STATEMENT OF R. B. ROBBINS Mr. ASHBROOK. The next witness is R. B. Robbins. Mr. ROBBINS. I am here representing the Teachers' Insurance and Annuity Association. This is a life-insurance company incorporated under the laws of the State of New York to furnish life insurance and annuity contracts to college and university teachers in the United States and Canada. The company is a stock organization with a capital of $500,000, and it started with a contributed surplus of the same amount 16 years ago. This capital stock was contributed by the Carnegie Corporation of New York which owns the capital stock. There is a provision of the charter that the stockholders may not profit by the business. The company is recognized as a charitable organization by the United States Government. Our life-insurance policies are on the same basis of rates as the Government insurance policies, which means the net American special rates. An outstanding fact is that all our expenses have been paid by the Carnegie Foundation for the Advancement of Teaching or the Carnegie Corporation of New York. No policyholder has contributed to the expense of the business at any time. The purpose of the company was to furnish these contracts at the lowest cost possible, and we have avoided all expense. We have never used agents. We have no agents. We are licensed in New York State only and conduct our business by mail. Since any teacher in a college or university is eligible to assume a contract, we may receive an application from any State in the Union. Mr. HARTLEY. How about high-school teachers? Mr. ROBBINS. They are not eligible. We include college and university employees only of the United States and Canada. Mr. DOBBINS. Have you any recognized status from those colleges and universities? Are you recognized as being the character of organization you say you have, a semiofficial status? Mr. ROBBINS. Yes; especially in this way: The primary purpose of organizing the association was to help universities and colleges in the conduct of their retirement plan. More than 100 colleges and universities use our contracts in connection with their plans. The universities and colleges contribute one-half of the premiums upon the contracts and the policyholders the other half. Those 100 constitute two-thirds of the universities and colleges in the United States and Canada that have any form of retirement plan. Therefore, there is a definite recognition of the status of the association. Our interest in avoiding licensing in the various States is merely a matter of expense and a matter of method. We have no intention of using agents. We may receive, say, six applications from a State this year and no more applications from that State for a year or two, and to carry on the detailed work that Mr. Milne spoke about would elevate our costs enormously. It would make our overhead cost almost one-half as much again to be licensed in all States of the Union. The cost of licensing depends upon retailatory laws in the different States. For instance, if the State of New York charges an outside company $300 to do business in New York State, that outside State will charge the State of New York, or anybody in it who wants to do business in the State, $300 to do business in its State. We might find ourselves paying a license fee of $200 or $300 a year for the privilege of writing one or two policies a year. The fees might be several times the premiums received from particular States. Between 20 and 25 percent of our business is in New York State. As to the extent of the business we have in force, we have about 13,000 annuity contracts and between 8,000 and 9,000 life-insurance contracts. Our assets are about $50,000,000. Our contracts are scattered all over the United States and Canada, New York State being the largest State so far as numbers are concerned. Our objection is merely a matter of expense, and without saying anything about the bill otherwise my only suggestion would be that any exceptions you may make in the bill should include us. Mr. ASHBROOK. I think you may safely return to your home and not feel any further concern about the pending bill. Let us now adjourn until 10:30 next Monday morning. (Thereupon at 12:20 p. m., Wednesday, Mar. 13, 1935, the subcommittee adjourned until 10:30 a. m., Monday, Mar. 18, 1935.) REGULATING THE USE OF THE MAILS WITH RESPECT TO INSURANCE CONTRACTS MONDAY, MARCH 18, 1935 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE OF COMMITTEE ON THE POST OFFICE AND POST ROADS, Washington, D. C. The subcommittee met at 10:30 a. m., Hon. William A. Ashbrook presiding. Members of the subcommittee present: Hon. Milton A. Romjue, Hon. Donald C. Dobbins, Hon. Arthur W. Mitchell, Hon. Gardner R. Withrow, Hon. Fred A. Hartley, Jr., and Hon. William D. Thomas. Mr. ASHBROOK. Gentlemen, we will proceed, please. I might state that we are here this morning for the purpose of giving further consideration to H. R. 6452, known as the "Hobbs bill." I have no doubt that my colleagues on the committee, like myself, have all received many wires and letters, largely protesting against this bill. I have no desire to cumber the record; yet there are a few that I believe should be incorporated in the record. I have heard from a number of local insurance agencies from my own district, who favor the bill, but I will not insert any of those in the record, but these I would like to have appear: Here is a wire from Mr. George L. Willets, of the First Presbyterian Church, Columbus, Ohio Mr. HARTLEY. Could we not save time by having those all admitted, by consent of the whole committee? Mr. ASHBROOK. I have no objection. I did not intend to comment on each one separately. Mr. THOMAS. I would say that I have about 10 times as many as that down on my desk. Mr. ASHBROOK. I thought just a word of mention as to who they are from would save the necessity on the part of other members of the committee of inserting similar messages from the same people, if they have received them. Here is a letter from the Dime Savings Bank, of Akron, Ohio; a wire from the Beaver Portland Cement Co., and Ross Island Sand & Gravel Co., of Portland, Oreg.; a letter from the Teachers' Insurance and Annuity Association of America, New York City; a wire from the California Bankers' Association; a wire from the Alabama Bankers' Association; a wire from the Oregon Bankers' Association; a letter from the New Jersey Bankers' Association; 128691-35- 3 25 a similar letter from the New York