CARE OF POOR CHILDREN.
Mr. Spann's bill [S. 130] to provide for the support and care of pauper children more effectually [see these reports January 20] being read the third time--
Mr. SPANN believed this bill would work great good in providing for destitute children now in Poor Houses--near 1,000 in number--by bringing them into a family group under the care and control of a mother. That they should be reared in the family crib is God's plan. The bill is commendable upon the ground of economy in that it limits the expense to thirty cents a day per capita. Then it is not mandatory in any of its provisions.
Mr. WHITE said the Committee had given this bill careful consideration, and it was of the opinion that it proposes a plan admirably adopted for the care and custody of the pauper children of the State, and he hoped it would be passed into a law.
Mr. VAN VORHIS had carefully examined the bill. It does credit to the head and heart of the author. Its provisions are well guarded, and he hoped it would pass.
Mr. BUNDY believed his County and but one other has a similar plan in operation. It is a subject of common remark that these children in his County are advancing more rapidly than many children enjoying the blessings of a good home. He preferred this system to the aggregate plan of an Orphans' Hospital.
Mr. GARRIGUS claimed such a system for his County, and knew the plan works well.
Mr. RAHM would take great pleasure in voting for this bill, as it embraces a much-needed measure for the relief of a deserving class.
Mr. FOSTER had prepared a bill looking to the care of this class of children, which he was much interested in, but believing this one would do the work, he hoped it would pass.
Mr. HEFRON appreciated the generous feeling of humanity that prompts the favorable consideration of such a bill, but believing we should be just before being charitable, he would have to oppose it. There are features in it which will take away many of its intended benefits. It places in the power of the matron to farm out the children, with the consent of the Commission. We have a law already that will operate as just as this bill, and much more cheaply. The plan of the bill would beget in the children a spirit of dependence on the Home for sustenance and protection, while the very desirable elements of self-reliance are taken away. The present law is much preferable.
Mr. OWEN very heartily indorsed the bill. It promises more for the good of society than any measure yet brought before this body. The Poor House is a kind of reservoir for the most infamous slums of society, and these children, by this measure, would be taken away from such contaminating influences.
The State takes care of her poor, feeble-minded children, and yet is degrading those who posses brains.
Mr. BELL fully concurred with what was said by the Senator, who has just taken his seat. That such a measure as this has not been passed by the General Assembly heretofore reflects not to the credit of the State. He hoped the bill would pass.
The bill passed by yeas, 31; nays, 7.
Mr. Traylor, when his name was called, said he should vote for the bill inasmuch as it is not mandatory. These children ought to be provided for better than they are in our Poor Houses.
The LIEUTENANT GOVERNOR laid before the Senate the following report of the Insurance Commission:
The Legislature of 1879, directed the Governor to appoint some person to act with the Attorney- General and Auditor of State "to constitute a Commission whose duty it shall be to prepare and present to the next General Assembly of the State, a bill for an act embracing a codification of the insurance laws of the State; so amended and with such additional sections and provisions as will, when passed upon, provide an insurance law which will properly regulate the business of foreign and domestic Insurance Companies doing business in this State, and provide for a proper collection and accounting of all moneys due from such Companies, and embrace such other matter as in the opinion of said Commission will be necessary to frame a good insurance law."
The Governor accordingly appointed John A. Finch to this position. The Commission was immediately organized. John A. Finch was elected Chairman.
At our first consultation it was determined we would make no omission or change in the present law, and add nothing to it except upon the clearest public necessity. The policy of the State touching insurance business should not be changed without it appeared to be imperatively demanded. We have been firm in adhering to this rule. We report against no existing section, make no change in any section, and add no new section without the fullest consideration and what seemed the most satisfactory reasons. It was also determined to make a thorough examination of all existing statutes of the States of the Union, and of the United States and of all foreign countries. The Chairman has collected all these statutes and patiently read their curious and complex provisions, and made report to the other Members of the Commission. Whatever seemed to be of probable value to a State like Indiana was reserved for more careful consideration.
In the consideration of the various intricate and delicate questions involved, the Chairman of the Commission was led into a very extensive correspondence with officials of other States in charge of insurance departments, with experts in insurance theories and practice, and in the law of insurance, with officials of Companies and with writers upon insurance topics. Patient attention was given to every communication received. This voluminous correspondence has been preserved and is at the service of the Committees on Insurance.
The Chairman also attended the Convention of Insurance Commissioners and Superintendents in St. Louis in September, 1879, and again in Chicago in September, 1880. The views of the gentlemen composing these Conventions were, from their official positon, of very great value. Many of them have been retained in their positions for many years, through changes in the politics of changing administrations. The Chairman also attended the sessions of the Association of Fire Underwriters of the Northwest in Chicago in September, 1879, and again in 1880. This is a body of men of singular activity and energy, and no one can attend one of their meetings without profit.
The Chairman and members of the Commission had also the benefit of an extended visit from Hon. Cornelius Walford, F. I. A., F. S. S., a most page: 153[View Page 153] eminent English barrister, who has a reputation as wide as civilization as a student and writer in insurance.
