ficiary of his indemnity be given an opportunity so to do, and to be fully aware of the effect of this provision if enacted. Of course, if the beneficiary in any event would be the same, he would need to do nothing. But there are many cases where he advisedly wants a different beneficiary for the two benefits.

The bill does not state the effective date. Assuming it be retroactive, it might adversely affect interests of those now authorized to receive the indemnity. And, as I pointed out, perhaps in derogation of the serviceman's own wishes. Of course, if he has died prior to the enactment of the bill, and the bill is retroactive, there is nothing he could do about it.

Mr. BONIN. That would also be applicable in a case where the young man had not been married and then afterward becomes married, and, relying upon the fact that he wanted his wife to get it, names no beneficiary, while under previous insurance he had perhaps his parents.

Mr. KNAPP. That is correct, sir.

I believe those are all the comments we have on that bill at this time.

Mr. BONIN. Thank you very much.

Mr. BIRDSALL. The next bill is H. R. 3838, which pertains to gratuitous national service life insurance. Under the existing law, the gratuitous benefit is payable to the widow and child or children and dependent mother or father. This particular bill has for its purpose to include, or to insert, another class, and that is the nondependent mother or father. We have not prepared a report on it. I think we had a rough draft.

Mr. KNAPP. I might say, Mr. Chairman, that under the National Service Life Insurance Act there was authorized a gratuitous insurance in the maximum amount of $5,000 for those cases who, in the early days of the war, up until April 20, 1942, were deemed by the Congress as not having had an adequate and full opportunity to voluntarily make application for insurance.

Accordingly, there are provisions in the law which afforded relief in such cases where death occurred on and after December 7, 1941, and prior to April 20, 1942. Or if a serviceman was besieged or captured for a certain period during that time, and became totally disabled, there was a relief provision under this gratuitous insurance section.

As the word implies, it was free insurance, and the Government bore the entire cost. It was in the maximum amount of $5,000, less any that he might have had previously.

As gratuitous insurance, the Congress saw fit to limit the payment. of it to those in the immediate family and those to whom the veteran perhaps owed a moral if not a legal obligation of support; and therefore; limited it to the surviving spouse, the children, or the dependent parents. Where there was no dependent parent living, this bill would extend the class of beneficiaries to a nondependent parent, which would not be consistent with that established policy of the Government on gratituitous insurance.

However, in all fairness, it should be pointed out that to some extent that policy was changed, under Public Law 23, with regard to the free indemnity. The Congress did enlarge the classes of beneficiaries of the free indemnity to include parents, regardless of dependency, and

even added brothers and sisters. So it is a matter of policy now whether the Congress wishes to go back and liberalize that insurance provision, which was for application during that limited period during World War II. Of course, the programs are independent of one another, and action under the later law need not necessarily call for similar amendatory action under the insurance law.

I might say that our insurance office informs us that the bulk of the insurance payments to dependent parents under this gratuitous provision is being made to Filipino beneficiaries, who, in the early days of the war, served with our Armed Forces. The members of the Philippine Army during the early days of the war did serve with our Armed Forces pursuant to the President's order calling them into service with the American Army. And there are very substantial numbers of beneficiaries of that category there.

Of course, at the present time they have to prove dependency. This would remove that limitation and no doubt bring in a substantial number of additional parents.

The records are not available on which to base an accurate estimate of the number of servicemen whose parents would be eligible to receive payments under the benefits of this bill. As of the present date, some 7,600 claims have been disallowed for lack of dependency. The estimated cost of the removal of the dependency requirement, based on that 7,600 figure, would be $34,200,000. This estimate is, of course, necessarily speculative, as there is no precise way of telling how many claims have not been filed at all, because the potential claimants knew they could not meet the dependency requirements. That is as far as we could go in determining the possible cost of the bill if enacted.

Mr. BIRDSALL. The next bill is another one we did not have a report ready on, H. R. 4084. We may have a short statement ready on it.

Mr. KNAPP. H. R. 4084 also deals with the subject of gratuitous insurance that I was mentioning in connection with the previous bill.

As I stated, at the present time the law provides that in the event of death or total disability under certain conditions between December 7, 1941, and April 20, 1942, the Government deems the serviceman to have been insured up to not exceeding $5,000. This bill would extend the gratuitous insurance provisions over a longer period of time, namely, if they died or became totally disabled within 120 days after entering active service, and prior to September 3, 1945, that being the date of the cessation of the Japanese hostilities. Any person who did not have insurance up to a maximum of $5,000, who entered service after October 8, 1940, and died within 120 days after entering active service, and prior to September 3, 1945, would be covered by this gratuitous insurance.

