Insurance rate
The price of insurance per unit of coverage, usually expressed as a cost per dollar amount of coverage per year.
Insured
A person or organization that is protected by insurance.
Insurer
An insurance company or other organization that provides insurance.
Liability insurance
An insurance policy that protects against claims for legal liability. Provides legal defense and pays sums necessary to settle claims against the insured.
Limit of liability
The maximum amount an insurer will pay in the event of a covered loss.
Limited payment whole life
Whole life insurance on which premiums are payable for a specified number of years.
Loss
An event or circumstance for which insurance may pay.
Major medical expense insurance
Insurance that pays for a broad range of medical services up to a very high maximum amount. It is usually subject to a deductible amount and percentage participation. Also called major medical.
Medical payments coverage
A form of insurance that pays for medical and funeral expenses without regard to liability. It is available in auto policies and other policies that provide liability coverage.
Mutual insurance company
An insuring organization that is owned by its policyholders.
Named peril insurance
Any insurance that specifies the perils (risks) it covers.
No-fault system
A system in which reimbursement for injuries on the basis of fault (tort liability) is not legally available.
Nonforfeiture options
Alternatives available to a policyowner who discontinues premium payments on a policy of insurance.
Nonparticipating insurance
Insurance provided by policies on which no policy dividends are payable. Also called nonpar.
Participating insurance
Insurance provided by policies on which dividends are payable.
Permanent life insurance
Loosely, any form of individual life insurance that develops a cash value.
Policy loan
A loan made by a life insurance company to a policyowner on the security of a policy's cash surrender value.
Policyholder
The person or entity who pays for, and therefore owns, an insurance policy. This is usually the insured, but it may also be a relative of the insured, a partnership, or a corporation. Also called a policyowner.
Premium
The price of an insurance policy.
Replacement cost
The cost of replacing damaged or destroyed property with new property, without deducting for depreciation.
. Risk
The cause of a possible loss. Also referred to as peril.
. Settlement options
The alternatives, other than immediate payment in cash, in which a life insurance beneficiary may choose to have policy benefits paid.
Stock insurance company
A corporate insuring organization owned by stockholders.
Straight life insurance
Whole life insurance on which premiums are payable for life.
Subrogation
A legal principle which provides that, to the extent an insurer has paid for a loss, the insurer receives the policyholder's right to recover from any third party who caused the loss.
Term life insurance
Life insurance payable to a beneficiary when the insured dies within a specified period. If the insured is living at the end of the period, the policy expires without value.
Underwriting
The process by which insurers decide which losses to insure and how to insure them.
Uninsured motorists coverage
A form of auto insurance that pays the damages that insured persons are legally entitled to collect from uninsured motorists.
Waiting period
In disability income insurance, the period of time between the beginning of a disability and the date that the policy's income payments begin. In group insurance, the period an employee must work for a firm in order to qualify for coverage.
Waiver of premium
A life or health insurance policy provision stating that premiums will not be charged if the insured person becomes totally and permanently disabled
Whole life insurance
Life insurance payable to a beneficiary at the death of the policyholder, whenever that occurs. Premiums may be payable for a specified number of years (limited payment life insurance) or for life (straight life insurance).
Sunday, September 20, 2009
Dividend
A partial return of premium, reflecting the difference between the premium charged and the amount needed to cover the company's operations and payments on claims.
Endowment insurance
Life insurance payable to the insured if he or she is living on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date.
Exclusions
Provisions that explicitly limit the coverage provided by an insurance policy.
Expiration date
The date when an insurance policy ends.
Grace period
A period of time following the date the premium is due, during which a policy remains in force even though the premium has not been paid.
Group insurance
Any insurance plan that covers a number of individuals under a single contract. It is typically issued to an employer for the benefit of employees.
Guaranteed insurability
A life insurance policy provision permitting the purchase of additional insurance at stated times regardless of the condition of the insured person's health.
Incontestable clause
A policy provision that prevents the insurer from challenging or contesting claims after a stated period of coverage, regardless of any misstatements made by the applicant.
A partial return of premium, reflecting the difference between the premium charged and the amount needed to cover the company's operations and payments on claims.
Endowment insurance
Life insurance payable to the insured if he or she is living on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date.
Exclusions
Provisions that explicitly limit the coverage provided by an insurance policy.
Expiration date
The date when an insurance policy ends.
Grace period
A period of time following the date the premium is due, during which a policy remains in force even though the premium has not been paid.
Group insurance
Any insurance plan that covers a number of individuals under a single contract. It is typically issued to an employer for the benefit of employees.
Guaranteed insurability
A life insurance policy provision permitting the purchase of additional insurance at stated times regardless of the condition of the insured person's health.
Incontestable clause
A policy provision that prevents the insurer from challenging or contesting claims after a stated period of coverage, regardless of any misstatements made by the applicant.
Tems
Actual cash value
The traditional measure of property insurance loss. Usually defined as the cost of replacing the destroyed property with new property, minus an allowance for depreciation.
All-risk insurance
A generic term for insurance that covers all risks that are not explicitly excluded.
Annuity
A contract that provides an income for a stated period or for a person's lifetime.
Auto collision coverage
The portion of an auto insurance policy that pays for collision damage to the insured auto.
Auto comprehensive coverage
The portion of an auto insurance policy that pays for loss or damage to the insured auto other than the loss or damage caused by collision.
Auto liability coverage
The portion of an auto insurance policy that protects against claims for legal liability arising out of auto accidents. Provides legal defense and pays sums necessary to settle claims against the insured person.
Automatic premium loan
A life insurance policy provision authorizing the insurer to use the policy's loan value to pay any premium not paid by the end of the grace period
Beneficiary
The person who receives the proceeds of a life insurance policy upon the death of the insured person.
Binder
A temporary insurance contract (written or oral) that remains in effect until replaced by a regular policy.
Cash surrender value
The amount of money payable to a policyholder who discontinues a life insurance policy.
Casualty Insurance
Insurance that covers losses caused by injury to others or damage to property of others. Casualty insurance policies may or may not require that policyowners determine legal liability (fault) in order to collect payments.
Coverage
The protection provided by insurance.
Credit life insurance
Term life insurance issued to cover repayment of a loan if the borrower dies.
Deductible clause
A policy provision defining the specific amount of loss that, if exceeded, will trigger insurance coverage.
The traditional measure of property insurance loss. Usually defined as the cost of replacing the destroyed property with new property, minus an allowance for depreciation.
All-risk insurance
A generic term for insurance that covers all risks that are not explicitly excluded.