State Bankers' Association; a letter from the Church Pension Fund of New York City; a letter from the Pennsylvania Bankers' Association; a letter from Congressman Christianson, of Minnesota; a letter to Senator McNary from Kerr Gifford & Co., Inc., Portland, Oreg.; a letter from the Norwood-Hyde Park Bank & Trust Co., Norwood, Ohio; and a letter from the Canal Winchester Bank, of Canal Winchester, Ohio. (The letters and telegrams referred to are as follows:) Congressman ASHBROOK, COLUMBUS, OHIO, March 17, 1935. House of Representatives, Washington, D. C.: Would register vigorous objection to Hobbs bill (H. R. 6452) which is unfair to mutual associations for clergymen. Hope you will use your influence to defeat bill in Post Office Committee or modify it in consideration of existing private protective organizations. GEORGE L. WILLETS FIRST PRESBYTERIAN CHURCH, COLUMBUS, OHIO. THE DIME SAVINGS BANK, Akron, Ohio, March 16, 1935. Hon. W. ASHBROOK, House Office Building, Washington, D. C. DEAR MR. ASHBROOK: Referring to H. R. 6452, I notice with regret that this bill is under consideration at Washington. We carry our insurance in an American company, authorized to do business in Ohio. The premium on same is very large. We expect and hope to be able to carry our insurance in American companies, but if we did not have the threat of placing the insurance with Lloyd's available, the Lord only knows what rate and what coverage would be offered by the American companies. In Ohio there is an example of good business. The surety companies made it almost obligatory to use them for depository of bonds, and then proceeded on a spree of riotous underwriting, and then pulled the plug, causing a large amount of hardship and losses and generally created a harmful and impossible situation. Surety companies as a result sustained losses that they should not have had. The idea of trying to protect States in securing of taxes in this situation is of little moment compared to losses of the State through taxes and otherwise as a result of unfair rates and coverage. I trust you will give this matter very careful consideration, and thanking you for same, I am We protest enactment bill (H. R. 6452) now under consideration. London market only available source certain forms protection required our business. Though we favor protection American markets from foreign encroachments, that protection is necessary due to unequal labor costs higher this country than elsewhere. Labor expense which is determining factor commodity costs either manufactured products or raw materials enters little, if at all, into insurance cost. Determining factors insurance costs are efficient management and financing which are relatively equal as between America and other countries so necessity for artificial protection American insurance companies not apparent as in. case all commodities involving labor as principal cost element. BEAVER PORTLAND CEMENT CO. TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, The Hon. WILLIAM A. ASHBROOK, Committee on Post Office and Post Roads, House Office Building, Washington, D. C. DEAR MR. ASHBROOK: In order that your committee may have a statement in writing regarding the operation of this association and the way in which H. R. 6452 would affect it, let me submit the attached sheet. It was gratifying to me to learn from your statement at the hearing Wednes-day, and from the statements from other members of your committee and the author of the bill, that there was no intention of hampering the operations of well-established organizations doing a legitimate business and giving satisfactory and commendable service to their clienteles. We realize that there is a very real problem that the bill was devised to solve. So far as we are concerned amendment so as to exclude from the limitations of the bill life insurance corporations organized to serve only employees of educational and research institutions would be sufficient. I realize that you would probably want to make the exclusion broader in order to avoid interference with some high grade institutions the services of which would be hampered if they were required to meet the conditions for doing business in all' States of the Union. One of the members of your committee desired evidence as to the increased cost involved in doing business in all States. It is difficult to get accurate information from published reports, but the following figures were taken from the annual reports of the different companies mentioned for the year 1933. They are probably not closely comparable because some seem to include such things as expenses of examination while others do not. Insurance Department, $38, 671 12, 094 6, 639 7,233 8, 919 New York Life Insurance Co---- Teachers Insurance & Annuity Association____. 617 2,258 The above figures by no means tell the whole story of the expense of doing business in a large number of States. The amount of clerical work at the home office is much larger when a company does business in many States, and the problems involved frequently require an undue amount of attention of administrative officers. Policy forms must be approved in each State; peculiarities in the laws of the different States must be studied, and minor modifica tions of policy forms made to meet them. Since reports must be filed in each State regarding business in that State, records must be kept to give the facts required. Annual statement figures must be published in the newspapers of many States, sometimes at a very substantial cost, and of course the home office must prepare copy. Some States have special taxes on capital stock; others have special requirements as to agency. No company doing business in a large number of States hopes to avoid considerable correspondence with and occasional visits to the insurance departments of these States with reference to the special problems. Sincerely yours, RAINARD B. ROBBINS, Secretary. SAN FRANCISCO, CALIF., March 16, 1935. Hon. W. F. ASHBROOK, Chairman, Committee on the Post Office and Post Roads, House of Representatives, Washington, D. C.: Understand your committee will consider H. R. 6452. On behalf of banks and trust companies of California we vigorously protest against the enactment of this bill as detrimental to the best interests of American banking. It is the firm conviction of our association that an open insurance market should be maintained for our banking institutions. ANDREW MILLER, Secretary, California Bankers Association. |