THE I. A. A. RECORD 



TiyE CHICAGO DAILY NEWS. TUESDAY. JUNE A. 1929. 



LIFE INSURANCE 

 RATES TOO HIGH, 

 EXPERTS ADMIT 



Chicagoans Discuss Effort 



Being Made for Read* 



justment. 



BY OIFFORD ERNEST. 



LUe insumnoe rates In force today 

 'vvre compute^ on mortality tables 

 now considered antiquated by actu- 

 aries and aM admittedly too blgh. ac- 

 oerdlng to insurance experts seeUns 



readjustment of premium rates. 



The average rate fot a straight life 

 policy in a participating company Is 

 about $36.50 annually for a person 3S 

 vcarsold. This Is approxlma telly 30 per 

 cent too high, say some actuaries and 

 eitecutives. 



Admission that the rate Is excessive 

 U made when at the end of one or 

 two years the epmpany starts an an- 

 nual refund ortllvidend of about t6.50 

 In the better companies and approxi- 

 mately $4 In other ccmpanles, Law- 

 rence A. Williams, (nsurance expert 

 and general executive of the Country 

 LtTs Insurance Compasr ot Illinois, 



pointed out today. 



Terms It Indefensible. 



"Insurance companies admit by this 

 customary refunding procedure that 

 they cliarge too much," he said. "In 

 a scientific business like Instn^nce. a 

 guess on rate fixing that Is almost 

 3t) per cent out of the way la Inde- 

 fensible. 



"Llfeinsurance rates required by law 

 are mostly based on the American ex- 

 perience mortality tables, now more 

 than fifty years old. These tables 

 are antiquated now that the life 

 span has increased, but rates havent 

 been lowered. 



"If the premium rate is ss high 

 that 30 per cent of It can be paid 

 baclc In annual dividends or refunds, 

 why not take It off the first cost of 

 msurancc?" 



Insurance circles are agog with 

 the controversy over high premJmn 

 rates, according to Mr. Williams, who 

 gave the points of contention that are 

 set forth In conferences of insurance 

 eKeoutlves, experts, specialist* and 

 through their journals. 



Paying for Promotion. ' 



High rates. It Is argued, provide a 

 surplus over the percentage of prof- 

 its allowed by law. This surplus 

 makes available a huge fund for get' 

 ting new business, and permits com- 

 panics to pay as high as 75 per cent 

 of the first annual premium to agents 

 in commissiotis. If the premium 

 rates were cut, ctxamlsslona now 

 paid would have to be reduced. The 

 present rates enable the companies 

 to pay high aoqalsltlon costs. 



There Is no monopoly in life Insur- 

 ance business. Approximately 350 

 companies do a competitive business 

 in the United States and new ones 

 are being formed all the time. Ameri- 

 ca's insurance business has $100,000,- 

 000,000 In policies in force. 



"The banking business, with assets 

 totaling $10,000,000,000, is made to 

 look like a kindergarten when com- 

 pared to the insurance business," 

 Donald F. Campbell of Chicago, well 

 knofcn Insurance actuary, remarked. 



"Life insurance Is as near a public 

 utility as any business can be," con- 

 tinued Mr. Williams. "The public's 

 funds are contracted for to be paid 

 m for life, or a set number of' years, 

 and the public Is Ignorant that of 

 the amount taken, practically 30 per 

 cent is in unwarranted premium 

 charges." 



Has Many Ramifications. 



Involved in the administration of 

 the Insurance business, with Its more 

 ta*n $100,000,000,000 are pollUcs, 

 building projects, tariffs, taxes and 

 international policies, according to 

 Mr, 'WUlUuns, who mainUins that tbe 

 oCfloli^am of the life insurance busl- 

 □Ssi constitutes the hierarchy keep- 

 ing up the premium rates. 



Opponents to reduction of the rates 

 hold that the ^eUts of Increased 

 life expectancy obt«i|i mainly In the 

 younger ages i^ that oorrectlons «f 

 ptsmlum tables are being made.'Also 

 tiM, because of .vigorous oompetltlco 

 there Is no call for a change. 



"Contusion also results Imm the 

 ptipalmc btiiet that premium rates 



a«e based on expectancy of life," 

 said Mr. Campbell. "On account of 

 interest and other faetors this Is not 

 wholly the case. Rates of mortality 

 in life tables are derlvod by the use 

 of certain formulse applied to cen- 

 sus statistics. 



"The ease Is quite different In con- 

 struction of mortality tables based 

 on Inswed lives where the Individuals 

 do not come under observation until 

 accepted as a risk by Insurance com- 

 ■ panics. 



Figuring Mortality Tables. 



"Tbt mortality tables used as a 

 basis of figuring life Insurance pre 

 mlum rates were built on an aggre- 

 gate of selected persons, and there- 

 fore the life expectancy figures in In- 

 surance iAh'.va are approximately 

 that of the latest finding* in ceU' 

 sus tables." 



