Image provided by: University of Nebraska-Lincoln Libraries, Lincoln, NE
About Omaha daily bee. (Omaha [Neb.]) 187?-1922 | View Entire Issue (May 4, 1913)
THE OMAIIA SUNDAY BEE: MAT 4, 191. of premiums paid less a' limited surrender charge. This provision Is one of the greatest Importance to a policyholder as surance, the company is required to pay the policy. . A provision under what condition" a policy may be reinstated after it has lapsed for nonpayment of premiums. Coupons Are Korblilden. Section 102 deals with provisions whloh a company Is prohibited from placing In any policy. Among these prohibited pro visions Is one on the use of coupons or other evidence of Indebtedness to be used f ' Life Insurance Legislation in Nebraska his equity in the policy cannot be for feited by the company after he has paid threo annual premiums. The "Stipulated Form of Insurance" mentioned above means that the policyholder la given a paid-up policy (that Is one on which no more premiums are payable) or his policy Is continued In force for a certain number Review of the Laws from the Beginning, With an Account of the Changes from Time to Time and an Analysis of the New Code of years and days, and If his death oc curs within that period of extended in (Continued on Page Soven.) 0-0 I 1! I 1 nr Z. SNEt-U President the Mldnl Life Inmr nnce Oompsnr The first ittslon of the lcgUlature of the then territory of Nebraska was held at Omaha, commencing January 16, 1855. No Insurance legislation was passed at that session nor In fact until the one held In lfcM. An act was passed In that year and approved February 16, entitled "An act In relation to lnsuranco com- not be construed a In any manner apply-l lntf to life insurance companies. There was no further legislation until the session of ISO, when there was passed as one act what was known as the Revised Statutes of Nebraska. Chap ter 15, was entitled, "Incorporations" and sections 1 to 1(, inclusive, dealt with In surance companies. These provisions were quite similar to those of the act of ISM, with the exception that the limi tation of the act to fire and marine In surance was removed, and the act ap nlled to all Insurance' companies. Our laws stood In this condition until UTS, when another act was passed, entltlod, "An act regulating; Insurance companies." By section 1 of this act, corporations formed under It were limited to com panies other than life Insurance com panies, and section 41 expressly repealed all that portion of chapter 23 of the Re vised Statutes of 18 and all acts and parts of acts amendatory thereto, "ex cept so far as the same relates to the business of life Insurance companies." By this act of 1STS the original act of 1S64 aa carried Into the revision of IMS was repealed, except as the same ap plied to life Insurance companies. We have, therefore, presonted the rather odd spectacle of a law, which In Its Incep tion related only to fire and marine In surance, by amendments, to apply to only life insurance companies. This fact ex plains some of the Inodnsletences and trance provisions, which wore In our Insurance laws, governing old line life Insurance companies organised on the stock plan. Hauls of Mebrnska Lstt. The act of IOCS was the basia of all the law in Nebraska governing old line life Insurance companies organised on the stock plan until llt There were four teen sections, Section 1 dealt with the original statement which every domestic company had to file with the auditor. This statement, I take It, applied to com panies already organized when the act was passed as well as to alt companies organised theroaftor. Section S made provision as to what the annual, or as It stood originally, the somlannual state ment of the affairs of the company should contain. Section 1 subjected the president and secretary of the company to a penalty of 1)00 if they failed to comply with the provisions of flections 1 and 2- Section 4 prohibited any com pany In this state from holding any real estate save what was necessary for the transaction of Its legitimate business of Insurance. Section S provided what the statement must contain which each agent of an Insuranoe company Incorporated, ' by any other state or territory had to file before It could procure a certificate from the auditor permitting It tq transact any business in Nebraska. Section S was In the nature of a relume of all that had preceded and to some extent a con struction of It, In that It explains the word "company" as used In prior seo tlons to Include "company or association, partnership firm or Individual, or any member or agents thereof,' 'and either foreign or domestic, and made it unlaw ful for any of them to transact business unless there had been a compliance with all the provisions of (he chapter together with some additional requirements. Bo tlon, 7 provided that the statement and evidences of investment required by the act should be renewed annually. Section 8 defined' who was an agent of a com yany and what acta performed by any one -would constitute such person an Mren't. Certified Clti Called For, Paction provided that certified copies of