PRESENT PROBLEMS IN INSURANCE 249 



with the insurance business. Existing legislation is inadequate 

 to accomplish this. Legislation is not regarded as a cure-all, but 

 within limits it can direct, shape, turn, encourage, or prevent. It 

 can preserve and promote public interests where competition and 

 self-interest, even in their enlightened form, tend to produce unde- 

 sirable results. 



Indeed, a survey of the insurance laws of to-day offers a variety 

 of suggestions. The taxation of the companies rests upon no uni- 

 form rule of administration or principle of taxation. Inequalities, 

 anomalies, and absurdities are everywhere apparent. The barbarity 

 of reciprocal laws continues without abatement. The diversities 

 in state legislation and the duplications and repetitions involved 

 in state supervision needlessly harass the companies and drain 

 their resources. Every analysis of the situation, undertaken from 

 whichever point of view, points toward the great advantages of a 

 single, fundamental federal code of insurance laws. This applies es- 

 pecially to taxation and supervision. The insurance business is over- 

 whelmingly an interstate business. It is by its very nature subject 

 to a great deal of publicity. It is a centralized business and, 

 therefore, it is relatively easy for a federal authority to supervise it. 

 No convincing arguments have yet been presented against a system 

 of federal supervision. A federal authority could prescribe uniform 

 reports and uniform rules concerning the general administration of 

 the business. Possibly there are some points which could be left 

 to the states. That is a matter of detail which can doubtless be 

 adjusted without difficulty when the time comes. A single examina- 

 tion of a company would then authorize it to do business in every 

 state. At present a company may be compelled to submit to the 

 inconveniences and expense of a number of examinations. The 

 expense of a single examination, according to authentic figures, 

 may exceed $50,000. This is the highest figure known to the writer. 

 Possibly other examinations have cost more. A repetition of such 

 examinations must affect the earnings on policies. Even though 

 this should not be the case to any appreciable extent, the system 

 of charging the cost of an examination to the companies is wrong 

 in principle and has been condemned by scores of state insurance 

 commissioners. Federal legislation would remedy the evil. 



Federal legislation, by instituting a single supervisory authority, 

 would also make it possible to exercise a more intelligent control 

 over the policy contract. Under a system of multiple state super- 

 vision this would be entirely impracticable. The language of the 

 policy contract is frequently involved and usually " composite." 

 A simple form of contract, which any intelligent man may under- 

 stand, is desirable. If, now, every form of contract were made 

 subject to the approval of a competent supervisory authority, many 



