remarks were so appropos and timely I think they should be quoted. In order to do this correctly, I have asked for a copy of the talk. When it is received, it will be placed in the bulletin for all to see. Mr. Harvey described the snowballing growth of Government services and decried the faster growth of citizen dependence on an all-providing government. He charged his agent audience, which he called free-wheeling independents, with the responsibility of helping to lead the country back to a faith in the ideals it professed when it was founded. A panel on package policies turned out to be a very lively affair-a panel composed of representatives of companies, rating bureaus, independent agents, and Commissioner Joe Hunt of Oklahoma. Commissioner Joe had nothing but bad to say about the packaging of plans, the guessing at rates, and encouraging of violations of the law by rebating. I take it from the discussions that many (I hope all) of the States are looking again at the plans that have caused all this uproar. One of the things I liked best about this convention was the company interest. Insurance company attendance was more than at any other NAIA convention. I also believe the agents are doing more, working harder, and working together more than any other time in recent history. This is good and, with company interest as it was displayed, we may have many of our problems worked out soon. An officer of one of the largest companies in the world told me he hoped something could be done on the package plans that have indications they are in violation of the rating laws; that his company had to make the me too filing to stay in business. One other officer told me he wished it could all be stopped so he could find out what their experience has been on any of the latest plans filed. He said that they changed so fast no experience was developed on one plan and he had to make another filing. Actually, he said, "No one can tell you the experience on any plan filed in many months, yet, new changes come out every day and the experience of the line must be justified it can't be done and we are only guessing. Wild, unjustified filings must be stopped." Advertising awards: Six companies were singled out for their promotion of the National Association of Insurance Agent's advertising program through the use of the "Big I" independent agent seal during the convention. The companies are as follows: Phoenix of Hartford, Aetna Casualty & Surety, Royal-Globe, United States Fidelity & Guaranty, American Casualty, and Zurich-American. Now, back to our own ranch: Director Kenneth Murray has resigned because of too many business commitments. Your board has appointed Mike Grummett to replace Ken. Good luck Ken in your several ventures and also good luck to you Mike in your appointment. The director of insurance has just reminded me that the legislative council will hear comments on several subjects, including SB83 (insurance code) the 15th of October, in Juneau. Any suggestions or recommendations should be forwarded to President Carl, for board action, as soon as possible. State chamber of commerce meeting to be held in Juneau, October 17-19. Your association will furnish the coffee bar, and aspirin, for the expected 250 members and visitors. Insurance for contractors: Fred S. James & Co., 1 North LaSalle Street, Chicago 2, Ill., has prepared a booklet on the subject of "Insurance for Contractors." I am told this booklet outlines in concise and direct terms exactly what insurance means to contractors. Indirectly, of course, it accomplishes the same purpose for those owners, architects, engineers and others interested in construction. Cost of a single copy of the booklet is $1. This is fire prevention week: I have noticed that all our member agents in Juneau have displayed "Fire Prevention Week" posters. Did you? Was your advertising changed this week to include fire prevention? If so, or if not, be sure to remember that next month we have Insurance protection week: From November 10 to 16 is Protection Week and we already have a proclamation signed by Governor Egan to this effect. I will see that the proclamation is released to the papers and other news media. Be sure to let everyone know you are a member of the Alaska Association of Insurance Agents and a professional, independent agent. This is our one big chance each year to sell our association-this is our week. Your 1963 advertising kit will have suggestions for advertising in addition to those of your own. Trailers for advertising of our film have been purchased. The three films, "Emergencies in the Making." "Stay Alive," "Winter Driving." are now in the State film library and have attached our advertising of the Alaska Association of Insurance Agents and the "Big I" insignia. Everytime these films are shown it will advertise your business. Nonadmitted insurers information office: New Hampshire Insurance Commissioner, Donald Knowlton, states that the nonadmitted insurers information office of the National Association of Insurance Commissioners is now open for business at 117 Liberty St., New York 6, N.Y. For an annual fee of $75, you can obtain a copy of the listing of alien nonadmitted insurers that have filed financial data with one or more States or surplus lines associations. By paying an additional fee, you can receive copies of individual insurers financial statements. The