Mr. BONIN. How would that approximate cost run?

Mr. KNAPP. We may point out, Mr. Chairman, in connection with the cost that, as I stated, the Filipino cases represent the bulk of these gratuitous insurance payments. Now, Public Law 301 of the 79th Congress which was enacted February 18, 1946, stated that the Filipino veteran of service in the armed forces of the Philippine Army called into service with our Army would, for the purposes of veterans' benefits, be limited to compensation for service-connected disability and death and insurance contracts theretofore entered into,

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which froze the insurance benefit of Philippine veterans to those contracts prior to February 18, 1946. The Veterans' Administration held that the gratuitous insurance provision was in effect a statutory contract in that Congress deemed that they would be covered up to that maximum. They are therefore presently eligible under that gratuitous provision.

Now, if we extend this to deaths and disability cases up to September of 1945, we will bring in probably a substantial number of Pilipino cases in addition to what we have. Of course, it is not limited to group. We are unable to estimate the cost. At the present time, the law requires that a claim for death benefits under the gratuitous insurance provisions must be filed within 7 years from the date of death of the insured. Such provision, unless amended, would result in no death claims which could be allowed as a result of the extension of gratuitous insurance under this bill. However, if it is assumed that valid claims could be filed for deaths occurring on or after April 20, 1942, within 120 days after entrance into service and prior to September 1945, it is estimated that the total cost of section 1 on account of approximately 258 such deaths would be in the neighborhood of $1,932,000.

Mr. GERARDI. Of course, I would say that we would have to assume that these people would be allowed time to file claims. Otherwise there would be an annullity. And for the purpose of such assumption, I think we must then try to visualize the number of men who, otherwise meeting the requirements, died between April 20, 1942, and September 3, 1945, and who didn't already have $5,000 insurance, and had no relatives otherwise entitled to take this insurance, and so forth. And when you consider all of those factors, you come to the conclusion that this thing is so nebulous that you cannot make any estimate that would be worthwhile considering.

I would say that unless we made an exceptionally close study and survey of the proposal, we would have to report, in my opinion, at this moment, that we could not give a good, firm estimate of what this bill might cost.

Mr. KNAPP. I might add, Mr. Chairman, that the bill also, similar to the previous bill, would remove the dependency requirement of the parents. So that aspect, as we have testified, would cost approximately $34 million.

Mr. BIRDSALL. The next bill, Mr. Chairman, is H. R. 2126. That is another bill on which no report was furnished. It has to do with the value of installments, payment of commuted value of installments, unpaid at the death of the last beneficiary to the estate of such beneficiary, or, if none, to the estate of the insured. That would require an amendment to section 602 (j) of the act on insurance maturing prior to August 1, 1946. That, again, gets us into these different types of cases where the maturity was before the act of August 1, 1946, and payments were made in the limited manner the Congress wanted on the wartime type of insurance. They introduced the peacetime program on August 1, 1946 with the peacetime privilege of designating anyone as a beneficiary on insurance maturing on or after that date. This bill would go back and permit the payment to the estate of the beneficiary or the estate of the insured of certain amounts which were not paid due to the restrictions under the law prior to 1946.

Do you have anything on that?

Mr. KNAPP. No, I don't.

Mr. BIRDSALL. The next bill is H. R. 4117, on which we have not as yet made a report. I believe we should furnish a report to the committee and get it into your record.

Mr. BONIN. We would like to get that, yes.

Mr. BIRDSALL. I wish to insert at this point a statement on H. R. 289.

(The statement referred to is as follows:)

STATEMENT ON PROPOSAL TO CREATE A VETERANS' INSURANCE CORPORATION (H. R. 289, 83D CONG.)

H. R. 289 would establish within the Veterans' Administration a Veterans' Insurance Corporation to handle the Government life insurance program under title III of the World War Veterans' Act, 1924, as amended, and the National Service Life insurance program under the National Service Life Insurance Act of 1940, as amended.

This bill is identical with H. R. 3317, 82d Congress, on which a report was submitted by the Veterans' Administration on June 4, 1951 (committee print No. 132). It stems from a recommendation of the Hoover Commission but differs somewhat from the original bill, H. R. 5171, 81st Congress, on which report was made under date of April 18, 1950 (committee print No. 246).

