International Styles

Government Supervision of Life Insurance

Few business institutions, if any, have been subjected to such strict and detailed government supervision as life insurance. The reasons for this become clear when we consider the vital relation which life insurance bears to the family and the community. We have seen that its mission is a sacred one, that the trust funds it holds run into the billions, and that millions of people rely upon it as the principal means of protecting the home against the deprivations occasioned by premature death. The great majority of contracts, as already noted, run for many years before maturing and frequently involve an obligation on the part of the company extending over fifty or seventy-five years.

Yet despite the almost universal use of life insurance and its vital importance to those who purchase it, very few persons, as we have noted, take a direct interest in acquainting themselves with the management and business policy of the companies in which they are insured. In practically all cases the companies are controlled by a limited number of persons who have little or no difficulty in securing the necessary proxies to perpetuate their control. Even assuming that any considerable portion of the vast number of policyholders could be induced to take an interest in the condition of the company in which they are insured, it is clear that very few are sufficiently posted in life-insurance matters to ascertain intelligently the true state of affairs. Life insurance is necessarily a technical and complicated subject and the real condition of a company can only be determined by laborious and expert examination. In view of conditions like those just recounted, it will readily be admitted that life insurance is a fit subject for some sort of government regulation designed to protect the public adequately against mismanagement and unjust practices.

Sections in Chapter 27.

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