Home Office Organization

In many respects the organization of a life-insurance company is similar to that of other corporations which are concerned with - the collection, investment, and disbursement of funds. It is the purpose of this chapter to outline the more important official positions, committees, and departments of the average large life-insurance company, and to describe briefly their respective functions and duties. In doing this it is recognized that the various companies present many differences in their organization. 1 Generally speaking, the average large life-insurance company, aside from the numerous office departments and special committees which handle the routine and technical work of the company, is managed by four groups of officials: those who compose the deliberative bodies, those who exercise executive functions, those who are entrusted with administrative duties, and those who serve in an advisory capacity.

Footnote 1. In his excellent lecture on "Office Organization in Life Insurance" (Yale Insurance Lectures, i, 112-125), John B. Lunger presents in schedule form the organization of the average large life-insurance company. His schedule is herewith reproduced. Since this chapter aims to discuss only the more important official positions, committees and departments, Mr. Lunger's description of the duties of the other departments and committees is given briefly under the respective headings. Mr. Lunger's schedule is the following:

• Deliberative Bodies - Board of Directors, Committees of the Board - Executive Finance, General Conduct.
• Officials Charged with Executive Functions - President, Vice Presidents, Treasurer.
• Officials Charged with Administrative Functions - Comptroller, Secretary, Superintendent of Agents.
• Officials Charged with Advisory Functions - Actuary, Medical Director, Counsel.

Office Departments:

• Agency
• Financial
• Actuarial
• Medical
• Legal
• Bookkeeping - Where all of the company's financial operations are summarized and classified.
• Auditing - Where the company's receipts and disbursements are checked and passed upon by competent accountants.
• Claims - Where all proofs of death are examined and passed upon, also all papers relating to maturing endowment policies and other contract obligations.
• Real-estate Loans - Where all applications for mortgages are considered, the value of property appraised, and if the loan is made, records are kept of all payments of principal and interest.
• Policy-writing - Which takes the applications which have been approved by the medical department and prepares and registers the policies applied for.
• Policy Loans - Which looks after the requests of policyholders for cash advances on the security of their policies.
• Inspection - Which supplements the work of the medical department by making inquiry concerning the habits and financial standing of applicants.
• Policyholders' Bureau - Which looks after all communications and queries from policyholders, formulates ways and means of keeping them posted, and looks after delinquent policyholders.
• Editorial and Advertising - Which is charged with the company's periodicals, circulars, all printed matter for the use of agents, and the company's general and special advertising.
• Supply - Which takes care of the printed matter of the company and distributes it in the home office and to the agencies in the field. It is often supplemented by a printing plant.
• Mail - Which opens all incoming mail and distributes it amongst the offices of the company and the various departments. Also collects, makes up and addresses all out-going mail.
• Filing - Which systematically stores applications for contracts, cancelled contracts, letters, and the replies thereto, books and cards no longer in use, and all of the many receipt forms and papers which it is necessary to preserve.

Committees of Officials and Chiefs of Departments:

• Agency Methods and Conduct - Composed of the chief of the Agency Department and his leading assistants. It considers the forms and terms of agency contracts, questions as to the amount of business to be written in various sections of the country, the efficiency of the management of state and local agencies, and ways and means for increasing the agency organization, and for the better instruction of agents.
• Review - Composed of representatives of the medical, actuarial, and agency departments. It considers and passes upon the applications concerning the acceptance of which there is a reasonable doubt.
• Clerical Efficiency - Made up amongst the heads of departments. It examines applicants for positions, passes upon their qualifications, reports the outcome to one of the leading officials, and is expected to keep track of progress made by new appointees.
• Claims - Sometimes composed of members of the board of directors, but more usually is made up from the officers and heads of departments. It passes judgement upon all claims upon the company, especially those concerning the legality or sufficiency of which there is reasonable doubt.
• Office Methods and Systems - It states and adapts to the company's purposes all improved and simplified office methods, examines and passes upon new forms, cards and registers, and regulates the work of each department so that it will fit smoothly into the work of every other department.