Annuity
A contract that provides an income for a stated period or for a person's lifetime.
Auto collision coverage
The portion of an auto insurance policy that pays for collision damage to the insured auto.
Auto comprehensive coverage
The portion of an auto insurance policy that pays for loss or damage to the insured auto other than the loss or damage caused by collision.
Auto liability coverage
The portion of an auto insurance policy that protects against claims for legal liability arising out of auto accidents. Provides legal defense and pays sums necessary to settle claims against the insured person.
Automatic premium loan
A life insurance policy provision authorizing the insurer to use the policy's loan value to pay any premium not paid by the end of the grace period
Beneficiary
The person who receives the proceeds of a life insurance policy upon the death of the insured person.
Binder
A temporary insurance contract (written or oral) that remains in effect until replaced by a regular policy.
Cash surrender value
The amount of money payable to a policyholder who discontinues a life insurance policy.
Casualty Insurance
Insurance that covers losses caused by injury to others or damage to property of others. Casualty insurance policies may or may not require that policyowners determine legal liability (fault) in order to collect payments.
Coverage
The protection provided by insurance.
Credit life insurance
Term life insurance issued to cover repayment of a loan if the borrower dies.
Deductible clause
A policy provision defining the specific amount of loss that, if exceeded, will trigger insurance coverage.
Fire Insurance
Fire Insurance.
Fire insurance in 1949 experienced another profitable year from an underwriting standpoint, with premiums moderately exceeding the record totals of 1948 for many companies and losses not expanding proportionately. The public shared in this continued prosperity as numerous leading fire insurers during 1949 announced stock dividends, also increased their cash dividends, and reduced rates on fire and automobile insurance in many states.
During the war years and the postwar period prior to 1948, the fire insurance business expanded its premium income tremendously, but from an underwriting standpoint the final results were not particularly profitable. Losses and expenses kept pace with premium growth, with the result that while company income and assets grew larger, surplus figures tended to shrink moderately. Then, in 1948, experience improved sharply, with companies showing profitable results far above the average of the last five or more years.
The twelve months ending Dec. 31, 1949, were about equally profitable. Fire insurance executives hastened to point out, however, that these results should not be taken as a base for future predictions, for underwriting results change quickly and tend to follow general business conditions in this country.
One of the major developments within the fire insurance business in 1949 was the preparation by nearly all large companies and groups of companies for multiple-line underwriting. With New York State having approved by law the writing of casualty insurance by fire-marine companies and fire-marine lines by casualty insurers, the work of integrating companies and personnel was well advanced in 1949.
Executives of companies were elected to hold identical offices in both fire and casualty units so that the rigid departmentalization which had existed in this country for many years by statute, until the recent changes in law, could be removed gradually.
Several large groups of companies announced mergers of smaller units, maintaining the trend of recent years toward fewer carriers under single ownership. Under state multiple-line laws and other statutes regulating insurance, there no longer existed the former reasons for maintaining large fleets of fire and casualty units.
Within the fire insurance business itself major problems centered around accounting studies under way as 1949 closed. These will provide statistics on expenses of doing business to determine whether some present practices are, or are not, on firm foundations. The insurance industry itself was sharply divided in its views. Some executives held that insurance rate discriminations in favor of large buyers of coverage were not unfair and were justified in the same way as were wholesale price discounts in any other line of business.
Opposing this theory were certain top executives who argued that although in past years the insurance business generally did grant discounts in rates to many large assureds, this practice was no longer legal since insurance became interstate commerce following the United States Supreme Court decision in the South-Eastern Underwriters Association case a few years ago, unless there were statistics to prove beyond any question that economies existed in connection with writing big mercantile and industrial risks which justified rate credits.
For the first half of 1949 a stalemate existed in writing multiple location fire insurance contents risks while the fire insurance industry and the state insurance supervisory officials debated the question whether rate credits should be allowed. The New York Insurance Department, headed by Superintendent Robert E. Dineen, led the battle to grant moderate rate credits. The majority of companies sought to get state approval of average rates without credits or debits for bad hazards. The National Association of Insurance Commissioners in June approved a compromise rate-credit plan and since then a few states have adopted such a formula.
However, in December several large groups protested this action by the New York State Insurance Department. Hearings were started by the Department, and it appeared as the year closed that the issue would be taken to high courts if the Department held to its approval of rate credits.
Also associated with insurance cost surveys was the question of whether discounts allowed on practically all three- and five-year term fire policies were too large. For years policyholders with three-year policies paid two and one-half times the annual rate and five-year policies cost four times the annual rate. The question was whether these rate credits, amounting to about 17 per cent on three-year policies and 20 per cent on five-year contracts, were in excess of savings made by insurance companies in being able to write a single policy for a term of years and collect the entire premium in advance. These discounts, in effect for over 70 years, were admittedly arbitrary and not supported by figures.
The term-rate problem was pointed up when several companies in recent years inaugurated annual installment payment plans on term policies, charging policyholders a service fee — including interest and cost items — of about 3 per cent over an almost equal division of the term premium by the number of years the policy ran.
For example, if an assured bought five annual policies at an annual premium of $100, his total cost would be $500. If he bought a five-year term policy and paid for it in advance his cost would amount to $400. Under the installment plans, which were opposed by a majority of fire insurers, the same assured could buy a five-year policy by paying $100 the first year and $78 at the inception of each of the following four years, bringing the complete bill to $412.
Opponents of installment premiums declared that if an assured bought annual policies for five years and paid $500, then he was being discriminated against unfairly by the person who bought a five-year term policy, paid for it in installments and was charged only $412. Those favoring installment plans argued that they were not changing the basic rate structure; they were charging a service fee for the installment privilege and that if any discrimination did exist it lay in the big discount allowed for term policies that were prepaid.
Consequently, the business and the insurance commissioners were conducting a study to ascertain whether these long-standing term discounts were justified or whether they should have been reduced so that if a term policy was financed the present large rate discrepancy would be narrowed to the point where no arguments would arise.
Sparking these drives to acquire figures to prove rate discounts, which were based on merit rating of individual risks or other factors, was the desire of the insurance business to avoid any clash with the Federal Trade Commission over possible violation of federal antitrust laws. Insurance desired maintenance of state regulation which was granted under Public Law 15 of Congress, without interference by the Federal Government to the extent to which the business was regulated adequately by the states.
At present the insurance business contends that the states cannot adequately regulate some of these long-standing rating practices until they have acquired from the companies the particular figures on premiums, losses, and expenses which will prove that rating has been conducted as it should be; or should be changed to conform to results of the cost investigations, due to be completed in 1950.