In his report on the previous identical bill, the Administrator emphasized his broad powers under the present law to accomplish changes in the administration of the insurance programs without the necessity for a corporation and pointed to the pendency of the contractual survey by Booz, Allen & Hamilton. In his testimony of June 10, 1952, on the insurance-H. R. 3317, 82d Congress-and other bills, the Administrator stated that there had never been any substantial evidence to indicate that a corporate method of administering veterans' insurance would offer advantages which could not be, or have not been, realized by administrative action, and that the proposal to establish a corporation would fix the insurance activities into a rigid form of organization which would not permit the flexible exercise of authority now vested in the Administrator to meet the needs for adjustment as they arise.

The report of Booz, Allen & Hamilton which was filed in complete form with the Administrator about July 1, 1952, recommended that there be established within the Veterans' Administration "a fully integrated department for the conduct of the insurance program." Under the plan of reorganization developed by the Administrator and announced on November 26, 1952, 1 of the 3 basic operating departments would be a self-contained Insurance Department, headed by the Deputy Administrator for Insurance, who would be responsible for all insurance activities, including the efficient operation of the insurance centers. This reorganization would also include a transfer of the settlement of insurance death claims to the new insurance department, as well as the death indemnity program under Public Law 23, 82d Congress. It is noteworthy that while the Hoover Commission recommended an insurance corporation, the Hoover Commission task force and the Trundle Engineering Co., which conducted a survey of the Veterans' Administration for the task force, each recommended an insurance bureau or department within the Veterans' Administration, headed by a Deputy Administrator. The Administrator's plan is awaiting determination by the President.

Further discussion of the proposed insurance department is contained in the document Reorganization of Veterans' Administration-Background and Solution (see pp. 16, 35, 47), copies of which were furnished by the Administrator to the committee and to each Member of the Congress on January 12, 1953.

Mr. BIRDSALL. We have four bills left of these miscellaneous types: H. R. 4774, which again has to do with distribution of insurance maturing before August 1946, authorizing payment to additional classes; H. R. 1261, which is to make certain Government life and national service life policies incontestable for fraud after 2 years; H. R. 50, to amend the National Service Life Act to assure judicial review of determinations by the Administrator and waiver of premiums in disability cases; H. R. 36 and H. R. 259, proposals to reduce the

interest rate on certain United States Government life insurance liens which were made in connection with service-connected cases, less than permanently and totally disabled, who were permitted to charge the liens against the insurance. These reports have been inserted in the record by the Chairman, and reference to them will give the detailed. information on each subject.

The last bill, H. R. 1859, concerns waiver of premiums. Instead of requiring total disability, a waiver would be authorized if a man has a 30-percent service-connected disability. I would suggest, unless you object, in the interests of time, that those reports stand for the record, and that we not go into the details on them. They are in a miscellaneous group. When any of the particular bills comes up later, we will be very happy to go into the details of our report.

Mr. BONIN. We can call upon you then.

Mr. BIRDSALL. That will conclude our statement, sir.
Mr. BONIN. Thank you very much.

Mr. BIRDSALL. Thank you.

Mr. BONIN. Mr. Olson, you represent the American Legion; is that correct?

STATEMENTS OF CLARENCE H. OLSON, ASSISTANT DIRECTOR, NATIONAL LEGISLATIVE COMMISSION, THE AMERICAN LEGION, AND CHARLES W. STEVENS, ASSISTANT DIRECTOR, NATIONAL REHABILITATION COMMISSION, THE AMERICAN LEGION

Mr. OLSON. Yes, sir, I do. My name is C. H. Olson. I am assistant director of the national legislative commission of the American Legion.

We appreciate the opportunity to come before you today. We appreciate and commend you for the exhaustive study you are making of the complex insurance laws.

Today we are here to discuss amendments to the World War Veterans' Act of 1924, the National Service Life Insurance Act of 1940, and Public Law 23 of the 82d Congress, the Indemnity and Insurance Acts of 1951.

We have statements prepared on House bills 36, 50, 51, and 2278, but we would like permission also to speak briefly and extemporaneously on House bills 289, 2126, 3838, 4084, and 4599.

The position we take on these bills today is the result of studies that are reflected in resolutions which were regularly adopted by our national organization in national convention or national executive committee meetings.

To prepare all the testimony required for a wide study of insurance laws is quite a task, and it has placed an unusually heavy burden upon our insurance expert, who accompanies me here today.

I am glad to present one who will ably discuss the views of the American Legion in these matters. He is Mr. Charles W. Stevens, Assistant Director of the National Rehabilitation Commission. We consider Mr. Stevens to be an expert in veterans insurance matters, And, with your permission, Mr. Chairman, Mr. Stevens will take over

now.

Mr. BONIN. Mr. Olson, you are submitting this statement at this time on the particular bills that you enumerated? Is that correct?