisions of the Article, unless expressly specified. In Sec. 128, however, as amended by the Acts of 1892 and 1894, it is provided that organizations issuing certificates for the payment of money or other benefits in the event of sickness, accident or death, or other contingency, ... · but issuing no certificate for the payment of a greater sum than $1,000 upon any one life, may be formed on the mutual co-operative assessment or stock plan.
No standard has been prescribed by law for determining the liability of companies granting insurance against sickness, or the amount of reserve to be held. Like the rate of mortality, the yearly rate of sickness, all experience shows, increases with advancing age. Therefore, where there is an increasing liability, with a fixed rate of premium with which to meet it, a reserve proportioned to the nature of the risk and the rate of the increase should undoubtedly be maintained. It would be advisable for legislation to be had on this subject, so that the Insurance Department may be enabled to see that companies which offer health insurance preserve the means of meeting the obligations which they assume. There are sufficient statistics in existence, based upon the experience of friendly societies, etc., to afford a basis for estimating the average yearly rate of sickness at the several ages of life.
EXAMINATIONS. In accordance with the requirements of the Statutes of Maryland, the quadrennial examinations for the purpose of ascertaining the condition of all companies and associations chartered by this State, were begun June, 1898, and completed April, 1899. This fact has been mutually beneficial to companies and associations as well as to the Department.
It is gratifying to state that, in making these examinations, this Department experienced the most pleasant relations conceivable with the companies and associations; every facility and co-operation was accorded the examiner by the officers and clerical force.
It was generally admitted the examinations were beneficial, in that they were given to the public in an official form of publication. The fees charged were reasonable; in no instance was the payment of the examiner's bill objected to or even criticised. American Bonding and Trust Company:
Condition as of June 1, 1898. Report filed June 28, 1898. Fidelity and Deposit Company:
Condition as of July 1, 1898. Report filed July 21, 1898. United States Fidelity and Guaranty Company:
Condition as of July 31, 1898. Report filed Aug. 6, 1898. Maryland Casualty Company:
Condition as of June 1, 1898. Report filed June 28, 1898. Immediate Benefit Life Insurance Company:
Condition as of June 25, 1898. Report filed July 21, 1898. Maryland Life Insurance Company:
Condition as of June 30, 1898. Report filed Sept. 26, 1898. Mutual Life Insurance Company:
Condition as of May 31, 1898. Report filed July 14, 1898. Eureka Mutual Aid Society:
Condition as of Sept. 24, 1898. Report filed Sept. 28, 1898. Baltimore Mutual Aid Society:
Condition as of Oct. 1, 1898. Report filed Oct. 14, 1898. Home Friendly Society:
Condition as of Jan. 1, 1899. Report filed Feb. 18, 1899.