In the automobile field the carriers insuring physical damage risks — fire, theft, comprehensive, and collision — generally reduced rates late in 1949 by about 15 per cent. Premium income continued to increase rapidly due to the tremendous production of new cars and trucks which were sold at prices far above those of prewar motor vehicles which the new ones replaced. Due to rate increases made in 1946-1948, the income has exceeded the boosts in repair costs so that some reduction in premiums was considered justified.
Ocean marine underwriters had a fairly good year in 1949, although beset with the problems of declining premium income. With most E. C. A. cargo business being insured in countries of the foreign recipients, with many nations passing restrictive laws in order to bolster their own insurance companies, and with numerous countries faced with dollar shortages, American marine underwriters have not today the same field of free competition open to them as they had before the war. Through the International Union of Marine Insurance, which meets annually in Europe and of which the American marine market is a member, attempts were being made to bring about more uniform practices in marine underwriting for the benefit of all. Marine underwriters announced in 1949 their practical withdrawal from the war-risk insurance market in the event of hostilities between any of the major powers. The companies felt that it was not their province to assume huge losses which might occur from atomic bombs or other instruments of war. They have asked the government to pass a law creating a stand-by war-risk insurance bureau available for instant use in the event this country again goes to war. This bill was introduced in Congress late in 1949 but no action was taken. The ocean marine underwriters felt that it would be adopted in 1950.
Fire insurance in 1949 experienced another profitable year from an underwriting standpoint, with premiums moderately exceeding the record totals of 1948 for many companies and losses not expanding proportionately. The public shared in this continued prosperity as numerous leading fire insurers during 1949 announced stock dividends, also increased their cash dividends, and reduced rates on fire and automobile insurance in many states.
During the war years and the postwar period prior to 1948, the fire insurance business expanded its premium income tremendously, but from an underwriting standpoint the final results were not particularly profitable. Losses and expenses kept pace with premium growth, with the result that while company income and assets grew larger, surplus figures tended to shrink moderately. Then, in 1948, experience improved sharply, with companies showing profitable results far above the average of the last five or more years.
The twelve months ending Dec. 31, 1949, were about equally profitable. Fire insurance executives hastened to point out, however, that these results should not be taken as a base for future predictions, for underwriting results change quickly and tend to follow general business conditions in this country.
One of the major developments within the fire insurance business in 1949 was the preparation by nearly all large companies and groups of companies for multiple-line underwriting. With New York State having approved by law the writing of casualty insurance by fire-marine companies and fire-marine lines by casualty insurers, the work of integrating companies and personnel was well advanced in 1949.
Executives of companies were elected to hold identical offices in both fire and casualty units so that the rigid departmentalization which had existed in this country for many years by statute, until the recent changes in law, could be removed gradually.
Several large groups of companies announced mergers of smaller units, maintaining the trend of recent years toward fewer carriers under single ownership. Under state multiple-line laws and other statutes regulating insurance, there no longer existed the former reasons for maintaining large fleets of fire and casualty units.
Within the fire insurance business itself major problems centered around accounting studies under way as 1949 closed. These will provide statistics on expenses of doing business to determine whether some present practices are, or are not, on firm foundations. The insurance industry itself was sharply divided in its views. Some executives held that insurance rate discriminations in favor of large buyers of coverage were not unfair and were justified in the same way as were wholesale price discounts in any other line of business.
Opposing this theory were certain top executives who argued that although in past years the insurance business generally did grant discounts in rates to many large assureds, this practice was no longer legal since insurance became interstate commerce following the United States Supreme Court decision in the South-Eastern Underwriters Association case a few years ago, unless there were statistics to prove beyond any question that economies existed in connection with writing big mercantile and industrial risks which justified rate credits.
For the first half of 1949 a stalemate existed in writing multiple location fire insurance contents risks while the fire insurance industry and the state insurance supervisory officials debated the question whether rate credits should be allowed. The New York Insurance Department, headed by Superintendent Robert E. Dineen, led the battle to grant moderate rate credits. The majority of companies sought to get state approval of average rates without credits or debits for bad hazards. The National Association of Insurance Commissioners in June approved a compromise rate-credit plan and since then a few states have adopted such a formula.
However, in December several large groups protested this action by the New York State Insurance Department. Hearings were started by the Department, and it appeared as the year closed that the issue would be taken to high courts if the Department held to its approval of rate credits.
Also associated with insurance cost surveys was the question of whether discounts allowed on practically all three- and five-year term fire policies were too large. For years policyholders with three-year policies paid two and one-half times the annual rate and five-year policies cost four times the annual rate. The question was whether these rate credits, amounting to about 17 per cent on three-year policies and 20 per cent on five-year contracts, were in excess of savings made by insurance companies in being able to write a single policy for a term of years and collect the entire premium in advance. These discounts, in effect for over 70 years, were admittedly arbitrary and not supported by figures.
The term-rate problem was pointed up when several companies in recent years inaugurated annual installment payment plans on term policies, charging policyholders a service fee — including interest and cost items — of about 3 per cent over an almost equal division of the term premium by the number of years the policy ran.
For example, if an assured bought five annual policies at an annual premium of $100, his total cost would be $500. If he bought a five-year term policy and paid for it in advance his cost would amount to $400. Under the installment plans, which were opposed by a majority of fire insurers, the same assured could buy a five-year policy by paying $100 the first year and $78 at the inception of each of the following four years, bringing the complete bill to $412.
Opponents of installment premiums declared that if an assured bought annual policies for five years and paid $500, then he was being discriminated against unfairly by the person who bought a five-year term policy, paid for it in installments and was charged only $412. Those favoring installment plans argued that they were not changing the basic rate structure; they were charging a service fee for the installment privilege and that if any discrimination did exist it lay in the big discount allowed for term policies that were prepaid.
Consequently, the business and the insurance commissioners were conducting a study to ascertain whether these long-standing term discounts were justified or whether they should have been reduced so that if a term policy was financed the present large rate discrepancy would be narrowed to the point where no arguments would arise.
Sparking these drives to acquire figures to prove rate discounts, which were based on merit rating of individual risks or other factors, was the desire of the insurance business to avoid any clash with the Federal Trade Commission over possible violation of federal antitrust laws. Insurance desired maintenance of state regulation which was granted under Public Law 15 of Congress, without interference by the Federal Government to the extent to which the business was regulated adequately by the states.
