McCain, vice admiral, United States Navy, a commission as admiral, United States Navy, and for other purposes, has been assigned to this Department by the Secretary of Defense for the preparation of a report thereon.

The purpose of the bill is as stated in the title.

The act approved July 28, 1942 (34 U. S. C 285d), authorized the President to issue or cause to be issued an appropriate commission in the name of any person who, while in the naval service of the United States at any time after September 8, 1939 shall have been officially recommended for appointment or promotion to a commissioned grade, which recommendation shall have been duly approved by the Secretary of the Navy, and who shall have been unable to receive or accept such appointment or promotion by reason of his death in line of duty. Issuance of a posthumous commission as admiral would not be authorized in the case of the late Vice Admiral McCain under existing law Had he lived until his retirement he would have been advanced on the retired list to the grade of admiral under the authority of section 12 of the act of July 23, 1938. as amended, by reason of his combat commendations.

Vice Admiral McCain entered the Naval Academy in 1902 and was graduated in 1906, following which he served the Navy in an active-duty capacity continuously until his death on September 6, 1945.

During his successful career as a naval officer ashore and afloat, Vice Admiral McCain qualified as a naval aviator. During World War II he commanded the Carrier Task Forces of the Third Fleet under the command of Fleet Adm. William Halsey, United States Navy. In the course of many arduous and notable operations Admiral McCain contributed enormously to the successful accomplishment of the United States Pacific Fleet. The list of battles in which he participated includes almost every major engagement involving the famous Third Fleet. For these achievements as a commander at sea in time of war he was awarded the Navy Cross, the Distinguished Service Medal, and the Commendation Ribbon. At the end of the war the forces under his command were conducting operations in the immediate vicinity of the Japanese home islands. He witnessed the surrender of the Japanese leaders on board the U. S. S. Missouri and then returned to his home where he died very suddenly on September 6. His death was attributed to the strain of constant and strenuous service at sea in time of war in a position of great responsibility.

The Navy Department recommends the enactment of House Joint Resolution 281.

This report has been coordinated in accordance with procedures established by the Secretary of Defense.

The Navy Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to the Congress.

Sincerely yours,

AMENDING THE LIFE INSURANCE ACT OF THE DISTRICT OF COLUMBIA

AUGUST 3, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. KENNEDY, from the Committee on the District of Columbia. submitted the following

REPORT

To accompany H. R. 43931

The Committee on the District of Columbia, to whom was referred the bill (H. R. 4393) to amend the Life Insurance Act of the District of Columbia, having considered the same, report favorably thereon with amendments and recommend that the bill, as amended, do pass. The amendments are as follows:

Page 6, line 3, after "application" change colon to period and delete the following:

Provided, That nothing contained herein shall apply to applications for reinstate ment. A reinstated policy shall be contestable on account of fraud or misrepresentation of the material facts pertaining to the reinstatement, for the same period after reinstatement as provided in the policy with respect to the original issue. Page 7, line 14, after "annually" change comma to period and delete the following:

and that such reinstated policy shall be contestable, on account of suicide, fraud. or misrepresentation of material facts pertaining to the reinstatement, for the same period after reinstatement as provided in the policy with respect to the original issue

Page 8, line 9, after "policies." add the following:

Nothing contained in subsection (3) hereof shall apply to applications for reinstatement. A reinstated policy shall be contestable on account of fraud, or misrepresentation of material facts pertaining to the reinstatement, for the same period after reinstatement as provided in the policy with respect to the original issue

Page 10, at the end thereof, add the following:

SEC. 8. This Act shall become effective ninety days after approval.

The purpose of the bill is to amend the Life Insurance Act of 1934 so as (a) to effect uniformity with Public Law 291, Seventy-eighth Congress, approved April 22, 1944, with respect to the imposition of penalties upon insurance companies and their representatives, (b) to repeal, correct, or amplify sections of the life act which were originally intended to apply to other forms of insurance, and (c) to provide certain minimum standards for policies of industrial life insurance. Specifically, the bill is designed to accomplish these purposes as follows:

Sections 1 and 2 would authorize the imposition of penalties less severe than those now provided in cases where the offense is of a comparatively minor nature. Fire and casualty companies and their representatives are now subject to identical provisions enacted under Public Law 291, Seventy-eighth Congress, approved April 22, 1944. Authority for the imposition of the more drastic penalty of revocation or suspension would not be repealed by this amendment.

