1871-2, NAIC Proceedings

  • 1871-2, NAIC Proceedings (fka National Insurance Convention)  ---  [BonkNote]  ---  657p
  • Insolvency
  • Valuation
    • (p54) - Trust Fund Deposit, Or Reserve, For Whole-Life Policies In Case The Payments Are In Equal Annual Premiums
    • (p58) - The "Reserve" Absolutely Necessary To Enable A Life Insurance Company To Pay Its Policies At Maturity, By Net Calculations On The Designated Legal Data
    • (p67) - Net Value as a Test of Legal Solvency
  • (p358) - Report Of The Committee Of Rate Of Interest, Rate Of Mortality, Valuations, Etc To The National Insurance Convention.
  • Touching the vexed question of "lapses," much comment has been made, and no doubt some abuse of the business is indicated by the immense volume of policies returned as lapsed; but it is a difficult point to deal with.
  • There is a large percentage of waste in all human effort, and even in oil natural movement Lapses unhappily prevail even in religious affairs, and some of the seed grain is wasted by the most careful sower.
  • You must be careful how you pull up the tares in the life insurance field, lest you destroy the whole crop. - [Bonk: Change Without Damage]

--  J. B. Ecclesine, editor of The New York Underwriter

1871-2, NAIC Proceedings (fka National Insurance Convention)  ---  [BonkNote]  ---  657p

  • In regard to this matter of dividends, every member of this convention is aware of the immense profits made by companies from lapses; and from that source many of the companies have been able to make dividends.
  • .... I think with Mr. Paine, of Maine, that the time has come, when some measures should be adopted to prevent this wholesale slaughter of policies of life insurance. 

 --  Mr. Clarke

1871-2, NAIC Proc., (fka National Insurance Convention)

  • (p17) - Professor E. W. Peet, secretary of the National life insurance company of the United States, says, (see pages 173 and following,)
    • "Now, as to whether a life insurance company should be permitted to charge a premium based upon six percent interest, this depends entirely upon whether it is safe to assume that six percent interest can be realized upon secure investments in this country for the next twenty-five or thirty years.
    • Whether or not this is a safe assumption is not, in my opinion, a question exclusively or even mainly for the actuaries to determine.
  • (p54) - Mr. Pillsbury, of New Hampshire: I was rather struck with the remarks of the gentleman who has just taken his seat; or, rather, his allusion to the winding-up of companies that might be found slightly deficient in their net reserve.
    • His suggestion struck me very favorably.
    • His proposition I understand to be, to permit the company to go on and take care of the policies that they have in hand, if they see fit so to do, and do the best they can with them, but to cease doing new business.
    • I hope that suggestion will be borne in mind by the insolvency committee.
  • (p59) - Fackler: Now before I show the mistake in the argument on
    which their conclusions are based, I wish to ask how it is that savings
    banks which invest their money at great disadvantage, as compared with life insurance companies, are able to pay their depositors seven percent, while, on the showing of these gentlemen, the life insurance companies only earn five percent.

    • Savings banks have to invest their money, so to say, on call. At any moment they may be required to pay out all their assets.
    • Life insurance companies, on the other hand, can make long investments -which always pay the highest rate of interest.
    • As is very ably remarked by the gentleman from Maine (Mr. Paine), who addressed us yesterday, investments give a low rate of interest in proportion to the ease of conversion, and we know that many of the best insurance companies now invest almost entirely in bond and mortgage, which is not very easy of conversion, simply because they can realize a high rate of interest thereon, while on investments which gave a low rate of interest because they are so easily convertible, the rate of interest is comparatively low. 
  • (p219) - Address of T. S. Lambert, M. D - (President of the American Popular Life Insurance Company), October 9, 1871
    • (p219) - Indeed, the great usefulness of the convention will consist, not so much in what it will settle, as in what it has unsettled, by opening for discussion important points which many had thought were unquestionable.
    • This, which to some seems discouraging, is, in fact, very encouraging.
      • Doubt is most wholesome where certainty does not really exist.
      • The conflicting character of the laws of New York and Massachusetts has been very useful, since they are wrong in both states, and would be equally so if those of either were uniform in both, while then they would not be so readily discerned.
      • This grand result of the discussions before the convention was not, of course, expected, but nevertheless it has done much to advance the true cause of life insurance, much to elucidate the want of a sound basis in life insurance, as usually transacted.
      • I am one of those who believe that life insurance is conducted, usually, not as it should be, but very inequitably, and with great jeopardy to the assured, and that the insurance laws in any of the states, instead of being protective, actually encourage wrong, and discourage right-doing.
      • The fact is, that the fundamental basis principles upon which life insurance should and does rest, have not been sought, established, nor wrought by our state departments, as they should have been. 
      • (p220) - Certain traditions, assumptions, and inventions have been accepted and adopted, without sufficient examination.
    • (p220) - The true basis of life insurance has scarcely attracted attention, even during the sessions of the convention...
    • (p225) - Examine the latter with the microscope, experiment upon it, observe it, compare it under its various forms, and as influenced by different circumstances, and the mystery of life will become as simple as knowledge always exhibits everything to be.
  • (p285) - J. B. Ecclesine, editor of The New York Underwriter - So long as life insurance depends on the persistent canvassing of agents, there must be a liberal allowance made for waste policies, and as the, business is purely voluntary, you may rely on it you would have very little life insurance to superintend, if the active work of soliciting agents were discontinued.
  • (p358) - Report Of The Committee Of Rate Of Interest, Rate Of Mortality, Valuations, Etc To The National Insurance Convention.
    • (p423) - If it can once be fairly believed that there is no mystery surrounding the process technically called valuation, too deep for ordinary ken, its reasons and importance may be better, or at least more generally, understood.