At present the insurance business contends that the states cannot adequately regulate some of these long-standing rating practices until they have acquired from the companies the particular figures on premiums, losses, and expenses which will prove that rating has been conducted as it should be; or should be changed to conform to results of the cost investigations, due to be completed in 1950.
In the automobile field the carriers insuring physical damage risks — fire, theft, comprehensive, and collision — generally reduced rates late in 1949 by about 15 per cent. Premium income continued to increase rapidly due to the tremendous production of new cars and trucks which were sold at prices far above those of prewar motor vehicles which the new ones replaced. Due to rate increases made in 1946-1948, the income has exceeded the boosts in repair costs so that some reduction in premiums was considered justified.
Ocean marine underwriters had a fairly good year in 1949, although beset with the problems of declining premium income. With most E. C. A. cargo business being insured in countries of the foreign recipients, with many nations passing restrictive laws in order to bolster their own insurance companies, and with numerous countries faced with dollar shortages, American marine underwriters have not today the same field of free competition open to them as they had before the war. Through the International Union of Marine Insurance, which meets annually in Europe and of which the American marine market is a member, attempts were being made to bring about more uniform practices in marine underwriting for the benefit of all. Marine underwriters announced in 1949 their practical withdrawal from the war-risk insurance market in the event of hostilities between any of the major powers. The companies felt that it was not their province to assume huge losses which might occur from atomic bombs or other instruments of war. They have asked the government to pass a law creating a stand-by war-risk insurance bureau available for instant use in the event this country again goes to war. This bill was introduced in Congress late in 1949 but no action was taken. The ocean marine underwriters felt that it would be adopted in 1950.
Owners, Landlords and Tenants, and Long-Haul Truck Changes.
Owners, Landlords and Tenants, and Long-Haul Truck Changes.
Reflecting rising costs and the tendency of court verdicts to follow the general rise in living expenses, an average country-wide rate increase of 23 per cent was made in mid-1949 in bodily-injury liability rates for a large number of owners', landlords', and tenants' insurance classifications. Such risks included stores, hotels, restaurants, apartments, tenements, boarding houses, and mercantile and office buildings.
In announcing the increased rates, the casualty-rating bureau pointed out that the cost of settling insurance claims has increased considerably since 1946. Despite that fact, this rate increase was on the conservative side.
It was also necessary in 1949 to make a sizable increase in premium rates for long-haul truckmen — the first countrywide revision since 1940. An exhaustive study of present-day conditions in the long-haul trucking industry pointed to a definite increase in the number of serious and costly claims during the past two years. As a direct result, the rates for increased limits were increased 50 per cent for both bodily injury and property damage.
An encouraging side of the 1949 picture was the trend toward broader policy coverage. One evidence of it was the revised program for insuring garage risks, which became effective late in the year. The result achieved was to provide by means of a single policy coverage which was formerly available only through multiple-policy issuance.
Another evidence of this trend was in the fidelity-surety bond field. Bond coverages were substantially broadened and at no increase in rates. In fact, the price of the services sold by corporate suretyship was one of the very few prices which has not been increased during recent years. On the contrary, bankers blanket-bond rates have dropped about 64 per cent since 1936; individual and schedule bonds have declined 30 to 40 per cent in cost; and primary commercial blanket-bond rates decreased 51.6 per cent to 65.4 per cent for selected coverages. All fidelity bonds as a group have decreased in cost approximately 60 per cent.
Fidelity bond underwriters were concerned over the rising trend in bank embezzlements, and so were member banks of the American Bankers Association. The situation received attention at the 1949 annual meeting of the A. B. A. when its insurance and protective committee chairman pointed to seven large dishonesty losses in the past year, each of which exceeded the bank's blanket bonds and seriously impaired or eliminated capital funds.
To guard against the recurrence of such substantial losses in the future, the recommendation was made for more rigid control of operations, periodic audits of assets and periodic verification of deposits, and the suggestion that the boards of directors of all banks resurvey their surety bond coverage and increase their bond limits, where necessary, up to the 'fair' amount set by the American Bankers Association
Reflecting rising costs and the tendency of court verdicts to follow the general rise in living expenses, an average country-wide rate increase of 23 per cent was made in mid-1949 in bodily-injury liability rates for a large number of owners', landlords', and tenants' insurance classifications. Such risks included stores, hotels, restaurants, apartments, tenements, boarding houses, and mercantile and office buildings.
In announcing the increased rates, the casualty-rating bureau pointed out that the cost of settling insurance claims has increased considerably since 1946. Despite that fact, this rate increase was on the conservative side.
It was also necessary in 1949 to make a sizable increase in premium rates for long-haul truckmen — the first countrywide revision since 1940. An exhaustive study of present-day conditions in the long-haul trucking industry pointed to a definite increase in the number of serious and costly claims during the past two years. As a direct result, the rates for increased limits were increased 50 per cent for both bodily injury and property damage.
An encouraging side of the 1949 picture was the trend toward broader policy coverage. One evidence of it was the revised program for insuring garage risks, which became effective late in the year. The result achieved was to provide by means of a single policy coverage which was formerly available only through multiple-policy issuance.
Another evidence of this trend was in the fidelity-surety bond field. Bond coverages were substantially broadened and at no increase in rates. In fact, the price of the services sold by corporate suretyship was one of the very few prices which has not been increased during recent years. On the contrary, bankers blanket-bond rates have dropped about 64 per cent since 1936; individual and schedule bonds have declined 30 to 40 per cent in cost; and primary commercial blanket-bond rates decreased 51.6 per cent to 65.4 per cent for selected coverages. All fidelity bonds as a group have decreased in cost approximately 60 per cent.
Fidelity bond underwriters were concerned over the rising trend in bank embezzlements, and so were member banks of the American Bankers Association. The situation received attention at the 1949 annual meeting of the A. B. A. when its insurance and protective committee chairman pointed to seven large dishonesty losses in the past year, each of which exceeded the bank's blanket bonds and seriously impaired or eliminated capital funds.
To guard against the recurrence of such substantial losses in the future, the recommendation was made for more rigid control of operations, periodic audits of assets and periodic verification of deposits, and the suggestion that the boards of directors of all banks resurvey their surety bond coverage and increase their bond limits, where necessary, up to the 'fair' amount set by the American Bankers Association
Other Casualty Insurance Rate and Rule Changes.
Other Casualty Insurance Rate and Rule Changes.
A noticeable downward trend was evidenced in 1949 in premium charges for workmen's compensation insurance. This reflected the general stability of industrial employment and pay rolls, despite some increase in unemployment. Another factor was the favorable industrial accident experience. In New York State, for example, the average reduction in the manual rate level was 4.7 per cent.