Section 3 would make it clear that the Life Insurance Act does not contemplate the operation of assessment life insurance companies in the District of Columbia. This clarification is accomplished by deleting the word "mainly" from that section of the Life Insurance Act which now provides

any company which makes insurance or reinsurance the performance of which is not guaranteed by the reserves required by this Act, but is mainly contingent upon the payment of assessments or calls made upon its members, shall not be formed, admitted, or licensed in the District.

Section 4 provides for a minimum amount of surplus in the amount of $150,000 for mutual companies. The law at present provides for minimum capital and surplus in the aggregate amount of $150,000 in the case of stock companies, but does not clearly provide for any minimum surplus in the case of mutual companies.

Section 5 would repeal a section which was never intended to apply to life insurance companies. The section to be repealed would require in certain cases the inclusion in an insurance policy of a contingent premium in addition to the cash premium. This requirement is not properly applicable to life insurance policies and was included in the Life Insurance Act inadvertently.

Section 6 is merely to guarantee that investments of foreign mutual companies provide the same degree of security as is required in the case of domestic companies.

Section 7 provides three new sections to be applicable to industrial life insurance companies. The first of these sections would prohibit a practice whereby policyholders might pay on a policy which is in arrears an amount insufficient to make the face amount of the policy collectible. The section also would require the proper recording of both current and advance premiums so as to make certain that the policyholder would receive full credit by the company of such premiums paid by him. The other two sections would provide standard provisions to be included in policies of industrial life

insurance.

The Life Insurance Act of 1934 provided comparable standards for other kinds of life insurance policies but did not provide such standards for industrial policies. These provisions are included voluntarily in the policies of most of the companies but there is no present require

ment that they must be included in the policy of any company. They are largely self-explanatory and may be summarized as follows: (1) A provision that all premiums after the first shall be payable in advance either to the home office of the company or to an agent of the company.

(2) A provision that the insured is entitled to a grace period of 28 days during which the policy shall continue in full force.

(3) A provision that the policy shall constitute the entire contract between the parties and that with certain usual exceptions, it shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than 2 years from its date.

(4) A provision for an adjustment of the amount payable when the age of the insured has been misstated.

(5) A provision for the payment of dividends on participating policies.

(6) A provision for nonforfeiture benefits.

(7) A provision specifying the options, if any, to which a policyholder is entitled in event of default in premium payment.

(8) A provision for the reinstatement of policies in arrears. (9) A provision requiring settlement upon proof of death. (10) A provision requiring a brief description of the policy. This subsection also provides that a reinstated policy shall, under certain conditions, be contestable for the same period after reinstatement as provided in the policy with respect to the original issue. The remaining portion of section 7 prohibits the inclusion of certain provisions which would be unfair to the policyholder.

Section 8 provides for the effective date of the act.

This legislation was submitted to the committee for consideration by the Commisioners of the District of Columbia and has their approval.

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman):

SEC. 6. REVOCATION OF CERTIFICATE OF AUTHORITY.—If the Superintendent shall find that a domestic, foreign, or alien company is insolvent, or that it does not have the surplus required by this Act and invested as by this Act required, or that it does not have the surplus or whose policyholders do not have the contingent assessment liability required by this Act; or, if an alien company, that it does not have the surplus required by this Act and invested as by this Act required in the United States; or, if an alien company, that it does not have the deposit required by this Act; or, if he finds that the authorized capital of any domestic, foreign, or alien capital stock company is impaired and the company is not promptly restoring the deficiency or reducing its capital; or, that any domestic, foreign, or alien company has violated or failed to comply with the law or its charter; or, that the company or any of its officers has willfully refused or failed to submit to examination or to perform any obligation relative thereto, he may revoke the certificate of authority to such company and thereafter no new insurance business shall be transacted by the company or its agents until the Superintendent shall issue a new certificate of authority of such company. The Superintendent shall not revoke the certificate of authority of any company until he has given the company not less than thirty days' notice of the proposed revocation and of the grounds alleged therefore and has afforded the company an opportunity to show that its certificate of authority should not be revoked. When the further transaction of business would be hazardous to the policyholders

of any company, the Superintendent may suspend the certificate of authority without giving notice as required[.] : Provided, That in lieu of revoking the certificate of authority of any company for causes enumerated in this section, after hearing as herein provided, the Superintendent may subject such company to a penalty of not more than $200 when in his judgment he finds that public interest would be best served by the continued operation of the company. The amount of any such penalty shall be paid by the company through the Office of the Superintendent to the Collector of Taxes of the District of Columbia.

