« PreviousContinue »
CAPITAL AND SURPLUS REQUIREMENTS
As Of June 1971
The tabulation shows the initial minimum capital and surplus requirements in each state for foreign stock life insurance companies, writing life and disability insurance, assuming youngest qualifying age if age is a requirement. Percentage surplus requirements are shown when applicable and expressed in the combined column as an amount applied to minimum capital required.
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware D. C. Florida Georgia Hawaii Idaho Illinois India na Iowa Kansas Kentucky Louisia na Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Monta na Nebraska Nevada New Hampshire New Jersey
$ 300,000 150,000
200,000 100,000 300,000 500,000
350,000 200,000 500,000 200,000 250,000 500,000 600,000 400,000 350,000 300,000 500,000 100,000 500,000 500,00
450,000 200,000 200,000 150,000 500,000 300,000 800,000 900,000
50% 300,000* 500,000
100,000 Flexible 200,000
50% 750,000 200,000*
50% 600,000 400,000 300,000* 750,000
750,000 800,000 500,000* 450,000 300,000 200,000 150,000
500,000 750,000 + 50%
300,000 1,500,000 1,250,000 1,600,000 1,500,000
900,000 500,000 400,000
300,000 1,000,000 1,200,000 1,000,000 2,600,000**
New Mexico New York North Carolina N. Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island S. Carolina S. Dakota Tennessee Texas Utah Vermont Virginia Washington W. Virginia Wisconsin Wyoming
$ 100,000 1,000,000
600,000 650,000 400,000
300,000 400,000 750,000 100,000
$ 200,000* 2,000,000
$ 300,000 3,000,000 1,200,000 1,000,000 1,000,000
800,000 1,000,000 1,500,000
* Special Surplus may be required. ** Increase pending.
Less than $ 300,000
$ 300,000 More than $ 300,000 but less than $ 750,000
$ 750,000 More than $ 750,000 but less than $1,500,000
$1,500,000 More than $1,500,000
19 2 6 51
Comparison with current D. C. Minimum Requirements
2 4 44 50
* Under certain conditions limits apply to permanent insurance as well. + For union groups 20/40/150% ++ For union groups $20,000
** Trusteed plans limited to $50,000 *** Some discretionary groups limited to $25,000
July 1, 1971
Mr. WATT. Mr. Chairman, that concludes my prepared statement. Senator STEVENSON. Thank you, Mr. Watt.
We have four witnesses here to testify on S. 2208. Perhaps the most expeditious way of proceeding would be to continue with the other witnesses, and if it is not too much to ask of you, it might be helpful if you could remain, in case they raise questions about this proposal.
Mr. Watt. I would be glad to do so, sir. Senator STEVENSON. Thank you very much, Mr. Watt. We will move as expeditiously as we can to consider all of the bills you have supported today.
Mr. WATT. Thank you, Mr. Chairman.
Senator STEVENSON. The next witness is Mr. Robert Price, vice president and general counsel of the Peoples Life Insurance Co.
STATEMENT OF ROBERT N. PRICE, VICE PRESIDENT AND GENERAL
COUNSEL, PEOPLES LIFE INSURANCE CO.
Mr. PRICE. Thank you very much, Mr. Chairman.
My statement is a consolidated one, made on behalf of four domestic District life insurance companies, whose names are identified in the statement.
Mr. Chairman, I am Robert N. Price, vice president and general counsel of Peoples Life Insurance Co., Washington, D.C.
This consolidated statement in support of S. 2208 is made on behalf of the following domestic District of Columbia life insurance companies : Acacia Mutual Life Insurance Co.; Government Employees Life Insurance Co.; Peoples Life Insurance Co.; and United Services Life Insurance Co.
S. 2208 is an omnibus bill divided into titles I through V. This statement is principally concerned with titles II and III which relate to life insurance and life insurance companies. We specifically support those titles.
The amendment proposed in title II would increase the capital and surplus requirements for stock life insurance companies authorized to do business in the District of Columbia. The District of Columbia proposes that this amendment be broadened to make a similar increase in those requirements for mutual life insurance companies. Over the years, the various States have increased the capital and surplus requirements of life insurers as a further safeguard to the security of policyholders. It is particularly important that the policyholders be protected in the early years of a company's operation. The proposed increases in the capital and surplus requirements would bring the District of Columbia more in line with the requirements of the various other States and would provide greater safety to policyholders of companies authorized to do business in the District of Columbia. Title III would increase the maximum amounts of group
life insurance to the lesser of $75,000 or 300 percent of compensation with a lower limit of $25,000. Twenty-seven States currently have no limits on the amounts of group life insurance while 19 States have higher limits than the District of Columbia, and four have the same limits.
The proposed amendment would offset the effects of inflation in the years since the last increase in the group life insurance limits, and it
would bring the limit more in line with those applicable in other States. Such an increase would permit the full employee benefits under the Federal income tax laws which exclude from personal income tax the premiums paid by an employer for group life insurance up to $50,000.
The present District of Columbia Code neither permits nor prohibits the assignment of group life insurance. S. 2208 as originally submitted did not include an amendment which would permit such an assignment. The above companies support the position of the District of Columbia in that S. 2208 should include an amendment permitting the assignment of group life insurance. The exercise of an assignment of rights under a group life insurance policy would permit a covered individual to obtain valuable benefits under the Federal estate tax laws. As of June 1971, 34 States permitted such assignments.
Titles I and IV are concerned with casualty insurance companies and the type of insurance written by them. Insofar as these titles afford additional policyholder protection, the above named companies generally support the requested amendments.
The amendment requested in title V would increase the amount of a contract with the District of Columbia for which no bond is required, and in view of the inflation in recent years, the higher amount would appear reasonable.
On behalf of the companies identified above, I wish to express my thanks to the chairman and members of the committee for the opportunity to present their views.
Mr. Chairman, we specifically support title II, because we believe the increase in the capital and surplus requirements is a sound business practice. We also specifically support title III, relating to the increase in the maximums on group life insurance, because this makes available greater amounts for District of Columbia residents. As an adjunct to title III, the District is also proposing that an amendment be made permitting the assignment of group life insurance. We also support that, because it enables individuals to make certain changes under the Federal estate tax laws in their estate planning. We are not taking any position on the other titles of the bill, because they do not relate to life insurance, or to life insurance companies. They are more concerned with casualty companies, and title V surety bonds.
We appreciate the opportunity to appear before the committee, and we will attempt to answer any questions you may have.
Senator STEVENSON. I do not quite understand your comments about title III concerning a suggested amendment to it.
Are the owners of the term life insurance in the District now prevented from assigning their policies!
Mr. PRICE. The District of Columbia Code at the present time neither permits nor prohibits the assignment.
Internal Revenue Service has raised certain questions about the assignment, unless there is specific statutory authority. That authority of assignment, as of June 1971, has been granted in 34 States. The District has proposed a similiar amendment to the District of Columbia Code to remove any doubt as to the validity of an assignment.