From his extended correspondence and acquaintance, and especially from interviews with the Commissioners and Superintendents of State Insurance Departments, the Chairman has had a pretty thorough information as to the general subject of insurance legislation. The points of discussion and for determination developed in this way have been canvassed with the Commission, and we have been in substantial accord on all leading propositions.
Upon the organization of the Commission, the Auditor of State notified all the Insurance Companies doing business in the State of the fact and invited suggestions from them. Similar notice was sent to all the newspapers in the State and to all citizens who might feel disposed to aid in the work to be done. There was some response to this from citizens and through the press, and valuable suggestions were received. The Insurance Companies without the State made no response. Later, the Chairman called particular attention of these Companies to special questions, and by repeated efforts in this way a fair expression was had.
Gentlemen interested in local Companies and other desirous of seeing strong local Companies organized have pressed upon our attention the fact that for some cause, and that ascertainable by reference to existing statutes, Indiana has been forced to buy insurance from corporations of other States. It was apparent that some change was needed--that this unnatural and unhealthy condition should be corrected.
It has long been a matter of surprise and regret with the best citizens of the State that the business of insurance should be so largely done by Companies organized without the State. It would seem that in a State of such wealth and population and energy as this, the business of insurance should largely be done by home Companies. The sums sent out of the State for insurance annually for the last thirty years make an immense aggregate. It is felt to be a drain from the State that prudence and enterprise would seek to diminish and balance by forming home Companies of strength that would, while doing all of the home insurance they prudently could without incurring danger from conflagration risks, also draw from other States in some such proportion as they draw from us. That this has not been done is a matter demanding attention, and we have given it a thorough investigation.
We do not believe any fostering legislation will develop home Insurance Companies. They must come from the energy, enterprise and intelligence of the citizens. They should be under no regulation or requirement that will chafe the management or imperil the business. It is an earnest hope of the Commission, as of every citizen of the State, that the insurance of property and life in Indiana should, so far as practicable, be by home Companies. The State can grant no special favor to incorporators of Companies for insurance that upon equal terms is not given to incorporators of Companies for any other business. Neither should the State impose conditions upon incorporators of Insurance Companies unknown to other business beyond the strictest necessity growing out of the of the nature of the business. With this thought we have considerately gone through with the existing law. No one need feel surprised at the fact of so few Companies for insurance having ever been attempted in this State. Since 1852 the law has been practically prohibitory. It has required every Company organized under the general law after notice of a loss "to pay the amount so lost within sixty days after such notice, under a penalty of ten percentum damages for every thirty days such loss remains unpaid thereafter."
It allowed an Insurance Company so organized to take real estate security, and to realize the debt, to take title to such realty. But "such Company shall be required to offer said real estate once in every two years at public auction to the highest bidder." This is simply a prohibition. Under these provisions a contested claim draws 120 per cent. interest, and in a suit to recover the claimant might delay a final trial until his claim would be quadrupled. A depression in prices, such as we have lately witnessed, would, under the rule of forced auction sale speedily bankrupt the most solvent Company. It would, indeed, be in such imminent hazard constantly that prudent men might well, as experience shows they have for thirty years, refuse to so place their capital.
These sections and many other minor provisions we omit. We have, indeed, entirely revised the law for the incorporation and management of stock Insurance Companies, and while we have most carefully guarded the solvency of the Company that might be organized, we have made no provision that will bear unfairly upon or harass the Company when organized. The policy holder and the stockholder will be equally safe.
Very decided changes are made for the admission of Companies of other States, and of foreign countries. Under the present law a Company is required to appoint its agents every six months, and authorize them to accept service during that time. Under this rule a Company may, as many have, come into the State and remain a short time until a considerable liability is incurred and then, by failing to renew its appointment of agents, can withdraw from the State. A citizen of this State having a disputed loss in such a Company, would be required to go to the State or foreign country where the Company is located in order to litigate. Under the present law the requirement, it will be noticed, is wholly upon the agent. The Company, as a Company, directly does nothing toward securing the right to do business in the State. Its first act is to appoint an agent, and the agent, before he can transact any business of insurance for the Company must do certain things. In this a change is made. The application for admission is made by the Company. It must present a detailed statement of its condition and comply with other requirements. It must appoint some person upon whom service may be had as long as any risks of the Company exist in the State. In case of the death, resignation or removal of such person, and the failure of the Company, for thirty days, to make a new appointment, service, it is agreed, shall be upon the Auditor of State. This provision will effectually secure citizens from annoyance by being unable to litigate against a Company upon a disputed claim in this State.
