Recent Legislation Concerning Rate Adjustments

As indicating the present tendency to bring about a gradual adjustment of fraternal rates, mention should be made of the so-called "Mobile Bill" which has been receiving the hearty support of the two great associations of fraternal societies in the United States, the National Fraternal Congress and the Associated Fraternities of America (recently merged into one association) and which has been adopted by a large number of states. The bill may best be described as a compromise, concessions having been made on both sides. It does not undertake to fix the net rates for any order; instead., present inadequate rates are to be increased gradually, and this policy is to be expedited through the education of the fraternal membership to the necessity of such an increase. The bill, as originally drawn, provided that after 1912 each benefit society was to report to the insurance department a valuation of its certificates, the minimum basis of the valuation to be the National Fraternal Congress table of mortality. Since such a valuation is sure to show a heavy deficiency in many of the societies, the bill further provided that the valuation was not to be considered as a test of financial solvency. The results of the valuation, however, including an explanation of the system, were to be furnished to the members of the societies beginning in 1914, with a view to educating them to the need of higher rates. It was also provided that the valuation of December 31, 1917, must be reported to the insurance departments, and that if the admitted assets at that time prove to be less than 90 percent, of the reserve and other liabilities, the deficit must "show a reduction of at least 5 percent, at each triennial valuation thereafter" and that "if such a reduction has not been made, and no good reason exists the insurance department may proceed to cancel the society's license, or begin proceedings for the society's dissolution." It is thus seen that the bill grants a society many years, in case of a large deficit, in which to place itself in a technically solvent condition. Under the bill societies are also enabled to group their membership. New members and such old members as care to enter the plan may be charged adequate rates with mathematical reserves, while the other members may be permitted to continue in what practically amounts to a separate order.

The history of fraternal insurance during the last four or five years has largely centered around the Mobile Bill and it has from time to time been considered necessary to modify the bill in certain respects. Generally speaking the bill is now supported by all the leading societies and also has the hearty approval of the insurance commissioners. At the close of 1913 twenty-three states had enacted the bill in either its original or modified form. Furthermore, the principles of the bill are enforced through official rulings in at least eleven additional states.