LIFE.] INSURANCE 183 indin made by the officers, to " investigate " the affairs of each life assurance company, that is, to overhaul its books and accounts, examine its muniments of title, and test and scrutinize every part of its administration. No company chartered by any other State or government can do any business within the State, except under his licence and certificate that it has complied with all the laws ; and exclusion from the State is the penalty for neglect to answer any question concerning its business which he may ask. In several States he is required to exclude any company which shall take an appeal from the courts of the State to a court of the United States, in a case arising between it and a citizen. The most important duty imposed on the superintendent is the administration of the legal test of solvency. In New York and most of the other States, his valuation, according to the legal standard, must be made by the net- premium method, and if any company is unable to meet this test by actual possession of the requisite amount of funds, he must commence legal proceedings for its dis solution, and the distribution of its assets as in bankruptcy. The Act making this course imperative in New York was passed in 1879, but many years earlier the practice had become fixed of requiring a company to meet a net valua tion of its obligations, or be deemed insolvent. The fair ness of this unbending application of the net-premium mode of valuation as a test of mere solvency, and the efficiency of the check supplied by a too exclusive reliance on such a test, have often been called in question. When an insolvent assurance company is wound up, the rule commonly followed by the courts of equity in dis tributing the proceeds is to recognize each policyholder as a creditor for the amount of reserve corresponding to his assurance at the time of the declared insolvency. The representatives of a policyholder who dies before the actual distribution may claim for the amount of the policy, dis counted back to the date of insolvency. The whole process of winding up would be much less unsatisfactory than it has proved, if the courts and the departments could make a prompt and inexpensive distribution. But in practice there is too much danger of the distribution being delayed until the available assets have been largely dissipated in receivership and legal expenses, In New York, and several other States, the legislature has interfered to prevent the forfeiture of assurances by the failure to pay a premium, and has undertaken to regu late the payment of surrender values and the grant of paid-up policies in such cases. There is not, however, any general agreement among the different States as to the basis on which such allowances are to be computed. It is too soon to judge finally of the effect of these non-forfeiture laws upon the business ; but the impression is believed to be growing among thoughtful policyholders that they are too favourable to withdrawing members, and tend to weaken the companies, by encouraging the retirement of the most healthy and profitable lives. Laws of this kind usually proceed upon the theory (which we venture to think an erroneous one) that the reserve for each particular assur ance is to be looked upon as in some sense the property of the individual policyholder. ieri- The American Experience Table adopted by New York . m r- State as the official standard of valuation was constructed J| e y by Mr Sheppard Romans from the statistics of the Mutual Life Insurance Company of New York City. Other valuable tables of American experience have been pub lished, such as that given by Mr W. S. Nichols (Ass. Mag., xix. 28) from the experience of the Mutual Benefit Insurance Company of New Jersey, and a later collection of the experience of the Mutual Life, more extensive than the first, to which Professor Bartlett has devoted great >n-for- ture attention. Some years ago the Chamber of Life Insurance in America (an association formed among the American assurance offices) undertook the collection and arrangement of the experience of a number of the companies in the States. Their labours when completed will no doubt throw much additional light on the value of assured life in America. Meantime Professor Bartlett brings out in his tables a longer duration of life than that indicated by experience in England, and Mr Nichols points out a higher relative mortality among young lives in America. If the latter peculiarity be well established, it will follow that the reserves required by American offices may be smaller than those required by English offices, even if the same rate of interest be employed in the calculations. An interesting feature in the practice of many American Bonus offices is their dividing profits on the " contribution system, method," so called because it aims at returning to each class of policyholders a share of the surplus proportionate to the amount contributed to its formation. An explana tion of this method by Mr Homans, by whom it was originated, will be found in the Assurance Magazine, vol. xi. p. 121. Bonuses, or "dividends," as they are called in America, are largely taken in cash, but they may be applied in augmentation of the sums assured. The " Tontine " system of assurance has come into pro- Tontine rninence of late years. The policyholders under this plan system, agree that no dividend, return-premium or surrender value shall be received for a term of years called the " tontine period " ; but that the entire surplus from all sources, in cluding lapses, shall be accumulated to the end of that period, and then divided among all who have maintained their assurances in force. The tontine companies usually offer this plan as an alternative with the ordinary mode of assurance, and large numbers of applicants select it. In Canada the course of legislation with regard to assur- Canada, ance has brought about a state of the law very much resembling that in the United States. After the passing of the latest Act in 1877, which, among other things, requires all companies to keep separate assets in Canada against their liabilities there,- several British and American offices withdrew from transacting new business in the Dominion. From the report of the superintendent of insurance for the year 1879 it appears that the number of companies licensed for the transaction of life assurance business in Canada for that year was thirty-six. Of these thirteen did not transact new business. The following arc the Canadian statistics for the year referred to. Assurances effected during the Year. Assurances in force at end of Year. Com panies. Amount Assured. Com panies. Amount Assured. Canadian Companies. British Companies.... American Companies. 7 11 5 $ 6,112,706 1,877,918 3,363,600 7 18 11
33,246,543 19,410,829 33,616,330 Total 23 11,354,224 36 86,273,702 In Australia and New Zealand there were in 1879Austral- (including the New Zealand Government Insurance Depart- a ment) ten institutions for life assurance business. The total amount of new assurances granted by them was between 3,000,000 and 4,000,000, upwards of 2,000,000 of which was transacted by one office, the Australian Mutual. The ten offices had in force at the close of the year nearly 70,000 policies, assuring upwards of 23,000,000. In India, at the Cape of Good Hope, and in the West India, Indies there are native assurance offices, but the business &c. in those places is largely transacted by companies whos< headquarters are in Great Britain.