Some improvement was also shown in automobile-liability, bodily-injury and property-damage insurance, and although this did not result in general rate reductions in 1949, a trend in that direction was evidenced by the lower rates made effective by independent, nonaffiliated companies, in certain territories where favorable loss experience justified the move.
At the same time, it was necessary in 1949 to revise the method of classifying and rating private passenger automobiles so as to reflect higher premium rates for drivers under 25 years of age — particularly teen-age drivers. This step was taken only after a careful analysis of accidents caused by the teen-agers, which study revealed that licensed operators under the age of 25 were involved in far more than their share of fatal and nonfatal accidents.
Concerned over the seriousness of this problem and the pressing need for solving it, the private insurance companies joined with state motor-vehicle departments and safety organizations in a nation-wide program of accident-prevention education in which the high schools were playing a big role. Consensus of opinion was that improvement in the situation will not be made until the youthful operators become fully cognizant of their obligations to others on the highways, and as the result of the combined efforts of parents, teachers, state authorities and safety organizations, they are imbued with the desire to exercise care, common sense, and reasonable consideration for others.
A noticeable downward trend was evidenced in 1949 in premium charges for workmen's compensation insurance. This reflected the general stability of industrial employment and pay rolls, despite some increase in unemployment. Another factor was the favorable industrial accident experience. In New York State, for example, the average reduction in the manual rate level was 4.7 per cent.
Some improvement was also shown in automobile-liability, bodily-injury and property-damage insurance, and although this did not result in general rate reductions in 1949, a trend in that direction was evidenced by the lower rates made effective by independent, nonaffiliated companies, in certain territories where favorable loss experience justified the move.
At the same time, it was necessary in 1949 to revise the method of classifying and rating private passenger automobiles so as to reflect higher premium rates for drivers under 25 years of age — particularly teen-age drivers. This step was taken only after a careful analysis of accidents caused by the teen-agers, which study revealed that licensed operators under the age of 25 were involved in far more than their share of fatal and nonfatal accidents.
Concerned over the seriousness of this problem and the pressing need for solving it, the private insurance companies joined with state motor-vehicle departments and safety organizations in a nation-wide program of accident-prevention education in which the high schools were playing a big role. Consensus of opinion was that improvement in the situation will not be made until the youthful operators become fully cognizant of their obligations to others on the highways, and as the result of the combined efforts of parents, teachers, state authorities and safety organizations, they are imbued with the desire to exercise care, common sense, and reasonable consideration for others.
General Liability Insurance.
General Liability Insurance.
Important improvements in the rating of general liability insurance, approved in December by the New York Superintendent of Insurance, centered around a method of experience-rating general liability insurance coverages as a whole rather than separately, and a composite rating plan for liability insurance other than automobile. Taken together, these two steps will make the rating of these coverages much more practical for the average insured. In effect, the plans tailor the rating procedures to the coverage provided under comprehensive liability policies.
The effective date of the new program will be around March 1, 1950, and in the meantime the casualty-rating bureaus are adapting the New York innovations for filing in other states. In this connection, it was being emphasized that, for the first time in New York State, recognition was given to interstate aspects of liability insurance by providing that the experience of the risk in all states shall be used in rating New York risks, with minor exceptions.
Important improvements in the rating of general liability insurance, approved in December by the New York Superintendent of Insurance, centered around a method of experience-rating general liability insurance coverages as a whole rather than separately, and a composite rating plan for liability insurance other than automobile. Taken together, these two steps will make the rating of these coverages much more practical for the average insured. In effect, the plans tailor the rating procedures to the coverage provided under comprehensive liability policies.
The effective date of the new program will be around March 1, 1950, and in the meantime the casualty-rating bureaus are adapting the New York innovations for filing in other states. In this connection, it was being emphasized that, for the first time in New York State, recognition was given to interstate aspects of liability insurance by providing that the experience of the risk in all states shall be used in rating New York risks, with minor exceptions.
Accident and Health Policies.
Accident and Health Policies.
The simplification and broadening of accident and health policy coverages represented a marked advance by the private insurance companies and with the insuring public as the chief beneficiary of the changes. There was practically no increase in cost. Made on a country-wide basis, the revision was considered the most extensive to date in the nearly 100-year history of accident and health insurance. Specifically, five extensions of coverage were included in the revision program.
First of these was the substitution of 'accidental bodily injuries' in the insuring clause of accident policies to replace the former 'accidental means.' Second, a marked modification was made in the aviation exclusion. Formerly policies had completely excluded losses resulting from air travel, but such exclusion has now been narrowed down appreciably so that usual passenger hazards are covered. Still another beneficial change was the inclusion in the surgical coverage schedule of a provision for payment of all 'cutting operations' whether listed in the policy schedule or not.
In an effort to strengthen public relations, the accident and health companies have also improved the elective indemnity provision so that the policyholder can no longer jeopardize his position in making his elective choice. Thus, he was now given complete latitude so that regardless of his original choice he will receive what would ultimately have proved to be the larger amount under this benefit.
Finally, the companies broadened the optional life indemnity provision by stipulating that if the insured, after requesting weekly indemnity payments in lieu of fixed sums for loss of both hands, both feet or sight of both eyes, shall die before receiving weekly indemnity for 200 weeks, the balance of such indemnity remaining unpaid at the time of his death shall be paid in one sum to his estate.
The simplification and broadening of accident and health policy coverages represented a marked advance by the private insurance companies and with the insuring public as the chief beneficiary of the changes. There was practically no increase in cost. Made on a country-wide basis, the revision was considered the most extensive to date in the nearly 100-year history of accident and health insurance. Specifically, five extensions of coverage were included in the revision program.
First of these was the substitution of 'accidental bodily injuries' in the insuring clause of accident policies to replace the former 'accidental means.' Second, a marked modification was made in the aviation exclusion. Formerly policies had completely excluded losses resulting from air travel, but such exclusion has now been narrowed down appreciably so that usual passenger hazards are covered. Still another beneficial change was the inclusion in the surgical coverage schedule of a provision for payment of all 'cutting operations' whether listed in the policy schedule or not.
In an effort to strengthen public relations, the accident and health companies have also improved the elective indemnity provision so that the policyholder can no longer jeopardize his position in making his elective choice. Thus, he was now given complete latitude so that regardless of his original choice he will receive what would ultimately have proved to be the larger amount under this benefit.
