Assessment companies call upon their policy-holders for such sums as are required to meet actual losses, together with a small amount for expenses and for an emergency fund. Mortuary assessments are called only when there is an amount in hand on that account, insufficient to meet the maximum sum for which a policy is issued. They may be called at stated periods, or as the exigencies of the case shall require. Objection is made to this method that it is unreliable, and cannot be depended upon when the mortality is from any cause unusual or excessive.
It is not claimed by the best informed advocates of assessment insurance, that direct assessments should be the sole reliance of the company. Some other provision should be made which is referred to later in this article, but the main dependence is upon assessments.
If companies are honestly and capably conducted, and risks judiciously selected, there is nothing in the experience of life companies to indicate that mortality assessments on the average will be sufficiently burdensome to seriously threaten the permanence of the institution. Where disaster has been visited upon assessment companies, the cause has been easily traceable to incompetent or dishonest conduct of the business, and utter disregard of the foundation principles of all insurance. It has in no instance been fairly chargeable to defects in the system. With the record before us of our best assessment companies, faithfully and competently administered, paying their losses promptly, at a cost to the insured for a term of years, of one third to one half only, of that in level premium companies, what reason is there for the insuring public withdrawing their patronage.
But we admit that it is not sound policy to depend upon assessments alone, and this view is held by most if not all, who have studied the subject in its various aspects. While for many years, and perhaps indefinitely, a company might be successfully conducted, if under a competent management, depending solely upon assessments, yet contingencies arc liable to arise in which it will be evident that true conservatism and wise forethought would have held in hand some funds for use without imposing, at that particular time, the burden of an assessment upon the policy holders.
The advocates of such conservatism have been met with the argument that it is contrary to the principle of assessment insurance, and a concession to the theory of the level premium plan. But the reply is that the requirements of an assessment company in the form of an emergency or reserve are in no sense comparable with those of a level premium company, and the application of it is upon an entirely different principle, and for an altogether different purpose.
An assessment company may need funds in hand to relieve its members of an assessment when otherwise they might be overburdened, because the death rate fluctuates in different years. Or again, in case of a depleted membership from any cause, the assessment company would need funds in hand to supply any deficiency in the proceeds of an assessment below the face of the maturing obligation. For either purpose a comparatively small sum is required, while the level premium company must pile up tens of millions of overpayments to cover the requirements of the principle on which it conducts its business. It is susceptible of mathematical demonstration that one or two millions of dollars of reserve is adequate to perpetuate any well conducted assessment company for all time, however large or small it may be, while the spectacle is presented to us of level premium life companies holding fifty to one hundred millions of accumulations belonging to their policy holders, from which no possible benefit, in most cases, will ever accrue to them. We therefore emphasize the proposition that a system of insurance that relieves the insurer of one half the pecuniary burden he is compelled to bear under the level premium system, is one that is worthy of fair treatment on the part of a discriminating public, and that the people cannot afford to have impeded in its usefulness by ignorance, prejudice, or moneyed monopolies. We repeat the claim for assessment insurance that it is natural as against artificial insurance.
It is pure insurance as against insurance and banking combined.
It is within the comprehension of ordinary minds. It is adapted to the wants of the people, because they can easily avail themselves of it, and as easily discontinue it without material or considerable loss.
It is within the reach of a much greater proportion of the people on account of its small comparative cost, and the ease with which payments can be made in small amounts. More than sixteen hundred thousand of the citizens of this country are now availing themselves of its advantages, as against about six hundred thousand in level premium companies while the former represent more than thirty-seven hundred millions of insurance, as against about fifteen hundred millions represented by the latter.
The disbursements of assessment companies to families of deceased members reach the munificent sum of more than twenty-two millions of dollars annually. The national organization of Mutual Benefit Assessment Associations of America is exerting a most healthful influence in elevating the standard of those companies that comprise its membership. It embraces organizations from all of the principal States of the Union, and its influence is strongly on the side of scientific and conservative methods and practices.
To be eligible to membership, a company must have its rates of assessment graded according to one, or the combined standard mortality tables, take proper precautions in selection of risks, protect new members at any time in its history against an excessive number of assessments, either by increasing the rate of assessment with advancing years or by accumulating a fund in lieu of advancing rates, will make a full exhibit of its policy data annually to the Convention. This standard upon its publication, compelled favorable recognition upon the part of level premium journals.
Thus assessment insurance has gradually placed itself upon a higher and more scientific basis, until it has commended itself to the most intelligent and thoughtful, and in its wonderful growth outstripped its older and less popular rival, until its obligations to the families of the insured exceed those of level premium insurance to the amount of about two thousand millions of dollars.
A Bureau of Insurance has been established under the auspices of the National Organization whose object is to gather and compile statistics relating to all phases of assessment insurance, such as the experience of companies with agents and medical examiners, the comparative cost of carrying various classes of risks and in short, everything in the practical working of the business by the companies comprising its membership, that may furnish data for a more scientific basis, and more satisfactory results in the future.
Many assessment insurance companies are not what they ought to be, but there are those worthy of confidence and patronage, whose managers are making the business a careful study, and bringing to its administration, honesty of purpose and large executive ability.
If the insuring public will learn to discriminate and place their risks in the best assessment companies, remembering that insurance in any good company must cost a reasonable amount, they need have no apprehension as to the result.
THE HERO OF LAKE ERIE
ORATION DELIVERED AT THE UNVEILING OF HIS STATUE AT NEWPORT, R.I., SEPT. 10, 1885By Hon. William P. SheffieldThe battle of Lake Erie was fought seventy-two years ago to-day; and we have convened to dedicate to the public and to posterity a statue in memory of the Commander of the American fleet on that occasion,