1940-0, NAIC Proceedings

  • Special Committees-Liquidation and Reorganization
  • Special SEC Committee

(Mr. Gontrum then read his prepared address, which follows)

I have chosen as my subject "Insurance Advisors" rather than "Insurance Counselors'' because I wished to include in the scope of this paper the three main classes of individuals and organizations that undertake to give advice on insurance matters.

  • The term ''Counselors'' has in recent years taken on a special meaning restricting it to a small group of individuals who are now rather much in the public eye and ear.
  • The three groups to which I shall refer are: First, Insurance Counselors; Second, Insurance Companies and Agents; Third, State Insurance Officials.  (p18)

1940-0, NAIC Proceedings

  • Most life insurance companies, ·it is true, will cancel the contract of an agent found guilty of replacing a policy already carried in. his own or another coinpany, by a new policy and such a practice is usually referred  to as "twisting."  (p21)

1940-0, NAIC Proceeding

  • Prior to· the end of the nineteenth century it had been necessary for all companies to use the method of valuation of policies then provided by law on what was known as the net level premium plan.
    • Under this plan it was extremely difficult to organize and develop new companies and there has been very few new life insurance companies organized prior thereto.
  • Beginning with the twentieth century a number of the Western states provided by law for the valuation of policies of companies upon what was known as the preliminary term or modified preliminary term basis, and it was these laws that permitted the organization and rapid growth of many companies throughout the Western and Southern states, as shown by the growth of companies on the schedules attached hereto, marked Exhibit "A". (p168)

1940-0, NAIC Proceedings

Recent history has furnished a most impressive example of the Convention leadership followed by the state departments in the matter of uniform moratorium regulations on policy loans and cash surrenders and their adoption during and following the bank holiday in 1933, by the states with only such slight variations from the National Convention model as were required by conditions in each state.

  • Meeting the excessive demands for cash surrender values and policy loans by living policyholders was made difficult, if not impossible, by the breakdown of banking facilities, throughout the country, and concerted action became necessary to prevent the  precipitation of a crisis.
  • In March, 1933, emergency laws were  passed in a majority of the states· and supervisory officials issued regulations in accordance therewith to meet the situation in the best interest of· policyholders by placing certain temporary restrictions on the withdrawal of policy values.
  • A special meeting of the National Convention convened
    in Chicago on April 7, 1933, where, after two days of deliberation, resolutions were adopted which eventually led to a set of standardized regulations.
  • Concerted action on this occasion forestalled confusion. The best interests of policyholders were protected with no interference· in the primary purpose of life insurance, i.e., protection against hazard of death, death claims, endowment maturities and installments due under optional settlement provisions.
  • The restrictions placed upon the withdrawal of surrender values were graduaUy relaxed and ultimately discontinued altogether.
  • The action of the National Convention in this emergency was marked by such promptness, vigilance and good judgment as to command the admiration of all. (p166-167)

1940-0, NAIC Proceedings