Finally, the companies broadened the optional life indemnity provision by stipulating that if the insured, after requesting weekly indemnity payments in lieu of fixed sums for loss of both hands, both feet or sight of both eyes, shall die before receiving weekly indemnity for 200 weeks, the balance of such indemnity remaining unpaid at the time of his death shall be paid in one sum to his estate.
Casualty Insurance.
Casualty Insurance.
No insurance development of 1949 created more public interest in New York and elsewhere than the nonoccupational disability benefits insurance law, signed early in the year by Governor Dewey and which was applicable to practically all business and industrial organizations in the state employing four or more people who were covered under the Workmen's Compensation Act for 'on the job' injury or sickness. Establishing a new private-enterprise pattern in the social insurances, the new law set up a program of basic benefits — ranging from $10 to $26 — which were paid for a maximum of 13 weeks for 'off the job' disability. Under a joint-contribution system employees were required to share in the cost of this protection with their employers at the rate of one-half of 1 per cent of average weekly wages (not to exceed 30 cents a week) paid to him on and after July 1, 1950, when the law will become fully effective. Flexibility of the law lies in the requirement that the cost of benefits, above the employee contribution, is to be borne by the employer. It was felt that this will afford an opportunity for the development of plans to meet particular employer-employee needs.
A salient feature of this program was that it provides for private insurance company participation on an equal basis with the State Insurance Fund for their share of the business. The estimate was that 170,000 employers in the state and an aggregate of 6,000,000 workers will be covered.
Still another aspect of the law was that temporary contributions at the rate of two-tenths of 1 per cent of wages (not in excess of 12 cents a week) were to be paid by each covered employer and employee during the period from January 1 to June 30, 1950. These funds were required so as to build up a special reserve fund to pay benefits to the disabled unemployed.
The New York Disability Benefits Law, which represented an amendment to the state's Workmen's Compensation Act, was so well regarded by insurance and business interests that many hope it will be followed as a pattern by other states adopting such legislation. Rhode Island, California, and New Jersey were the other states in which similar nonoccupational disability plans were operating.
Combination Policies.
Considerable impetus was given during 1949 to the multiple-line underwriting development which permitted financially qualified fire and casualty insurance companies to write all kinds of insurance, except life insurance and annuities. From the insurance buyer's standpoint the chief advantages of this trend were seen in the saving in expense through providing multiple coverages under a single policy: no twilight zones of coverage for which the insured will have difficulty in obtaining insurance; and more complete and attractive policy forms.
Already noticeable on the insurance horizon were various 'package' or combination policy appeals, particularly in connection with combination automobile policies covering specified perils on a scheduled basis. The ultimate in such 'package' contracts will be the comprehensive all-risk policy, written on a single-rate basis. However, many underwriters felt that caution should be exercised in achieving this multiple-line goal. From the standpoint of the insured alone, the premium rate for the complete coverage would be too high to be attractive. It was felt that in rate-making many new approaches will have to be taken and underwriting 'judgment' will have to be utilized to a considerable extent.
Introduction of a two-year family polio policy in mid-1949 captured the public imagination. The appeal of $5,000 in benefits for polio-incurred expenses for each victim in a given family was so strong that one company alone (the Continental Casualty) had sold over 700,000 policies by mid-November
No insurance development of 1949 created more public interest in New York and elsewhere than the nonoccupational disability benefits insurance law, signed early in the year by Governor Dewey and which was applicable to practically all business and industrial organizations in the state employing four or more people who were covered under the Workmen's Compensation Act for 'on the job' injury or sickness. Establishing a new private-enterprise pattern in the social insurances, the new law set up a program of basic benefits — ranging from $10 to $26 — which were paid for a maximum of 13 weeks for 'off the job' disability. Under a joint-contribution system employees were required to share in the cost of this protection with their employers at the rate of one-half of 1 per cent of average weekly wages (not to exceed 30 cents a week) paid to him on and after July 1, 1950, when the law will become fully effective. Flexibility of the law lies in the requirement that the cost of benefits, above the employee contribution, is to be borne by the employer. It was felt that this will afford an opportunity for the development of plans to meet particular employer-employee needs.
A salient feature of this program was that it provides for private insurance company participation on an equal basis with the State Insurance Fund for their share of the business. The estimate was that 170,000 employers in the state and an aggregate of 6,000,000 workers will be covered.
Still another aspect of the law was that temporary contributions at the rate of two-tenths of 1 per cent of wages (not in excess of 12 cents a week) were to be paid by each covered employer and employee during the period from January 1 to June 30, 1950. These funds were required so as to build up a special reserve fund to pay benefits to the disabled unemployed.
The New York Disability Benefits Law, which represented an amendment to the state's Workmen's Compensation Act, was so well regarded by insurance and business interests that many hope it will be followed as a pattern by other states adopting such legislation. Rhode Island, California, and New Jersey were the other states in which similar nonoccupational disability plans were operating.
Combination Policies.
Considerable impetus was given during 1949 to the multiple-line underwriting development which permitted financially qualified fire and casualty insurance companies to write all kinds of insurance, except life insurance and annuities. From the insurance buyer's standpoint the chief advantages of this trend were seen in the saving in expense through providing multiple coverages under a single policy: no twilight zones of coverage for which the insured will have difficulty in obtaining insurance; and more complete and attractive policy forms.
Already noticeable on the insurance horizon were various 'package' or combination policy appeals, particularly in connection with combination automobile policies covering specified perils on a scheduled basis. The ultimate in such 'package' contracts will be the comprehensive all-risk policy, written on a single-rate basis. However, many underwriters felt that caution should be exercised in achieving this multiple-line goal. From the standpoint of the insured alone, the premium rate for the complete coverage would be too high to be attractive. It was felt that in rate-making many new approaches will have to be taken and underwriting 'judgment' will have to be utilized to a considerable extent.
Introduction of a two-year family polio policy in mid-1949 captured the public imagination. The appeal of $5,000 in benefits for polio-incurred expenses for each victim in a given family was so strong that one company alone (the Continental Casualty) had sold over 700,000 policies by mid-November
Unauthorized Insurers Process Act.
Unauthorized Insurers Process Act.
State supervision of insurance business was further strengthened in 1949 by the enactment of the Unauthorized Insurers Process Act in 15 states and by the adoption of fair-trade practice acts in 5 additional states. Approved as a model draft by the insurance commissioners in December 1948, the former was designed to provide more adequate state regulation of mail-order insurance. Under Public Law 15, the Federal Trade Practices Act now applies to the business of insurance to the extent such practices were not regulated by state law. The five states enacting this type of legislation in 1949 brought the total to 24 states.