The same provision is made for Companies of foreign countries. They are required to make three statements-one showing the condition and business of the Company in the United States; one showing condition and business in the aggregate. These statements are to be made in a prescribed form. If such Company is required, where organized, to make a report to any official, it shall also file with the Auditor of State a copy of such report. These reports will, if truthfully made, give satisfactorily full information concerning these Companies. Under the provisions of the bill we report, all Companies, organized without the State issuing any form of policy or certificate, by which anything is promised in the event of loss of property or life, are upon equal footing. The only exception is in favor of Companies insuring only against injury by accident, or loss of time by disease. It would seem that $100,000 of capital unimpaired, or of accumulated surplus, would be amply sufficient to meet their liabilities. This may exclude from the State a class of Companies issuing certificates of membership by which at the death of a member, an assessment on existing membership is promised. Experience has fully page: 154[View Page 154] justified grave doubts of the permanency of this form of Company. No such Company has ever succeeded for any long period. Membership is not held by any obligation beyond agreement to pay the assessments as made. It is Impracticable to compel payment by litigation. As a result of this, it has, without exception, been the rule, that as the age of members increases, and the death rate increases correspondingly, new members will not unite, and those who drop out are the strongest and least liable to die. The selection is thus against the Company with an inevitable result of practical dissolution. It is not believed that any benefit from such Companies, organized in other States, has been realized equal to the loss. A Company without capital or accumulation can give no guaranty to our citizens. Such a Company can only do a business satisfactory to its membership, when its management is within immediate observation of all those interested. The Commissioners and Superintendents of Insurance Departments of other States are unanimous in condemnation of this system. In many of the States they can only organize by full compliance with the law concerning the organization of Life Insurance Companies.
While making this requirement as to the assessment Companies, we have made no change in the law for the organization of such Companies in this State. They are organized under the law for organization of Voluntary Associations, and that is not within the laws referred to this Commission. All such Companies are, however, required to make annual report of their business and condition, and the reports are required to be published, as are the reports of other form of Companies. We can see no objection on the part of any Company to this requirement. So far as we have had expression from any of these Companies, they all favor an annual report. Officers of these Companies, as a rule, think it as important that such Companies should make report as that Companies upon any other theory should report. Upon the theory that the patrons of every sort of Company doing insurance business in any form should have for their information sworn reports of what the Company is doing, we have provided that Companies whose business is limited to one County shall make report to the Auditor of the County. For this only a nominal fee is provided.
Statements of all Companies doing business in the State are required to be filed in the office of the Auditor of State. Certified copies of these must be filed in the office of the Clerk of every County where they do, business. These are to be kept by the Clerk for public inspection, and this will give full information to all concerned of the condition of every Company, The Auditor of State is required to publish, in his annual report, the amount of fees and taxes paid by each Company, and to send a copy of his report to every Company doing business in the State. This will be sufficient guard for correct accounting. His report shall also contain an abstract of the annual statements of the Companies and such other information as he may deem proper to publish.
In framing the provisions affecting the relation between the Companies and the public who patronize them, we have kept this principle in mind, that in a Government like this, the State shall do no act for a citizen that he can as well do for himself. We dislike tampering with contracts by-legislation. Only considerations of grave public policy will justify this. We have endeavored to interfere with the terms of contracts as slightly as is desirable asa matter of public policy. As a general rule, we think the parties to a contract should be left to its terms. But this rule only fully applies where contracting parties are on equal terms. The ordinary policy-holder and the Insurance Company are not on equal terms. Therefore, we make certain requirements touching the contract. The most important of these may be mentioned:
1. After three annual payments of premiums on any life policy, death by suicide shall not avoid the policy, if the person on whose life the policy was written, shall commit suicide when insane.
2. After three annual payments of premium on a life policy, a paid-up policy shall be issued for such amount as the unexpended part of the premiums paid (technically called the reserve) will purchase at the then age of the person on whose life the policy was written. This provision may be waived in favor of any other provision, which shall, however, be fully stated in the waiver.
3. After five annual premiums have been paid on a life policy, the Company issuing it can not defeat recovery on account of any misstatement or omission in the application, unless the misstatement or omission was fraudulent. Error as to age may be corrected by accounting when the policy matures.
4. Every policy must have attached to it every instrument in any way affecting it. Other changes are made, but they are of slight importance, and do not need recapitulation.
Under the provisions of the bill we report, the Auditor of State is given the right to visit the agents and offices of all Companies doing business in the State, whenever in his discretion the public good requires it. The expenses of such examination is borne by the Companies examined. This isa large power, and, if wisely exercised, will guard the State from Companies of doubtful solvency. The Auditor is required to report the cause upon which he acted making or ordering an examination.
The Auditor of State, by this bill, is intrusted with the heavy responsibility of saying to the people of the State in what Companies they may safely insure. This duty requires such technical knowledge that many of our citizens have urged upon us the necessity of providing for the appointment of an especial officer, who shall be skilled in such matter. In nearly all of the States there is such an official. It would, on many accounts, seem to be desirable that Indiana should have such an official. If a salary would be given sufficient to secure the services of one technically informed and devoted to this specialty, and he be made only removable for cause, it might reasonably be expected that a more perfect service would be rendered in this Department. But it is not the policy of the time to create new offices or to give inviting salaries or indefinite term of office. And it may be said in justification or extenuation of the present system that the people of Indiana have not suffered more by failure of Insurance Companies than have the people of other States protected by special Departments of Insurance.
And further, that in New York, where the statutes relating to Insurance Companies make a considerable volume, and a department is provided with a well-paid official in charge, there have been most disastrous failures, particularly in life insurance.
Then came the recess till 2p. m.
