Excerpt from Investigation of Concentration of Economic Power: A Study Made Under the Auspices of the Securities and Exchange Commission for the Temporary National Economic Committee, Seventy-Sixth Congress, Third Session; Monograph No. 28-28a, Study of Legal Reserve Life Insurance Companies
Among the principal topics considered in the report are the great size of the legal reserve companies, their enormous growth and present possibilities for future growth, the concentration of economic power and inﬂuence which rests in the hands of the five largest companies all of whose Offices are located in the New York area, the absence of any effective policyholder control over the activities Of the mutual life insurance companies with the consequent self-perpetuation in Office of insurance directors, and the tangled web of interlocking directorships which binds the principal life insurance companies with the country's major banks and industries.
Prevailing attitudes in the business toward the responsibilities of life insurance company directors are examined and discussed in a special section. In this connection particular reference is made to the attend ance record of some directors at board meetings, and the use of their positions by some directors for personal gains through the institution of preferential business transactions and loans, or the initiation of changes in the basic plan of company Operation designed to promote their private interests.
Considerable attention is also given to the experience of life insur ance companies during the depression. The withdrawal of 188 life insurance companies from the business which has occurred since 1930 is examined with special respect to those retirements which resulted in losses to policyholders. Causes for life insurance company failures are also examined in the light Of case histories of reinsurance deals and other promotional activities. Special sections are also devoted to life insurance company lobbying activities and to the nature and effect of numerous anticompetitive arrangements arrived at through inter company conferences which established agreements fixing policy rates, agents' commissions and uniform policy provisions. Detailed studies of policy net costs and of lapse and other forms of policy terminations are presented.
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