INSURANCE ADVOCATE--75 YEARS AGO.

• Position: LOOKING BACK

THE INSURANCE ADVOCATE HAS BEEN IN PUBLICATION SINCE 1889. EACH ISSUE, WE LOOK BACK TO A DIFFERENT TIME TO SEE WHAT INSURERS WERE READING ABOUT BACK THEN. HERE'S AN EXCERPT FROM

FEBRUARY 17, 1945

Observe good faith and justice towards all nations; cultivate peace and harmony with all.

--Washington's Farewell Address, delivered on September 17, 1796.

Let's Halt Hasty State Insurance Legislation

The insurance business may really become as sick as some would-be perfectionists imagine it to be if legislative tinkering is permitted to have its way. Here we are in the midst of a severe shortage of paper stock, and yet a deluge of bills continues to inundate state legislatures. It's not only that we are confronted with a woeful waste of good printing and manpower hours, but, what is more disturbing, some of the suggested legislative cures are worse than the ills they are aimed at.

Every state legislative session has its overabundance of proposed insurance measures. But this year promises more than the usual banner crop. And the ostensible reason is a mad desire to meet the requirements of the Supreme Court decision in the SEUA case. Well, to be sure, the states will have to enact appropriate legislation within the time limit of the moratorium which Congress is to set, whether the date happens to be June 1, 1947, or January 1, 1948. But why must they or their insurance supervisory officials go frantic about this legislative job? Why in the name of all that is fair and sensible can't there be a halt to pell-mell legislative efforts which can have such punishing effect on the insurance business in general and on agents and brokers in particular?

Oh, yes, there is the matter of state taxation which, in the opinion of most authorities, has to be clarified at once. Well, forgetting for the moment the unpardonable delays in formulating a necessary federal legislative program--a program which must be the basis of state action--the legislative proposals so far made in several states to meet tax emergencies are comparatively simple in form. How effective they will be is another matter. If we are inclined to be gloomy about the prospect, we can find support in Chief Justice Stone's warning words that the Court's SEUA decision "cannot fail to be the occasion for loosing a flood of litigation and of legislation, state and national, in order to establish a new boundary between state and national power...."

But looking on the brighter side, let us say that the temporary tax measures will serve until that "new boundary" is established. Well then, by all means, enact them into law at once. However, this immediacy does not hold for overhauling all state legislation relating to supervision. In this there can be a decent pause, especially in those states which have held a forward place in state regulation. That's precisely why the moratorium was granted in both houses of Congress by overwhelming votes.

And now to a specific case. New York State has long been a leader in state regulation. It has had the benefit of outstanding administration of its Insurance Department. Supervision has been of a high order, and the industry's conformity has been exemplary. This applies to companies, agents, brokers, adjusters, rating associations, service organizations and all others engaged in the insurance business in this state. Conceivably then, one would expect that the Department would confine its legislative recommendations to a minimum, particularly so with reference to refinements of supervision and regulation. Regrettably, this is not the case.

It's been our privilege to publish in serial form the Eighty-sixth Preliminary Report of Superintendent Dineen--a lucid, a concise and a carefully considered document. This very issue carries that portion of the report dealing with "Uniform Accounting Methods," and here, too, Mr. Dineen seems to establish a plausible case. It's the fair spirit in which he discusses some of his legislative recommendations which makes opposition to any part of his program so difficult. And yet, one can't help asking, "Why does he urge this legislation now?"

Admittedly the expense involved to domestic insurers would be heavy and burdensome. And he knows that companies are unable to obtain clerical help or office machinery to carry out even their present statistical activities. But apart from these factors, if state regulation is to continue, then every state would have the right to demand its own kind of uniform accounting methods. What a bedlam that could create! No, in the present chaotic situation, this is an innovation which can wait and which should wait, at least until a semblance of "uniform accounting" can have countrywide use.

Let it be understood that this is in no wise a discussion of Mr. Dineen's full legislative program. We are merely touching several points. For example, there is his bill which would repeal present Section 184 and add in place thereof a new section bearing the same number. And again the question is, "Why must this be done now?" This question is not asked because of its rhetorical sound. It's a question which all responsible company executives, agents and brokers should ask. Nor should they rest with this. They should do their utmost to convince the Superintendent to withdraw the bill.

Space does not permit the publication of the text of the new bill nor Mr. Dineen's comments on the entire Section 184. It will suffice, however, to center consideration on what he has to say regarding its Subsection (6):

Subsection (6) of the proposed bill is designed to meet a criticism of rate regulation, namely, that it is inflexible. The criticism is, in many instances, justified. The Department believes that the practice of granting deviations should be encouraged, not discouraged. It encourages competition and...