ail papers required to be deposited in the office of the auditor should be re ceived as evidence the same as the orig teals. Section 30 provided a penalty for iTlolatlBC any of the provisions of the act BcUbn 11 provided that the single I tateatawt and evidences required for one I fcKent afaeuld be sufficient for all. Geo- ltlon 11 required that the companies of (nny other state whose laws required i guarantee deposit to be made by the com- i panics of this state should make a like .deposit with the Auditor of this state. I Section IS related to requirements of mu- I tuat companies of other states to do busl- 1 nesa in this state, and Section 14 required publication of a copy of the statement to 1 be filed with the auditor to be made In counties when an agent was seeking to establish an agency. This section was repealed In IMC. It will thus be seen from an explana tion pi these various sections that the amount of capital stock which a domestla lle insurance company should pay In be fore It was authorized to do business was not fixed. Neither was It under the gen eral Incorporation laws of the state. Until 1KB the capital stock might have been nominal, or ti,CO), or even less. In that year there was pending before the legislature "an act to regulate the or ganisation and operation of mutual bene. fit associations." This act as originally drawn did not contain sections lsa and 18b, but was confined to the organization and operaton of certain forms of assess Stent Insurance companies. Late In the eelon the title of the bill was amended tiy adding the words "life Insurance and life insurance companies'' making the title then to read after the amendment "an act to regulate the organization and operation of mutual benefit associations, life Insurance and life Insurance com panies." Section la Is what is known as the reciprocity provlson, which gav to the auditor of publlo accounts the power to do unto outside companies as their states did unto ours. Section 18b is as follows) No company organized under the laws qvuus eie ipr use purpose of transact insr the business of Ufa lunnnp, with capital stock shall continue or commence business until such company has trans ferred to and deposited with the auditor of public accounts for the security of Its ttolleyholders the sum of? lifaO.OOi In thn kinds f seguritles as provided by the laws of this state; but In no case shall ecunues e reeeivM at a rate above their Dar value nor above their current market value. BtK Deposit Required. It will be noted that this soctlon made It necessary for any life Insurance com. pany with a capital stock to deposit With the auditor of publlo accounts securities to the amount of tlW.000. It Is worth noting, however, In passing from this branch of the subject that the act under discussion was so broad In Its title and provisions as to relate both to assess ment and old line life Insurance com panies. The act of 1K was Amended In Wi by adding to section 2 a provision In regard to the valuation of policies, whleh Is as follows: He (the auditor) shall also on or be fore February 1 In each year cause to bo mode i valuation of the policies of all Joint stock legal reserve life Insurance companies organized under the laws of this state and ascertain the reinsurance rcssrva thereof comnuted ution the basis of the so-called "actuaries or combined experience table or mortality, w(in com pound Interest at 4 per cent per annum. He shall also, when requested so to do by the proper officers of any such com pany, ascertain the amount of such re Insurance reserve upon the basis of the an.rnlli.it "AtnerlFftn Ext)L-rlnCe TADla of Mortality," with compound Interest at the rate of 4i4 per cent per annum, and the arnnunis nieertalned uton said basis shall be legal reserve." The same section was amended again In 1S06 to the effect that each company should file an annual, and not a semi annual, statement of Its affairs with the auditor. In the year 1505 the act was further amended by the addition of two sections, one In reference to the deposit of $100,000 of securities with the auditor and the other, the reciprocal provision. These two seotlons are the same, word for word, an the two sections which were added to tho mutual benefit act and passed as a part of it In the year 1895, and to whloh reference has already been made. But it was thought best to make them a part of the act governing old line stock com panies. Hence the amendments of 1MB. Provides for "Publication. In 1WT seotion i was again amended. This time the amendment consisted in re quiring a summary of the annual state ment to be published in two newspapers Instead of one, and requiring the certifi cate of the auditor to be attached to such statement to the offect that the company had complied with the laws of tho state relating to Insurance; also in requiring of domestla companies a full, complete and specifically Itemized statement of all expenses of every kind and nature what soever. Section 6 relating .to foreign companies was similarly amended except as to the requirement with reference to the state ment as to expenses. An entirely new