Nevertheless, Mr. Williams points 

 ou^ the refunding of a percentage of 

 annual premiums goes on. He also 

 thinks that the dividends are paid 

 as a result of the tremendous com- 

 petition In the business, and not be- 

 cixHt of business ethics. 



In other words," he said, 'com- 

 petition has done for policy holders 

 what laws regulating luemium rates 

 have failed to do. But mucU more 

 could be done If an InTesUgatlon 

 were made to ascertain scientifically 

 What rate should be paid, and what 

 the companies do with the interest 

 on the excess premium collected be- 

 fore they return It In the form of 

 so-called dlTldenda." 



Country Life WiUing 



to Debate Ins. Rates 



Seeks to be Fair at All Times 



By L. A. Williams, Manager, Country 

 Life Insurance Company 



'■ j ■'HROUGH the program of Country Life 

 ■^ Insurance Company, we have been con- 

 vinced beyond a doubt of the great service that 

 can be rendered to members bf Farm Bureaus 

 and their families. The lowi yet actuarially 

 sound, guaranteed rates of Country Life have 

 been compared with the ratei of other com- 

 panies. Such comparisons cannot be avoided in 

 the future. 



Alfred M. Best Company, Inc., has taken 

 exception to certain references in an article by 

 me in the May issue of the Recokd, which 

 might be construed by some as reflecting upon 

 the business integrity of the ^est Company. 



The statements in the article objected to 

 are as follows: 



"They champion the overcharge methods of 

 ■their clientele as they recognize their 'Master's 

 Voice'." 



"And cf cpurse it is logiqal that a class 

 publication shall champion those who have been 

 fooling the public so long." 



"When a little company likie Country Life 

 Insurance Company, with honpsty of purpose 

 can make all the big old line (tompanies squeal 

 through a mouthpiece, it is veijy apparent that 

 Sam Jones' old saying, 'Every once in awhile 

 a burnt sinner will squeal' is | overwhelmingly 

 true." 



The article in the May issue followed an 

 interchange of correspondence between A. Dex- 

 ter Best of the Best Company arid myself, copies 

 of which were published by ths Best Company 



in the May 1st issue of Best's Insurance News. 

 The officers of the Best Company appear to 

 think that these statements are a reflection 

 upon the business integrity of their company. 

 Inasmuch as the article was intended to set 

 forth justification of the position and rates of 

 Country Life Insurance Company and in no 

 way as an attack upon the business integrity 

 of Alfred M. Best Company, Inc., I desire at 

 this time, and without further reviewing the 

 controversy and to the end that no misunder- 

 standing and prejudicial interpretation may arise 

 from the above quoted statements, to recall 

 them and suggest, as is done in judicial pro- 

 ceedings, that same be stricken from the 

 Record. 



There can be no question but that' the Best 

 Company has rendered a valuable service to 

 business through its insurance publications. Its 

 criticisms and approvals have been very help- 

 ful and constructive in the advancement of 

 life insurance. 



Welcome Rate Discussion 



The officers of the Best Company have in- 

 dicated their readiness to debate with me any 

 matter of life insurance. I solicit and will wel- 

 come a discussion on the subject "Rates on 

 Life Insurance" made by old line companies 

 which claim to be mutual and operate on the 

 participating plan. 



The progress of the Country Life Insurance 

 Company to date justifies ever increasing en- 

 thusiasm and optimism for greater service to 

 its policyholders than was anticipated at the 

 time of its organization. We shall continue 

 to put forth every additional constructive ef- 

 fort for its advancement in a manner that will 

 accrue to the benefit of the policyholder and 

 make every policyholder a booster for Country 

 Life Insurance Company. 



Hcprint from Chipaco Daily Newa 



August 1 Last Call For 

 Liability Insurance 



AUGUST 1 is the closing date to get pledge 

 - cards and checks in the mail to help 

 initiate Employers' Liability Insurance for 

 farmers, announces V. Vjniman, director of in- 

 surance service. 



This insurance will protect the farm employer 

 against liability for injury or death to employes 

 up to $5,000 and $10,000. The cost of the 

 insurance will be about $10 per year according 

 to present estimates. 



Vaniman cites several recent accidents on the 

 farm as follows: Arthur Brossman of Plain- 

 field had a team of horses run away with his 

 hired man on July 2. The hired man received 

 a broken shoulder and left foot broken across 

 the instep. He was taken to a hospital at 

 Aurora. 



Frederick W. Huston of Gibson City died on 

 July 4 as a result of injuries received two days 

 before when he accidentally fell out of the door 

 ill the hay mow. 



With his two sons, Howard and Fred, Mr. 

 Huston was putting hay in the barn when the 

 rope broke. He went to the mow to fix it and 

 fell from the doorway, striking the ground 20 

 feet below. It was found that his arms were 

 paralyzed, one leg broken above the knee, and 

 his back was seriously injured. 



Members are asked to call at their Farm 

 Bureau offices for further information about 

 this new insurance service at cost. 



Two hundred and twenty-five appli- 

 cations for auto insurance were re- 

 ceived by tlie Illinois Agricultural 

 Mutual the first week in July. 



