Practical remarks on the present state of life insurance in the United States : showing the evils which exist, and rules for improvement : to which are added the valuable tables of associated actuaries, now printed for the first time in the United States / by Harvey G. Tuckett.

  • Tuckett, Harvey G. (Harvey Garnett), -1854.
Date:
1851
Catalogue details

Licence: Public Domain Mark

Credit: Practical remarks on the present state of life insurance in the United States : showing the evils which exist, and rules for improvement : to which are added the valuable tables of associated actuaries, now printed for the first time in the United States / by Harvey G. Tuckett. Source: Wellcome Collection.

Provider: This material has been provided by the National Library of Medicine (U.S.), through the Medical Heritage Library. The original may be consulted at the National Library of Medicine (U.S.)

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    expenses, the valuation of policies, and the basis upon which he proposes to grant a bonus or dividend—and if all this is satisfactory, they sign the report, and thus sanction its presentation to the general meeting. The Auditors must be men of high commercial standing, and be paid for their examination of the accounts; but in all other respects, unconnected with the company. All dividends should be voted at general meetings, and the report of that general meeting should be printed for general circulation.* I have now before me the prospectus of a Mutual Company of some three years' standing, which says (p. 21): At the end of every year, should the losses of the company in that year fall short of the losses called for by the Carlisle tables of mortality, the trustees shall fjass to the credit of the sinking fund a sum equal to the deficiency, and the sinking fund so credited shall be applied to the payment of losses which shall occur in any year over and above those called for in said tables, and when the sinking fund exceeds one hundred thousand dollars, the board of trustees mag, if theg deem it expedient, divide the EXCESS hegond that sum as profits. By a reference to Table C, p. 16, it will be seen that this Company has not a cent to divide as profit, much less a sinking fund of one hundred thousand dollars, created by the losses of the company falling short of the losses called for by the Carlisle table; and never will have; and yet, they have twice declared dividends of eighty per cent. Had proper Auditors been appointed, could this have been the case ? Would com- mercial men of standing have signed their names to a financial report, and taken the onus upon themselves of such dividends being declared? 1 think not. It has been the policy of Mutual companies to create an opinion that Mixed or Proprietary companies charged not only too high rates of premium, but also made immense profits /f These new Mutual Companies therefore promised beforehand to divide—what might never have an existence, and what certainly cannot exist for several years to come. In reference to this point, the distinguished Actuary, Mr. Griffith Davies, remarks, tl The evil of charging excessive premiums cannot, however, long remain in a country where capital is allowed to flow freely from one channel to another, as the natural effects of competition must necessa- rily reduce the profits on Life Insurance to the level of that derived from other species of investments; on thecontrarg, the peculiar nature of the subject renders it extremely dangerous lest the rates for life insurance should be so far reduced as to dimiuish the security of those who may select this niode of accumulating their savings for the benefit of their fami- lies; for, if the premiums charged by societies established for these pur- poses should, by excessive competition, be rendered inadequate to the payment of the claims which, sooner or later, must come upon them whatever honour, wealth, or probity the present managers of them may possess—whatever capitals they may boast of—or however prosperous they may appear to go on, even for a considerable time—the result must ulti- * The Actuary's report should be ready for the insured and stockholders at least ten clear days before the general meeting. f As has been shown, the 5 per cent, guarantee (no) capital of a Mutual Insu ranee is exactly equal to eleven per cent, of a Proprietary (paid) capital.