Alaska insurance department has subscribed to this service and they now have a complete listing of the nonadmitted insurers doing business in the many States. Quickies on many items: The Ohio department of Insurance has withdrawn approval for all rating plans that provide for optional commission contribution by the agent. FF survey indicates majority of agents are not opposed to the current trend of company mergers, though some are concerned about the possibility of impaired service and breakdown in agency and company relationships. (Insurance flash.) State police report 34 fatalities reported to date this year; only 30 reported same date last year. Division of fire prevention has investigated 39 fires of suspicious origin since January 1-11 were determined incendiary; also reports 22 fire fatalities to date this year, reported same date last year, 17. ARKANSAS ASSOCIATION OF INSURANCE AGENTS, Senator THOMAS J. MCINTYRE, DEAR SENATOR MCINTYRE: This organization is vitally interested in the possible effect that would be realized countrywide by passage of either of two bills now before your District Subcommittee. These bills are S. 1184 and S. 2077. Both of them, on the surface, seem to be entirely local in nature. However, we feel that their ultimate effect would be national and of the gravest nature. Throughout congressional consideration of proposals for changing the insurance rating laws of the District of Columbia, this association has kept a close watch on statements of those who would interpret a change of District of Columbia insurance laws as a measure of "congressional intent for the Nation." Since we do feel that the general interpretation of any congressional action on District of Columbia rating laws would be viewed as an expression of "congressional intent," we feel compelled to file the enclosed statement of our views in support of passage of S. 2077, which is now before your committee. We urge your committee's consideration of the enclosed statement in its deliberations on S. 2077, and stand ready to provide further information and views if requested to do so. Thank you for your kind consideration. D. E. "GENE" PORTSON, Manager. STATEMENT RELATIVE TO S. 2077 FROM ARKANSAS ASSOCIATION OF INSURANCE AGENTS, LITTLE ROCK, ARK. This statement is made in behalf of the members of the Arkansas Association of Insurance Agents, a trade association of independent insurance agencies located in every section of the State of Arkansas. The Arkansas Association of Insurance Agents draws its primary concern with the many bills affecting insurance rating practices in the District of Columbia because of the many prior public statements to the effect that legislation adopted in the District can be taken as an expression of the will of Congress insofar as State regulation of the insurance industry is concerned. For the very reason that some proponents of some rating legislation now pending before this subcommittee have made a great issue of the question "congressional intent," this association feels compelled to clearly state its views as to what legis lation best serves the public interest in most efficiently carrying out the effective regulation of the business of insurance. The National Association of Insurance Commissioners (a body composed of State regulators of insurance) has spent much time and effort in studying the question of the most effective, most efficient means of regulating the insurance industry. This group, which is the most highly qualified for such a study of any group in this country, has arrived at the conclusion that retention of the principle popularly known as prior approval of insurance rates is the most effective means of regulating the insurance industry to the end of best serving the insurance-buying public. This group's recommendations are contained in S. 2077 by Senator Miller, now before this subcommittee for study. The Arkansas Association of Insurance Agents supports S. 2077 and respectfully urges its adoption. The history of the highly technical and complex insurance business shows that the paramount consideration in its regulation is the necessity of safeguarding insurance company assets to insure solvency. It is a long-established principle that insurance, because of its inherent characteristics, is an unique product different from products in mercantile and manufacturing fields. In the latter, the public has no difficulty in testing, comparing, and evaluating such products as to their composition and quality. Buyers can use, smell, taste, eat, wear, and handle the tangible objects of commerce and industry. Moreover, their sellers or producers know precisely the cost of their products, that is the amounts spent for raw materials, labor, selling, and administrative expense of a product when it enters the price competition of the open marketplace. Price competition, therefore, is in itself a nature regulator. WHY INSURANCE IS DIFFERENT On the other hand, the product called insurance is only tested by those with claims against insurance companies. Buyers purchase insurance with the overwhelming odds that they will never become claimants and will never actually use the product. In contrast to products of commerce and industry, insurance companies cannot be sure what the cost of their "product," at any given time, precisely is or should be. Companies collect a payment in advance