It has been my privilege to discuss this bill with the sponsor, Congressman Hobbs, and I am given to understand there is no intention of working a hardship upon such an association as ours, or any other properly conducted and legitimate insurance organization, who is financially secure and who are promptly meeting their obligations. Likewise, it has been my privilege at previous hearings of this. committee to hear you, Mr. Chairman, intimate the committee has no intention of working any hardship on such an organizationas ours. Therefore, we respectfully request that any amendment the committee might. conclude to make in H. R. 6452 will be sufficiently broad to exclude Expressmen's Mutual Benefit Association from the provisions thereof. (The subcommittee thereupon adjourned until Tuesday, Apr. 2, 1935, at 10 a. m.) (The following are the papers submitted for the record by Mr. Ashbrook:) BRIEF OF EXPRESSMEN'S MUTUAL BENEFIT ASSOCIATION Organized State of New York, January 12, 1869. Operating by authority, and under supervision of the New York State Insurance Department. Licensed to do business in the States of New York and Illinois and the Dominion of Canada. Following is a list of the officers of the Expressmen's Mutual Benefit Association for the year 1934: W. E. Beckner, president; general manager Railway Express Agency, Findley & McLean, Cincinnati, Ohio. C. L. Chase, executive vice president; vice president and general manager Railway Express Agency, St. Louis, Mo. Vice presidents: W. A. Benson, vice president Railway Express Agency, San Francisco, Calif.; C. R. Graham, vice president Railway Express Agency, New York City; T. E. McDonnell, president and general manager Canadian Pacific Express Co., Toronto, Ontario, Canada; W. W. Owens, vice president Railway Express Agency, Atlanta, Ga.; C. D. Summy, vice president Railway Express Agency, Chicago, Ill.; R. H. Vogel, general agent Southeastern Express Co., Atlanta, Ga. Treasurer, American Express Co., 65 Broadway, New York City. Assistant secretary, C. J. Kleinklaus, 50 Church Street, New York City. The following is contained in annual statement as filed with the insurance departments of the States of New York and Illinois and the Dominion of Canada as of Dec. 31, 1934: Net reserve, American Experience Table (3 percent). (See certificate of actuary). Death claims... Sundry liabilities. Advance contributions and interest. Reserve for omission of contributions during 1935. Reserve for adverse mortality and taxes__. Contingency reserve.. Surplus... Total liabilities. 91, 325. 56 $91, 325. 56 5, 849, 072. 02 8, 187. 73 81, 723. 31 1,771, 650. 19 7, 801, 958. 81 6, 114, 718. 00 15, 500. 00 9, 498. 11 7, 864. 42 165, 000. 00 176, 017. 64 701, 888. 64 611, 472. 00 7, 801, 958. 81 Following is copy of certificate of the valuation of the certificates (policies) in force as of December 31, 1934, made by Miles M. Dawson & Son, consulting actuaries, 500 Fifth Avenue, New York City: NEW YORK, N. Y., January 17, 1935. EXPRESSMEN'S MUTUAL BENEFIT ASSOCIATION, New York, N. Y. GENTLEMEN: This will certify that we have this day completed valuation of the certificates of the Expressmen's Mutual Benefit Association in force at Decembr 31, 1934, as per lists furnished us, and find that valued by the American Experience Table of Mortality and 3-percent interest on the select and ultimate basis. the total required reserve is $6,114,718; and we find the amount of liens to be $1,967.21, the amount of loans to members $1,734,122 and the automatic premium loans $35,560.98, making a total amount of liens and loans of $1,771,650.19, of which none is in excess of the corresponding reserve. The net amount of reserve, therefore, required to be represented by other assets is. $4,343,067.81. Respectfully submitted. (Signed) MILES M. DAWSON & SON,. Consulting Actuaries.. The object of the association is the collection of contributions (premiums) and the payment of insurance, as stipulated in the certificate, at the death of the mem-ber. The association is a purely mutual institution, founded solely upon the good faith of its members; it will have no capital stock nor any liabilities beyond the obligations defined in the constitution and bylaws. Certificates of membership (policies) shall be issued in the sum of $500, or multiples thereof, and not to exceed $5,000, may be issued to any member eligible. Any person between the ages of 18 and 60 and employed by a responsible express company, or employed by the Expressmen's Mutual Benefit Association, may become a member of this association, subject to the restrictions set forth in the constitution and bylaws. The wife and/or dependent child or children 15 years of age or older of an employee of a responsible express company, or of a member of the Expressmen's Mutual Benefit Association, may also become a member of the association. A member (policyholder) shall not forfeit any rights in this association because of leaving the express service or the service of the Expressmen's Mutual Benefit Association. Contributions (premiums) are based on the Legal Reserve Manchester, Unity and Mortality Table with 3 percent interest. Certificates (policies) provide for loan and cash-surrender values, automatic premium loans