IV MEMORANDA ON LEGISLATIVE BILLS APPROVED TO AMEND THE INSURANCE LAW GRANTING TO FRATERNAL BENEFIT SOCIETIES THE PRIVILEGE OF WRITING INSURANCE UPON THE LIVES OF CHILDREN OF MEMBERS STATE OF NEW YORK-EXECUTIVE CHAMBER ALBANY, April 8, 1918. Memorandum filed with Assembly Bill, Introductory Number 418, Printed Number 1072, entitled: "An act to amend the insurance law, in relation to the powers of fraternal benefit societies." APPROVED: This bill amends section 231 of the Insurance Law by adding thereto a new subdivision to be known as subdivision 4, granting to any fraternal benefit society authorized to do business in this State and operating upon the lodge plan, the privilege of writing insurance upon the lives of the children of its members between the ages of two and eighteen years. The Legislature of 1915 passed a bill which conferred upon fraternal societies the right to engage in the business of infantile insurance, but it was disapproved by the Insurance Department and vetoed by me upon the ground that it did not sufficiently safeguard the interests of those for whose benefit the protection was sought. The present bill differs from the one vetoed in 1915 in the following particulars: (a) The present measure provides that no fraternal society can exercise this new power of infantile insurance unless it has at the time, and thereafter maintains, at least one adequate rate class of adult membership to which the juvenile member can be transferred upon attaining the age of eighteen years. This provision was inserted upon the recommendation of the Superintendent of Insurance who informed me that the measure would not have had the approval of his department had it not been included. (b) No infantile certificate shall be put in force until simultaneously "at least five hundred " are ready to be issued and upon which at least one assessment has been paid, nor can the society continue to issue such certificates if at any time the number of lives represented thereby is less than five hundred. (c) The funds collected from the infantile class are to be segregated and used entirely for the benefit of that class, no portion of which can be used for the payment of any debts or obligations of the society other than the benefits therein provided. (d) The society is compelled to maintain "the reserve required by the standard of mortality and interest adopted by the society for computing contributions." (e) A separate financial statement of the business transactions and of the assets and liabilities arising from the juvenile class shall be filed with the Superintendent of Insurance. (f) It is expressly provided that the society shall have the power at any time to levy extra contributions when it appears that the rate charged under the standard provided for in the bill is inadequate to maintain the proper reserves upon this class of business. (g) Upon attaining the age of eighteen years, the child may transfer his infantile certificate to any other form issued by the society but can be transferred only to the adult membership class maintaining an adequate rate basis. Any reserve that has been accumulated to the credit of the infant certificate is likewise transferred to the credit of the new certificate. (h) The beneficiary under the infant certificate likewise has no vested right in the new certificate and the certificate holder has the right to name his own beneficiary when admitted to the adult membership class. The foregoing are the principal changes between the present bill and the measure of 1915. The rates to be charged for this class of business are the same as required by the former measure and are practically the same rates charged by the legal reserve life insurance companies. Since 1915 the entire subject was considered by the National Convention of Insurance Commissioners, and a bill, substantially in the present form, was approved by that body and has since been enacted in twenty-one states. The Convention Bill, however, did not contain the provision which required a society to maintain at least one adequate rate class to which the juvenile could be transferred upon attaining the proper age as does the bill before me. I feel that this bill with the additional safeguards is decidedly preferable to the Convention Bill. For these reasons the bill is approved. (Signed) CHARLES S. WHITMAN. |