SEC. 27 SUSPENSION OR REVOCATION OF License, Grounds for, NOTICE OF HEARING-The Superintendent of Insurance may suspend or revoke the license of any life insurance general agent, agent, solicitor, or broker, if, after due investigation, notice and a hearing either before him or before any salaried employee of the insurance department designated by him whose report he may adopt, he determines that such license has been secured by fraud or misrepresentation; or that the general agent, agent, solicitor, or broker has violated any insurance law of the District; or has made any misleading representations and/or incomplete and/or fraudulent comparison of any policies or companies or concerning any companies to any person for the purpose or with the intention of inducing such person to lapse, forfeit, surrender, or exchange his insurance then in force; or has made any misleading estimate of the dividends or share of surplus to be received on a policy; or has failed or refused to pay or to deliver to the company or his principal any money or other property in the hands of said general agent, agent, solicitor, or broker belonging to such company or principal when requested so to do; or has violated any lawful ruling of the insurance department; or has been convicted of a felony: or has otherwise shown himself untrustworthy or incompetent to act as a life insurance general agent, agent, solicitor, or broker. Before the Superintendent of Insurance shall revoke or suspend any such license he shall give to the general agent, agent, solicitor, or broker and to the company which or whom he represents written notice of the charges and of the hearing, not less than twenty days prior to the time set for such hearing. Such notice shall be forwarded by registered mail addressed to the general agent, agent. solicitor, or broker at his last known address, and the company at its principal place of business Full opportunity shall be given at such hearing to the general agent, agent, solicitor, or broker and to the company or principal to appear with counsel and be heard upon such charges. Within thirty days after the revocation or suspension of license or the refusal of the Superintendent to grant a license, the general agent. agent, solicitor. or broker, or applicant aggrieved may appeal, from the ruling of the Superintendent of Insurance to the court of competent jurisdiction designated in Section 28, appeals may be taken from the judgment of the said court as prescribed in Section 28[.]: Provided, That in lieu of revoking or suspending the license of any such general agent, agent, solicitor, or broker for causes enumerated in this section after hearing as herein provided, the Superintendent may subject such person to a penalty of not more than $200 when in his judgment he finds that the public interest would be best served by the continuation of the license of such person amount of any such penalty shall be paid by such person through the Office of the Superintendent to the Collector of Taxes of the District of Columbia. No individual whose license as a general agent, agent, solicitor, or broker is revoked shall be entitled to any license under this Act for a period of one year after revocation. Any person who violates any provision of this section upon conviction shall be fined not exceeding $100 for each and every violation.

The

SEC. 32. ASSESSMENT COMPANIES.-(Chapter II) Any company which makes insurance or reinsurance the performance of which is not guaranteed by the reserves required by this Act, but is [mainly] contingent upon the payment of assessments or calls made upon its members. shall not be formed. admitted. or licensed in the District.

SEC. 8 CAPITAL-STOCK REQUIREMENTS.—(Chapter III) A domestic capitalstock company organized under this Act shall have a paid-up capital stock of not less than $100,000 Each domestic capital-stock company organized under this Act, in addition to the paid-up capital stock shall have a surplus paid up equal to at least 50 per centum of such capital stock. Each domestic mutual company organized or doing business under this Act shall at all times have a surplus as defined by this Act of not less than $150,000.

[SEC. 32. MAXIMUM AND CONTINGENT PREMIUMS OF MUTUAL COMPANIES.(Chapter III) The maximum premium shall be expressed in the policy of a mutual company and it may be solely a cash premium or may be a cash premium and an additional contingent premium, which contingent premium shall not be less than he cash premium, but no mutual company shall issue any insurance policy for a