section was also addeda which related to the fee chargeable to companies for filing statements, obtain ing certificates tor agents and authority to do business. CoTeruluic Domestto Mutual. Until 1W there was no law governing domestic mutual legal reserve companies. In that year a bill comprising thirty-one sections and entitled "An aot to regulate the organisation add operation of life Insurance oompanlea on the mutual, level premium, legal reserve plan" was passed. Those who were unfriendly to the bill succeeded In bavins Incorporated therein oertaln amendments. Aa originally drawn It provided that bona fide applicants for Insurance on at least JM lives and ag gregating $500,000 or mora had to be re ceived and approved and the first annual premium paid thereon, and a deposit of securities aggregating $10,000 made with the auditor of publlo accounts before any company organized under the aot could transact business. The provision regulating the amount of deposit was amended so aa to read $100,000. No mutual company could be organized In Nebraska until 1t had first deposited $160,000 In the securities required by that act with the auditor of publlo accounts and seoured applications on at least 250 lives for In surance aggregating $eM,0W on which the first annual premiums at adequate rates bad been paid. This provision In re gard to the deposit aade the organization of mutual oosapanlca In thla state prao- tloally prohibitive. A. stock company could be organised and begin to Issue policies at ones when the dipoclt of $100,900 In securities' had been made with the auditor. In addition to this deposit of $100,000 a mutual company had to secure applications on SO lives aggregat ing $600,000 of Insurance and the applicants for Insurance must have paid the first . 4 . ir.z.-sjtszi. Ttcs. XJiiWeti ZiFr ZutuTJXC Ck share In any such distributions. To de termine the amount of Its surplus each company shall deduct from its assets, first, an amount equal to the net value at defined In the preceding section of all its outstanding policies, and, second, an amount sufficient to meet all expenses, matured claims and alt other liabilities." The aot required that each whole life and endowment policy should provide for paid-up or extended insurance after three annual premiums should have been paid and that tables of minimum surrender values In paid-up or extended Insurance shall be endorsed In figures on all such policies and the time within which the same shall be applied for by the Insured. There Is no requirement as to the amount of the reserve, which should be used to purchase paid-up or extended Insurance. There were no provisions either in regard to discriminations or rebating. No amendments were mode to thla aot. System of rntoUwork. Such, In brief, were the laws of this state governing Oldline insurance companies. As has been seen, it was & system of patchwork so far as stock companies were concerned. And as to both stock and mutual, many Important require ments are conspicuous by their absence. Certain provisions should be common to both kinds of companies. There were omissions, duplications and incongrui ties, like the fee for filing the annual re port. The stock companies paid $30 and the mutual companies $10 for exactly the same thing. A fairly complete law was passed In 1890 known as the "Weaver Bill," whloh was declared unconstitutional by the su preme court. No attempt was again made to oodlfy the insurance laws until 1913. Probably this review of Insurance legis lation, which so far has only covered legal reserve companies, should Include a few words In reference to the amend ments to the Mutual Benefit act passed In 1899. The more Important of those amendments were: 1. Including the term "stipulated prem ium" In section 1 of the act 2. Including stipulated premium com panies within tjie definition of a "mutual benefit association" as defined by section It at the original act! and the prohibition of any companies organized under the act other than those operating on the natural premium or stipulated premium plan from giving cash surrender values, extended or patdup Insurance, or endow ment Insurance In any form. 1. The addition of a new section relat ing to the distribution of surplus, which might be paid In cash or received In pay ment or reduction of future dividends. or for extended and paidup Insurance and for an equitable cash surrender value of policies. 