The decision of the United States Supreme Court in the case of Connecticut Mutual vs. Moore, upholding the constitutionality of the New York Unclaimed Funds Law relating to life insurance, provoked considerable interest in similar laws in a number of states. As the Supreme Court's decision left unsolved several important jurisdictional problems, a subcommittee of the Joint Legislative Committee prepared a model draft of an unclaimed-funds act for use in states where a strong demand or need was apparent for legislation of this type.
State supervision of insurance business was further strengthened in 1949 by the enactment of the Unauthorized Insurers Process Act in 15 states and by the adoption of fair-trade practice acts in 5 additional states. Approved as a model draft by the insurance commissioners in December 1948, the former was designed to provide more adequate state regulation of mail-order insurance. Under Public Law 15, the Federal Trade Practices Act now applies to the business of insurance to the extent such practices were not regulated by state law. The five states enacting this type of legislation in 1949 brought the total to 24 states.
The decision of the United States Supreme Court in the case of Connecticut Mutual vs. Moore, upholding the constitutionality of the New York Unclaimed Funds Law relating to life insurance, provoked considerable interest in similar laws in a number of states. As the Supreme Court's decision left unsolved several important jurisdictional problems, a subcommittee of the Joint Legislative Committee prepared a model draft of an unclaimed-funds act for use in states where a strong demand or need was apparent for legislation of this type.
Valuation of Securities Laws.
Valuation of Securities Laws.
A development of the year in the field of valuation of securities was of major interest. To render financial assistance to the state insurance departments in establishing a competent staff for the valuation of types of investments not properly subject to valuation on a market or amortized basis, there were enacted in 1949, with approval and sponsorship of companies in the states involved, laws in Connecticut, Massachusetts, New Jersey, New York, and Pennsylvania. The measure provided for an over-all annual sum not to exceed $250,000 to be assessed against the domestic companies of these states in proportion to their securities subject to valuation. Life insurance companies thus demonstrated their willingness to co-operate fully with state regulatory officials in the interest of sound supervision of their affairs. A problem of supervision which required the participation of more than one state was solved within the framework of state regulation.
A development of the year in the field of valuation of securities was of major interest. To render financial assistance to the state insurance departments in establishing a competent staff for the valuation of types of investments not properly subject to valuation on a market or amortized basis, there were enacted in 1949, with approval and sponsorship of companies in the states involved, laws in Connecticut, Massachusetts, New Jersey, New York, and Pennsylvania. The measure provided for an over-all annual sum not to exceed $250,000 to be assessed against the domestic companies of these states in proportion to their securities subject to valuation. Life insurance companies thus demonstrated their willingness to co-operate fully with state regulatory officials in the interest of sound supervision of their affairs. A problem of supervision which required the participation of more than one state was solved within the framework of state regulation.
Corporate Finance.
Corporate Finance.
Growing interest among life insurance companies was noted during the year in a comparatively new method of corporate finance, which was the sale and lease-back of real estate. Although corporations adopting such financing have welcomed the device as a means of securing additional capital, the insurance companies have likewise promoted the plan in that it has opened a new field of investment for their growing investment assets. With the approval of, and in many states at the insistence of the life insurance companies, the legislatures of practically all the states have now enacted legislation permitting the life companies to make direct investments in real estate or interests in the real estate acquired for the purpose of producing income — often referred to as 'income real estate.' The legislatures long had provided for investment by life companies in real estate to a limited extent, namely in home-office properties and foreclosed real estate and housing. The expansion of this power to include investment in real estate was merely an extension of the field within which the inherent investment power of a life company could be exercised.
Growing interest among life insurance companies was noted during the year in a comparatively new method of corporate finance, which was the sale and lease-back of real estate. Although corporations adopting such financing have welcomed the device as a means of securing additional capital, the insurance companies have likewise promoted the plan in that it has opened a new field of investment for their growing investment assets. With the approval of, and in many states at the insistence of the life insurance companies, the legislatures of practically all the states have now enacted legislation permitting the life companies to make direct investments in real estate or interests in the real estate acquired for the purpose of producing income — often referred to as 'income real estate.' The legislatures long had provided for investment by life companies in real estate to a limited extent, namely in home-office properties and foreclosed real estate and housing. The expansion of this power to include investment in real estate was merely an extension of the field within which the inherent investment power of a life company could be exercised.
Assets and Investments.
Assets and Investments.
The admitted assets of all United States legal reserve life insurance companies approximated $58.3 billion at the end of 1949. The figure was $55.5 billion at end of 1948, so the increase was about $3.8 billion during the year. Reflecting the heavy volume of capital formation in the private sectors of our national economy during the past three years, public-utility bond holdings rose from 11.6 per cent of assets at end of 1946 to about 16.5 per cent of assets at the close of 1949. Industrial and miscellaneous bonds, mainly industrials, increased from 6.9 per cent to 14.9 per cent in the same period; and mortgage holdings rose from 14.8 per cent to 21.7 per cent. At the same time holdings of United States Government bonds declined from 44.9 per cent to 25.6 per cent of assets.
The gross acquisitions of new investments by United States legal reserve life companies totaled $6.6 billion during the first nine months of 1949, as compared with $8.2 billion during the same period of the former year. The acquisition of public-utility bonds declined $304 million; of railroad bonds, $96 million; and of industrial and miscellaneous bonds, $108 million.
The admitted assets of all United States legal reserve life insurance companies approximated $58.3 billion at the end of 1949. The figure was $55.5 billion at end of 1948, so the increase was about $3.8 billion during the year. Reflecting the heavy volume of capital formation in the private sectors of our national economy during the past three years, public-utility bond holdings rose from 11.6 per cent of assets at end of 1946 to about 16.5 per cent of assets at the close of 1949. Industrial and miscellaneous bonds, mainly industrials, increased from 6.9 per cent to 14.9 per cent in the same period; and mortgage holdings rose from 14.8 per cent to 21.7 per cent. At the same time holdings of United States Government bonds declined from 44.9 per cent to 25.6 per cent of assets.
The gross acquisitions of new investments by United States legal reserve life companies totaled $6.6 billion during the first nine months of 1949, as compared with $8.2 billion during the same period of the former year. The acquisition of public-utility bonds declined $304 million; of railroad bonds, $96 million; and of industrial and miscellaneous bonds, $108 million.
Life Insurance
Life Insurance.