and paid-up insurance. The expense of operations are restricted by the provisions of the constitution and bylaws and are within the expenditure limits prescribed by New York State insurance laws. For the year 1934, the expense of operations was 14.14 percent of the cash income from premium collections. All officers and directors are elected by the policyholders at biennial conventions. W. E. BECKNER, President. PHYSICIANS CASUALTY ASSOCIATION OF AMERICA, Hon. WILLIAM A. ASHBROOK, Chairman Subcommittee on Offenses against the Postal Service, DEAR SIR: Please permit me to submit the following argument in opposition to H. R. 6452. I am writing on behalf of the Physicians Casualty Association and the Physicians Health Association, of both of which associations I am. secretary-treasurer. The Physicians Casualty Association was organized in 1902 and the Physicians Health Association in 1912. Each Association was organized with a membership of 250. On December 31, 1934, the two associations had outstanding 43,231 policies and I submit that the record of growth over more than a third of a century is the best evidence that the associations have dealt fairly with their membersand to the entire satisfaction of the great mass of them. The associations have members resident in each of the several States of the United States and in Canada. There has been an uninterrupted increase in the number of members in each successive year since the associations were organized. In both associations the membership is limited by the articles of incorporation to practicing physicians and dentists. The associations are organized under the laws of Nebraska as assessment associations, their income being derived from assessments upon their members and the interest on investments, the investment fund being maintained to protect the members against excessive losses during any limited period. These associations have paid to their members and to their beneficiaries the sum of $6,637,829.23 during the period ending January 1, 1935. The assessments in the Casualty Association have never exceeded $13 per annum and the assessments in the health association are now and for a number of years have been $20 per annum. The benefits are equal to those paid by old line companies whose annual premiums for accidental losses are from $30 to $40 and for health policies $40 to $65 for similar coverage. Obviously, the only way in which accident and health policies can be issued by these companies for the amount of the assessments made is by reason of the fact that no agents are employed and no taxes paid to any other Štate than that in which the companies are organized and are doing business. It goes without saying that the associations are subject to the jurisdiction of the State insurance commissioner of Nebraska, to which detailed annual reports are made, and its books and records audited and examined by the commissioner periodically and a deposit of $200,000 is maintained with the department for the protection of all members, wherever located. The passage of this bill would most seriously cripple, if not result in the dissolution of these associations. Under the laws of a number of the States, these associations could not gain admission in them if application were made, not because of the records of the companies or the character of their management, but because of the prohibition in the statutes to the admittance of foreign insurance corporations of this character. To be required to gain admission to do business in the various States in which such an application would be accepted would involve an expense that would no longer permit the associations to write policies containing the benefits provided for in the policies now issued, except at an expense to the members far beyond what they are now paying. Permit me to say that no member of the health association has ever been required to bring suit in order to recover what he was entitled to and that the total number of suits brought against the Casualty Association in the 33 years that have elapsed since it was organized would average much less than one a year. The number that have been tried is less than a dozen and during this period the claims filed with the two associations exceeded 60,000. In conclusion, you may be interested in knowing that their expenses have averaged approximately 15 percent of the total assessments collected. To be more specific, the associations have received from their members during the last 5 years more than $3,250,000 and their total expenses during this period was $476,635. During the same period over $52,000 was expended for postage. Yours respectfully, E. E. ELLIOTT, Secretary. LAFAYETTE, LA., March 27, 1935. Hon. WILLIAM A. ASHBROOK, Enact Chairman Committee on the Post Office and Post Roads: The undersigned, 63 employees, are vitally opposed to House bill 6451. ment of such a bill would cause thousands and thousands of policyholders to suffer who are unable to obtain protection from old line companies. We furnish protection at actual cost and have thousands and thousands of satisfied members throughout the United States. Therefore we urge you to do all in your power to kill such a bill. Re: H. R. 6452. Hon. WILLIAM ASHBROOK, T. B. A. OFFICE