to pay for an unknown future event. The exact cost of which cannot be foretold at the time of payment. More important, from the viewpoint of the buyer, property and liability insurance is, to him, an economic necessity. Insurance is often said to be one of the four cornerstones of the economy along with banking, transportation, and communications-all fields of endeavor long identified as having a special public interest. Since property and liability insurance is purchased by the buyer to protect his property and welfare as well as the welfare of persons unknown to the insured as in the case of liability insurance, the fields of property and liability insurance bear significant social implications. This entire field of domestic free enterprise is closely enmeshed in the fabric of the American society of today. For these fundamental reasons, a vital public interest has been recognized in the very nature of this product, and in those who offer it to the public and in what terms and conditions they impose. Following the case of United States v. South-Eastern Underwriters Association, 323 U.S. 533, 64 S. Ct. 1162, the 79th Congress enacted Public Law 15, otherwise known as the McCarran-Ferguson Act. This legislation recognized the need for continuing State regulation of the business of insurance-although the Supreme Court had held in the case cited above that the business of insurance was interstate commerce. Public Law 15 actually provided that the business of insurance should be subjected to the various antitrust acts "to the extent that such business is not regulated by State law." As a result, the so-called all industry laws came into being. These laws, enacted in most States of the Union, provided for a relatively uniform system of State regulation of the business of insurance. Since the McCarran-Ferguson Act was, in effect, a statement delineating the bounds within which the States might regulate the business of insurance, it is our feeling that any further Federal regulation on the subject of insurance rating would, although by a "reverse method" admittedly, spell out to the States a change in congressional feeling insofar as the regulation of insurance is concerned. Since the proponents of lessened regulation of the industry have been so vocal in their support of measures limiting regulatory authority and in their attempts to tie any action by the Senate District Subcommittee to an overall expression of congressional will and intent, we have no choice but to actively solicit support for S. 2077 as the best continued method of regulation of the business of insurance in the District of Columbia. This is what Basically, S. 2077 would continue the practice that now adequately protects the public against insolvency of insurance carriers—that is, the advance review and approval of proposed rates for insurance by the insurance commissioner before insurance companies may actually put those rates into effect. has been termed the principle of prior approval of insurance rates since the insurance regulatory authority must approve said rates before they may be used. The proponents of legislation such as S. 1184, would say that it is not necessary to protect the public to the extent of having the regulatory authorities give prior consideration to insurance rates before they might be employed by insurance carriers. The Arkansas Association of Insurance Agents feels that such approach would be extremely injurious to the public welfare, and would create the very real danger of possible insurance company insolvencies. As we have stated before, the average person purchases insurance with the idea of securing protection that he hopes he will never need. There is nothing more frightening than to see an insurance claimant trying to collect from an insolvent insurance company. The National Association of Insurance Commissioners has stated in various studies and reports since the original enactment of the McCarran-Ferguson Act that it believes the public interest is best served by the examination of rates by proper State authorities before such rates take effect. After several years of study, the National Association of Insurance Commissioners subcommittee to review fire and casualty insurance rating laws and regulations consolidated the separate rating bills for fire and casualty insurance into one rating bill, covering fire, marine, casualty, ad surety. That bill, as approved by the National Association of Insurance Commissioners is substantially the same as S. 2077, now before the Senate District Subcommittee. It is worthy of special note that throughout all of the years of modern insurance regulation the men charged with regulating the industry-the various State insurance commissioners-have stood firm on the principle of prior approval of rates as being in the best interest of the insurance-buying public. It is the belief of the Arkansas Association of Insurance Agents that the basic pattern of the so-called all industry bills has served the public well as the insurance business extremely well. Of necessity, some adaptations have been made to fit various geographic and economic needs. It is not the intent of the Arkansas Asociation of Insurance Agents to interfere in affairs which are solely the concern of the citizens of the District of Columbia. However, as has been pointed out earlier in this statement, proponents