4. The prohibition of companies organ ized under the act and transacting their business upon tho natural premium or stipulated premium plan from charging a less premium than the net premium computed on the basis of the American Table of Mortality and 4Vi per cent, Wcvr Era at Legislation. The year 1913 marks a new era In in surance legislation In this State. The legislature has just passed a compre hensive Insurance code which repeals all existing laws and enacts a new code from bcclnnlng to end. Some provitlons of the existing laws were re-enacted and many radical changes were made. To begin with, the Insurance department, which heretofore has been under the control of the auditor of publlo accounts, Is transferred to a state Insurance board, which consists of the governor, the auditor of publio accounts and the at torney general. This board shall elect a secretary who Is styled the Insurance commissioner, who may be empowered by the board to do any and all things that it may do except as the law provides the board shall perform while in sesston. In actual practice the Insurance commis sioner will be the board and he will administer the law. A new department, in effect, Is created. Among the powers conferred upon this board Is a quite important one, namely, that of liquidating Insolvent companies. Heretofore this has been done entirely through a receiver appointed by the court. By. this code, while the court retains general jurisdiction, an Insolvent com pany Is In effect liquidated through the commissioner of insuranoe. This will save to the creditors of such a company many thousands of dollars. For If there has been one thing above another that In the past hna subjected courts to more or less criticism, It has been the, way in which corporations have been wound up through receiverships. Clinnen In the Lan. Article VI classifies insurance com panies, fixes the capital stock required of stock companies and provides gen erally the manner and method of organiz ing stock and mutual companies. A mutual life Insurance company may be organized much easier under the new law than under the old. These requirements are that such a company shall: L Issue simultaneously policies upon 200 or more lives, each within a maximum single risk which Is prescribed In another section. t Shall hold a fund n cash or Invested, aa provided by law, equal to ten times the maximum single risk to be assumed; and 8. Shall have received in cash one an nual premium upon each outstanding risk. It will be observed that the number of policyholders Is out down from ICO to 200, and if the company Issues policies of $1,000 or less, the aggregate amount of Insurance required Is only $300,000 and not $600,000. Instead of a mutual com pany being compelled to deposit $100,000 in securities In order to start In business, the new law requires, only $10,000, if the maximum risk assumed is not over $1,000, During the passage of the bill it was charged in the newspapers and by some of the opponents of the bill In the senate that the requirements to organize mutual companies were so stringent that no new companies would be organized In the fu ture. The reverse of the proposition la the actual tact. Article V fixes the reserve which all kinds of companies are required to main' tain. Tho amount required of accident companies Is decidedly low, although It Is In advance of that required under the old law, as no premium reserve whatever was exacted of thorn. No reserve Is re quired of assessment companies as they meet their losses and expensed from as sessments levied upon tho members. Mutual companies that charge a fixed premium and In effect are the same as stock companies, without a capital stock, are required to maintain the same re serve as stock companies. The liability of a member In a mutual company Is limited to the premium stated In his policy. Tho liability for any one year of a member of an assessment association organised to insure property may be lim ited in its by-laws to not less than one and one half times the regular rate charged by stock companies for like in. surance. When the bill was before the legisla ture It was charged by different ones that the Farm Fire associations would be re quired to maintain the same reserve as stock companies. These associations are not mutual companies as" defined in the insurance code, but are assessment as soclatlons, and, therefore, not required to maintain any reserve as previously stated Article VI deals with standard forms and provisions. This is one of the most important of tho eleven articles In the code. The New York standard fire policy Is made the Nebraska standard fire policy with certain exceptions and modi fications. Provisions Affecting; Life Companies Section 101 deals with the provisions which all life insuranoe companies are required to put Into their polices. Among these provisions are many which are In the Interest of the policyholder, such as: 1. Requiring a grace of one month In the payment of all premiums after the first year. 2. A provision that all statements made by the Insured shall, In the absence of fraud, be deemed representations and not warranties. 4. A provision that the policy shall be lncontestlble after the second year from Its date except for non-payment of prem iums and except for violations of the con ditions of the policy relating to naval and military service In time of war. A provision that If the age of the Insured has been misstated the amount payable under the policy shall be such as the premium paid would have pur chased at the correct age. 6. A provision that the policy (If a par ticipating one) shall participate in the surplus of the company and that begin. nlng not later than the end of the third policy year, the company shall annually ascertain and apportion the amount of divisible surplus to which all such poll cies aa a separate class are entitled, which amount shall be carried as a dis tinct and separate liability In favor of such policies. Upon written request of the Insured, the company is required to furnish him with a statement of the amqunt of surplus provisionally set aside on his policy. Under annual dividend policial, the insured has the right each year to have the dividend arising from such participation paid in cosh. 1. A provision that after three full years' premiums have been paid, the com pany will advance on proper assign ment of the policy, a certain sum, de fending upon the number of premiums paid less a limited surrender charge. 