FORCE, T. B. A. AssoCIATIONS. CENTRAL ASSURANCE CO., United States Congress, Washington, D. C. MY DEAR SIR: It is my understanding that this bill is to be before your committee on the 28th instant. I would like to express my desire that it may be reported out unfavorably. While I am not in hearty accord with the desire to prevent the bad practices that will be brought to your attention and to overcome which this bill is apparently designed, I nonethless feel, after careful consideration, legislation of this type is fraught with much possible danger to reputable companies and that the purpose might better be accomplished through the State insurance commissioners. Soliciting your earnest consideration of the above, I beg to remain Yours respectfully, B. B. PADDOCK. HEALTH AND ACCIDENT UNDERWRITERS CONFERENCE, March 25, 1935. House of Representatives Bill No. 6452, by Representative Hobbs. Chairman, Subcommittee of Post Office and Post Roads Committee, DEAR MR. ASHBROOK: In behalf of the Health and Accident Underwriters Conference, an association of 83 insurance companies writing personal accident and health insurance, I am entering our objection to the enactment of House bill 6452 by Representative Hobbs. Our organization appreciates the desire of Representative Hobbs in attempting to correct by this measure an evil which exists by reason of a few irresponsible and fraudulent insurance organizations who organize in one State and transact a large part of their business in other States by use of the mails. The members of our organization have felt the effect of these "fly-by-night" insurance concerns when agents for our members have attempted to sell insurance to those who have been defrauded or otherwise mislead by these concerns. Every reputable insurance company will agree with Representative Hobbs that it is to their interest as well as the public interest that these irresponsible insurance concerns should be prevented from doing an insurance business. However, Federal legislation is not the proper remedy. In the first place, Federal legislation is unnecessary because sufficient power now exists in the hands of various State insurance supervisory officials to stamp out this evil. If any question exists as to the proper authority of State insurance commissioners to exercise this power, it can be readily granted by each or all of the State legislatures. In the second place, it is unnecessary because there now exists in the Federal statutes sufficient authority for Federal action against these fraudulent insurance concerns to disbar them from using the mail by reason of fraud. An important objection to the Hobbs bill is that it would prevent the transaction and negotiation of a considerable amount of insurance now being effected by mail for which there is a real need and which because of conditions peculiar to such insurance cannot be negotiated as economically in any other manner. We have in our organization several members who negotiate personal accident and health insurance from one office by the use of the United States mails. Some of these companies have been members of our organization for over 30 years and most have been in business for a much longer period. They are high-grade, reputable insurance carriers and have the admiration and respect of other members in our organization who effect their insurance through an agency system. These members of our association who use the mails for transacting their business do not compete with other insurance carriers transacting a personal accident and health business because their policies are issued to risks which as a rule cannot be reached by other carriers. It would therefore be an injustice to enact the Hobbs bill which would necessarily force out of business these long-established reputable companies who have for so many years used the United States mails to transact their business. It is to their everlasting credit that their form of personal accident and health insurance has been sold to their members at a remarkably low overhead or administrative cost and thus the money returned to their policyholders has been larger in proportion to the premiums charged these same policyholders than for any other class of insurance. Certainly the enactment of the Hobbs bill would deprive thousands of policyholders of these reputable companies doing business by mail the privilege of obtaining personal accident and health insurance at a low cost. I sincerely hope that you and other members of this subcommittee will give serious consideration as to the effect of the enactment of the Hobbs bill upon these members of our organization who would be forced to discontinue business. I am attaching hereto a list of the members of my association together with a brief description of the character and representativeness of our association in the personal accident and health insurance business, Yours very truly, HAROLD R. GORDON, Executive Secretary. The Health and Accident Underwriters Conference is an association of 83 insurance companies transacting an accident or accident and health business. Personal accident and health premiums written by those companies in 1934 totaled approximately $65,000,000. The conference was organized in 1901 and |