of drastic revisions in insurance rating legislation have made a great case to the effect that regulations and legislation adopted in the District shall express the intent of Congress to the various State legislatures. In that light, we must strongly urge that the Senate District Subcommittee look beyond the confines of the District of Columbia to determine the effect of its action in studying the measures now pending before it. We strongly endorse the principles of prior approval of insurance rates embodied in S. 2077. We strongly feel that the only legislation now being considered by this committee which can materially protect the public welfare insofar as the regulation of insurance rates is concerned is S. 2077. We are strongly opposed to any drastic revisions in insurance rating practices in the District— especially if such revisions are to be interpreted as an expression of congressional intent for the country. The dilemma being faced by this subcommittee is one created by the peculiar nature of the business of insurance and the duel regulatory position under which the insurance industry must operate. We strongly feel that the present rating laws have served the insurance buyers of the State of Arkansas extremely well. We know that our rating legislation was first adopted as being legislation compatible with the will of Congress after its adoption of the McCarran-Ferguson Act. We further feel that any attempt to amend the District of Columbia rating laws should follow the tested and tried direction of continued prior approval of insurance rates. For these reasons, the Arkansas Association of Insurance Agents respectfully urges this U.S. Senate District of Columbia Subcommittee to pass favorably S. 2077, now before you for consideration. We further urge that this subcommittee reject any proposals embodying the destruction of the principles of prior regulatory authority supervision of insurance rates filed by insurance carriers. The Arkansas Association of Insurance Agents stands ready to provide further information if needed. FLORIDA ASSOCIATION OF INSURANCE AGENTS, The Hon. THOMAS J. MCINTYRE, DEAR SENATOR MCINTYRE: S. 2077, now before your District Subcommittee, has the complete approval of the Florida Association of Insurance Agents. This bill, amending the District of Columbia rating laws, is scheduled for hearing the first week in February. It is not possible for the Florida Association of Insurance Agents to be represented at the hearing. Consequently, please consider this letter as the statement of position of this association on this bill. You have every reason to inquire as to why an insurance association located in the State of Florida should be supporing a bill involving insurance rates in the District of Columbia. The reason is simple. If there is to be any change in the existing laws of the District, then we favor S. 2077 because it would continue "prior approval" of insurance rates. Florida has had prior approval for nearly two decades to this writer's knowledge, perhaps longer. It has worked, and worked well. The association is apprehensive that should "no prior approval" be adopted in the District of Columbia, as proposed in another bill before your committee to be heard at a later date, then the proponents of such a measure will use its adoption in the District of Columbia as an argument to extend the principle to the several States. No prior approval would not be to the best interests of the people of Florida, nor do we feel to the folks in the District. Consequently, if Congress feels a change necessary, we urge that it be made on the basis of S. 2077. Sincerely, TOM C. JOHNSON, Executive Secretary. ATLANTA, GA., February 3, 1964. Senator THOMAS J. MCINTYRE, Chairman, Senate District Subcommittee, On behalf of the thousands of members of the Georgia Association of Independent Insurance Agents and on behalf of a presently sound insurance industry within the State, we urge your most serious and considerate approval of the principal of prior-approval rates regulation as contained in S. 2077 which will be considered by your District Subcommittee February 5 and 7. After 15 years of successful State regulation under the mandate of Public Law 15 the National Association of Insurance Commissioners, after holding five hearings in various cities across the country in 1962, concluded that prior-approval-type laws are essential to positive and competitively fair regulation and protect most effectively the welfare of the insuring public. We concur in this position and reiterate our request to your District Subcommittee to approve the principle of prior-approval regulation and reject any so-called no-prior-approval-type laws which would undermine the present stable condition of the insurance business and lead to most disastrous and unbridled rate wars which certainly could not be in the public interest. GEORGE M. IRWIN, President, Georgia Association of Independent Insurance Agencies. BOARD OF UNDERWRITERS OF HAWAII, Senator THOMAS J. MCINTYRE, DEAR SENATOR MCINTYRE: The Board of Underwriters of Hawaii, representing the independent insurance agents of the State of Hawaii, submits the attached statement for the consideration of the Senate District Subcommittee at its hearing into bill S. 2077, concerning regulation of insurance in the District of Columbia. Respectfully, R. S. DOANE, President. |