At the end of 1949 there were approximately 80,000,000 people in the
Gain in amount of life insurance purchased in 1949 exceeded all previous records as did size of funds which went to policyholders and beneficiaries throughout the nation in the form of policy benefits. The total legal reserve life insurance protection at the year's end was $213,400,000,000, a net gain for the year of 6.01 per cent. Of this total, about 66 per cent represented ordinary coverage; 15 per cent, industrial insurance coverage; and 19 per cent, group coverage.
Policyholders and beneficiaries in the
Congressional Inquiries.
Congressional Inquiries.
The inquiries into life insurance by Congressional committees were those of the Judiciary Committee's Subcommittee on Power Monopoly, the chairman of which was Emanuel Celler of Brooklyn, and the Joint Committee on the Economic Report, the chairman of which was Senator Joseph C. O'Mahoney of Wyoming. Both inquiries quickly assumed fact-finding aspects. Nothing developed at either hearing of a nature critical to the institution of life insurance or its operations.
The questions of Chairman Celler were largely based on whether certain companies had grown too large and influential for the good of the national economy or of life insurance itself; whether federal supervision should replace state insurance supervision; and whether small companies or those lately entering the field were unable to progress satisfactorily either in competition for new production of business or in their fund-lending activities because of the size and power and influence of the larger companies with which they would compete. Witnesses represented large, medium-sized, and small companies. Testimony was that there was no monopoly in life insurance; that the so-called giant companies were losing their percentage leadership in production of new business; and that the life insurance business was now being operated to a substantial extent on a decentralized basis even with the very large companies. It was also testified that since 1900 approximately 250 new companies had entered the field — 100 of them in the last decade — and none had been a failure. Many avenues were open for lending activities of small companies, witnesses said. None of the executives favored federal supervision of insurance if it were to replace state supervision, all of them praising present state methods of supervising insurance companies.
Before its hearings, the O'Mahoney committee sent out a large number of questions asking life companies for a great deal of detailed information. The questionnaires were largely based on whether shortage of equity capital was temporary or permanent; whether the financial door was being closed on independent and small business; whether large financial institutions had an advantage over small enterprises because of size and influence; and whether savings were being channeled to an increasing degree through life insurance companies, thus diminishing the supply of equity capital as such. The executive officers of numerous leading life companies came to Washington and testified before the O'Mahoney committee that the reasons for the shortage of equity capital were due to many factors including the government's 'easy-money policy,' which has kept interest rates low; the heavy taxation of business; and inflation and various currents in the political stream which had weakened confidence of investors.
None of the life insurance company officers, including the small companies, thought that the life companies were too large nor that their competition was damaging to small companies. All denied that lending operations of life companies, whether through directly negotiated loans or other financing, gave them any management in operation of business corporations. They testified they did not want that power.
The questions of Chairman Celler were largely based on whether certain companies had grown too large and influential for the good of the national economy or of life insurance itself; whether federal supervision should replace state insurance supervision; and whether small companies or those lately entering the field were unable to progress satisfactorily either in competition for new production of business or in their fund-lending activities because of the size and power and influence of the larger companies with which they would compete. Witnesses represented large, medium-sized, and small companies. Testimony was that there was no monopoly in life insurance; that the so-called giant companies were losing their percentage leadership in production of new business; and that the life insurance business was now being operated to a substantial extent on a decentralized basis even with the very large companies. It was also testified that since 1900 approximately 250 new companies had entered the field — 100 of them in the last decade — and none had been a failure. Many avenues were open for lending activities of small companies, witnesses said. None of the executives favored federal supervision of insurance if it were to replace state supervision, all of them praising present state methods of supervising insurance companies.
Before its hearings, the O'Mahoney committee sent out a large number of questions asking life companies for a great deal of detailed information. The questionnaires were largely based on whether shortage of equity capital was temporary or permanent; whether the financial door was being closed on independent and small business; whether large financial institutions had an advantage over small enterprises because of size and influence; and whether savings were being channeled to an increasing degree through life insurance companies, thus diminishing the supply of equity capital as such. The executive officers of numerous leading life companies came to Washington and testified before the O'Mahoney committee that the reasons for the shortage of equity capital were due to many factors including the government's 'easy-money policy,' which has kept interest rates low; the heavy taxation of business; and inflation and various currents in the political stream which had weakened confidence of investors.
None of the life insurance company officers, including the small companies, thought that the life companies were too large nor that their competition was damaging to small companies. All denied that lending operations of life companies, whether through directly negotiated loans or other financing, gave them any management in operation of business corporations. They testified they did not want that power.
The Pension Plan.
The Pension Plan.
The Pensions Plans grew to become an outstanding matter of interest to insurance companies, industry, and the working population following the agreement on this subject between the C. I. O. union and United States Steel, Bethlehem Steel, Ford Motor Car Company, and a growing number of industries. The United States Steel agreement with the union was to pay to employees with 25 years or more service a minimum of $100 a month less the primary benefit under the Social Security Act. As the campaign for pensions increased in insistence, government social security benefits came under wide discussion. New ways of integrating the private programs into the basic federal old-age insurance system were under consideration. It was believed that 7,000,000 persons were now covered by all types of private pension plans, both union- and company-sponsored. The Federal Security Agency paid out $220,000,000 in benefits in 1949 to about 300,000 persons past the age of 65. How far the government could expand its spending program has become a political issue.
The Pensions Plans grew to become an outstanding matter of interest to insurance companies, industry, and the working population following the agreement on this subject between the C. I. O. union and United States Steel, Bethlehem Steel, Ford Motor Car Company, and a growing number of industries. The United States Steel agreement with the union was to pay to employees with 25 years or more service a minimum of $100 a month less the primary benefit under the Social Security Act. As the campaign for pensions increased in insistence, government social security benefits came under wide discussion. New ways of integrating the private programs into the basic federal old-age insurance system were under consideration. It was believed that 7,000,000 persons were now covered by all types of private pension plans, both union- and company-sponsored. The Federal Security Agency paid out $220,000,000 in benefits in 1949 to about 300,000 persons past the age of 65. How far the government could expand its spending program has become a political issue.
1949 Insusurance
Of the many developments in the field of life insurance and affiliated coverages marking the year 1949, the most important was the impetus given to the growth of group insurance and pensions in industry by unions. Also figuring prominently was the extension of nonoccupational disability benefits, commonly referred to as 'cash sickness' benefits. Two inquiries into life insurance were made by Congress, one relating to investments of life companies and the other seeking to ascertain whether the larger companies were exercising too much power because of their size, the advantages given them by very large home-office staffs and the large volume of their writings and financial operations.
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