Verhovayak Lapja, 1947 (30. évfolyam, 1-24. szám)
1947 / Verhovay Journal
PAGE 4____________________________________________________________________________________________________ Verhovay Verhovay Journal Journal of the Verhovay Fraternal Insurance Ass’n. OFFICE OF PUBLICATION 7907 West Jefferson Ave. Detroit 17, Mich. PUBLISHED SEMI-MONTHLY BY THE Verhovay Fraternal Insurance Association Managing Editor: JOHN BENCZE Editor: COLOMAN REVESZ Editor’s Office: 436—442 FOURTH AVENUE PITTSBURGH 19, PA. Telephone: COurt 3454 or 3455 All articles and changes of address should be sent to the VERHOVAY FRATERNAL INSURANCE ASSOCIATION 436—442 FOURTH AVENUE PITTSBURGH 19, PA. SUBSCRIPTION RATES: United States and Canada ...................................... $1.00 a year Foreign Countries ..................................................... $1.50 a year Entered as Second Class Matter at the Post Office at Detroit, Michigan under the Act of March 3, 1879. FRATERNAL PROBLEMS and the INSURANCE DEPARTMENT — Oscar A. Kottler, Deputy Insurance Commissioner, Describes Insurance Department Policies To Pennsylvania Fraternal Congress. — A significant statement of the aims and purposes of the Pennsylvania Insurance Department, by Deputy Insurance Commissioner Oscar A. Kottler, highlighted the Convention of the Pennsylvania Fraternal Congress, on November 18th, 1947. at the Abraham Lincoln Hotel in Reading Pennsylvania. Mr. Kottler’s discourse has definite bearing on several issues which confronted our delegates at the XXI. National Convention and, even though much pains had been taken to fully acquaint the representatives of our membership with the reasons for insisting on the adoption of certain proposals, a great deal of uncertainty still seems to prevail among the membership in regards to the correctness of the course taken by the convention. We believe, therefore, that by printing some of the remarks of the Deputy Insurance Commissioner with a view of facilitating a better understanding of the issues involved, as may render a service to our membership. Strengthening Reserves One of the reasons of the declining rate of dividends was the necessity of strengthening the reserves on oür 4L and 3Vz% membership certificates w^ich, in turn, was necessitated by the general decrease in the rate of interest on insurance investments. In compliance with the recommendations and instructions of the Insurance Department 8435,000 had been set aside for this purpose. This situation is described by the Deputy Insurance Commissioner in the following statement: “The recommendation which has appeared most often in the reports of examination during the past several years, concerns a subject which is most vital to your organizations. It is the matter of reserves and their various ramifications. Several years ago, we, in the Insurance Department, decided to make a concerted effort to prod fraternals whose reserves were not quite what they should he. in an effort to get them to adopt adequate, lower mortality tables, and lower interest assumptions. The reasons, of course, are the declining interest rates, and many societies were on an out-moded mortality table. In that effort we succeeded in approximately 95% of the societies.” “As a result of our findings we have been including in our Reports of Examination, where the condition of reserves warranted it, a recommendation to the effect that the fraternal adopt as a minimum basis for new business the American Experience Table of Mortality with an interest assumption of 3%;' and a further recommendation, advocating the strengthening of existing reserves, and the rerating of old business. We have had a few instances where the society questioned the necessity of these recommendations. In the main, we have had splendid cooperation from the fraternal societies/’ Mr. Kottler mentioned, also, that this procedure involved in some instances the setting aside of a substantial lump amount for this purpose, in others the setting aside of a certain amount each year until all the reserves will be strengthened while stili Journal ___________________________________________________________________________ December 31, 1947 in others this could not be accomplished without increasing the rates! Anyone acquainted with the affairs of our Association wil! be able to deduct from the Deputy Commissioner’s statement that in the case of the Verhovay 1.) the strengthening of the reserves was necessitated soleiy by the declining rate of interest on Investments, which made it impossible to maintain a 4% or 3 Vs\; interest assumption on which the rates of our formerly issued membership certificates were based, 2.) that the strengthening of the reserves was recommended by the Insurance Department and, 3.) that by complying with this recommendation the Verhovay kept in line with 95% of the fraternal societies. Sick Benefits The modifying of the sick benefit provisions was one of the most difficult tasks of the last Convention. This was not undertaken in a haphazard manner. Several sets of recommendations had been prepared and submitted for tentative approval to the Insurance Department. Of these the one deemed accptable by the Insurance Department had been presented to the National Convention by the Board of Directors, whose recommendations, however, were overwhelmingly defeated. Thus, it became imperative that still another plan be developed since this matter could not be left pending until the next convention. With due consideration to the opinions of the delegates and, also, to the proposals deemed unacceptable by the Insurance Department, a new set of provisions was prepared and presented to the National Convention which, finally, adopted this last version. That, however, did not conclude the controversy which was taken over by serveral of the districts objecting strenuously to the provisions enacted by the Convention. Many of the objectors seem to question the course adopted by the Board of Directors and the National Convention. They ask: did the Board of Directors and the National Officers act in the best interest of the membership? Did the Insurance Department really require the amending of the sick benefit provisions and if so, why? Did the officers of the Association act properly when submitting their recommendations first to the Insurance Department before presenting them to the National Convention? The following statement of the Deputy Insurance Commissioner has bearing upon these questions: “Now in addition to the matter of life reserves, we are somewhat concerned because some societies are not charging adequate rates for sick and disability benefits. I urge you to review your rates for sick and disability benefits. It is extremely important that if you are w riting non-cancellable sick and disability benefits, to charge adequate i-atcs for such benefits and set up adequate reserves to take care of these benefits in the future.” “Another item is the matter of presenting amendments to the by-laws of your society to the Insurance Department for approval. What most of you do is to adopt amendments to the amendments to your by-laws and then present them to the Insurance Department for approval. Sometimes these laws are not properly drawn and when they are presented to the Department, they are disapproved. It is my suggestion that when you contemplate making changes in your By-laws, you present these to our Policy Analyst and ask him to give you tentative approval of these proposed changes. You can then go to youi convention and inform the delegates that these contemplated changes have already had the tentative approval of the Insurance Department. It follows from the above 1.) that the Insurance Department considers it extremely important that the rates for sick benefits should be established on an actuarial insurance basis and should be operated accordingly — by adjusting the provisions and strengthening the reserves of the disability fund, and 2.1 that the officers of the Association followed the only proper course when submitting to the Insurance Department for tentative approval several sets of recommendations based on the suggestions of the Department. It should be noted that, in the case of the Verhovay, the Insurance Department did not require an increasing of the dues for disability benefits, only the enactment of certain restrictions which will hardly affect the privileges of the greatest majority of our members. This can be interpreted only as an indication of the comparative strength of the Disability Fund of our Association. The changes effected by the Convention, on the other hand, were necessary for the simple reason that the Sick Benefit Fund has been operated, up to this time, on an out-moded, unscientific basis which made it impossible to set up adequate reserves for future benefits. J (Continued on page 5)