8. A provision that in event nf default after three annual premium payments, a policyholder shall be entitled, without action on his part, to a stipulated form of Insurance, depending upon the number The Elkhorn Life and Accident Insurance Company offers a very desirable policy' LIFE AND ACCIDENT AT REASONABLE RATES and distributes the profits of its business to the policy holders for the decrease of their premiums. This Is a Nebraska Company investing its RESERVE FUND IN NEBRASKA SECURITIES. A liberal contract will be given to good agents. Write the Home Office at NORFOLK, NEBRASKA. Certificate mf Publication STATE OF NEBRASKA OFFICE OF Auditor of Public Accounts LINCOLN, FEB. lut, 1913. It 1b hereby certified that Tho Bankers Reserve Llfo Com pany of Omaha, in the State ot Nebraska, has complied with the insurance law of this state, applicable to such companies, and Is therefore authorized to continue the business of life in surance In this state for tho current year ending Jan. 1st, 1914. Summary of Report Filed for Tear Ending Sept. 81st, 1012: INCOME Premiums .$1,132,641.43 All other sources 167,566.64 Total ?1,290;208.08 DISBURSEMENTS v Paid polloy holders 373,062.61 All other payments 861,631.88 Total i 724,698.89 ADMITTED ASSETS 13.702,215.67 LIABILITIES ' Net Reserve $2,890,165.00 Net Policy Claims 19,000.00 All other liabilities 126,446.22 83,035,611.22 Capital stock paid up ., 100,000.00 Surplus beyond Capital Stock and other liabilities 666,604,46 8 666,604.45 Total i 83,702,215.07 Witness my hand and seal of the Insurance department the day and "year first above written. W. B. HOWARD. Auditor of Publlo Accounts. L. B, Brian, Deputy. annual premium. The se curios; of 50 applicants for fSM.OOO Insuranoe before a company can Issue a tingle policy is no ItSht undertaking, Before the whole SS0 are seoured some may conclude that they wilt drop out and there is no way ot keeping them in. It would seem to be much herder to get these original 250 applicants in a paper or prospective com pany, it they are bona fide applicants who pay the first annual premium, than it would in one organised and ready to Issue a policy as soon as an application is received and approved. Necessary to Quality. By one ot the provisions ot that act existing companies could qualify under It It they had assets aggregating 150,000 and the requisite amount of Insurance In force, namely, $500,000 and ISO policy holders. That provision, however, ap plied only to companies then In existence. although one company organised later was permitted to qualify under the act. By the act of 1903, the so-called one- year preliminary term plan ot valuing policies was adopted In Nebraska so far as mutual companies were concerned. In making valuations the rata of Interest as sumed shall not be greater than i per cent per annum and the rate ot mortal ity shall be that of the American or' Actuaries Experience tables. The act did not require an annual accounting or dls trtbutton of surplus. The only proyUlon In reference to a distribution was as tol lows: "All companies doing- business under this act may make distribution anions their policyholders, and contract holders of such part of ths surplus as may ao cumulate as their board ot directors may from time to time deem desirable, which distribution shall be made from no other fund and shall be In proportion to the amount ot reserve to whloh each policy, or contract holder Is entitled, and the individual ailpttment thereof shall be conclusive upon all persons entitled to GUARANTEE FUND LIFE ASSOCIATION Organized January 2, 1902 PURE PROTECTION INSURANCE Asststs, April 1, 1913, - - - - - $1,111,923.20 Reserve Fund, April 1, 1913, - - - - 893,559.57 Securities with State Department, April 1, 1913, 524,137.50 Policies provide death, disability and old age benefits, and are incontestable after two years from their date. WE EXCEL IN THREE IMPORTANT RESPECTS, VIZ.- 1. LARGEST RESERVE FUND of any Association, without regard to age or volume of business. .'" 1 ; , 2. LOWEST MORTALITY of any similar institution of equal age and volume., i ; ' ,-. "v? All ; 3. MOST EFFECTIVE ORGANIZATION, as results easily show. " 4 Advertised rates are reasonable and are guaranteed by entire assets., L, A, WILLIAMS, State Afeit F. W. TITTERINGT0N, District Mgr. 359-60 Omaha Nat'l Bank Bldf., Pfame D, 5920 6 64 Brandeis Bld., Phone D. 7021 LOOK UP OUR RECORD HOME OFFICE: BRANDEIS BUILDING, Omaha, Nebraska Telephone, d001is 7021