The history of fraternal insurance during the last four or five years has largely centered around the Mobile Bill and it has from time to time been considered necessary to modify the bill in certain respects. Generally speaking the bill is now supported by all the leading societies and also has the hearty approval of the insurance commissioners. At the close of 1913 twenty-three states had enacted the bill in either its original or modified form. Furthermore, the principles of the bill are enforced through official rulings in at least eleven additional states. Business-Assessment Associations. A discussion of assessment life insurance is not complete without reference to the numerous local societies which at one time granted insurance in the United States on the assessment plans already referred to, but which were neither fraternal in character nor organized on the lodge system. These societies were generally known as "business-assessment associations" to distinguish them from fraternal societies. Almost universally, however, these associations failed to follow sound business methods in writing insurance. In nearly all instances their managers ignored actuarial principles and, like the fraternal societies, took the position that the accumulation of reserves was an unnecessary practice which served only to increase the cost of insurance. They, therefore, employed various assessment plans and as a consequence encountered the same difficulties experienced by fraternal societies. The local and non-fraternal character of the societies, however, caused the consequences of defective rating systems to show themselves much more quickly and effectively, and, as a result, although fraternal insurance still ranks as a leading form of life insurance, practically all the important assessment societies have either passed out of existence or have been reorganized into old-line companies. As compared with fraternal orders, business assessment societies were greatly handicapped in overcoming the defects of their system in that they lacked the benefits of a lodge relationship and the strong fraternal tie that binds the members together and causes them to stand by each other in time of adversity. In other words, they lacked the fraternal feeling among their members and were really nothing more than ordinary companies organized solely for the purpose of giving insurance at rates much lower than those charged by old-line companies. As compared with the fraternal orders, business assessment associations were also operated at a much greater expense, and in many instances their medical selection of risks was decidedly inferior. Assessment Plans Used by Such Associations.— The earliest associations were operated on the "flat assessment plan," i.e. upon the death of any member all the other members would be called upon to pay an assessment which was equal for all and just large enough to pay the claim. While mostly local in character certain of the associations were connected with some trade or profession, and, instead of limiting their membership to a particular locality, sought business wherever it could be found, and in certain instances even organized an agency system for the purpose. In the latter case the management was more apt to be such as would discern the shortcomings of the pure assessment plan. Accordingly, we find that this latter class of associations showed a greater vitality and was the first to require either the payment of the assessment in advance (instead of a post mortem assessment) or, as was done later, to collect an extra sum to create an emergency fund which could be drawn upon when necessary and thus avoid the necessity of levying extra assessments. But those who adopted this plan still condemned the mathematical reserve idea, and usually explained their emergency fund collections as nothing more than a means of making extra assessments unnecessary in case the mortality should exceed "10 per 1,000" or "the losses according to the American Experience table of mortality." Some of the societies succeeded in this way in accumulating considerable assets, although in nearly all instances the fund was woefully inadequate to guarantee the payment of the association's obligations at the rates and assessments which were being collected. Various societies also made use of the "graded assessment plan” at an early date, the rate being determined by the age at entry and remaining the same during the continuance of membership. When it became apparent that the flat and graded assessment plans were grossly unsound, several of the associations adopted the " stipulated-premium" plan. This method involved not only the collection of the estimated cost of insurance in advance, but the accumulation of a reserve fund whose purpose, according to the managers of the association using the plan, was to "equalize the cost" of the insurance during the later policy years. Here we have a recognition of the mathematical reserve idea, but it should be noted that the reserve fund accumulated, usually being accomplished by adding a certain sum per $1,000 of insurance or a certain percentage of the rate of mortality at the age of entry, fell far short of equaling the reserve maintained by old-line companies. In the case of at least one important business assessment association, which has since been successfully reorganized into an old-line mutual company, the stipulated premium was so computed that, assuming a given lapse ratio, the rate it was felt could be kept level if no surrender values were allowed. After the difficulties inherently connected with any assessment plan which does not involve the maintenance of an adequate reserve became more apparent, a considerable number of the important associations undertook to reorganize themselves into legal reserve companies. In fact this movement 6 In such reorganizations, as stated by Mr. Dawson, the associations "dealt with their assessment membership chiefly in the following manner, viz: by carrying out their contracts with such of them as would not transfer to regular 'old-line' plans, abandoning their assessment policies. In such cases, the cost to those who persisted upon the assessment plan, has naturally been high; but they at least have had the advantage that the death claims were paid and that their insurance was good for its face, instead of being utterly wiped out by the failure of the institution. In one or two cases, this reorganization was attempted at too late a date, or was accompanied by such extravagance and mismanagement that the reorganized company was not successful." (Miles M. Dawson, “As considerably preceded the similar movement towards old-line methods which is now assuming such large proportions in the field of fraternal insurance. BIBLIOGRAPHY DAWSON, MILES M., Assessment Insurance. New York, 1896. The Business of Insurance, chap. 26, 416-437. "" Assessment Life Insurance and "Fraternal Life Insurance," Annals of the American Academy of Political and Social Science, xxvi, 120-36. 66 MEYER, B. H., Fraternal Insurance in the United States." Annals of the American Academy of Political and Social Science, March, 1901, 80-106. NICHOLS, WALTER S., "Fraternal Life Insurance." Yale Readings in Life Insurance, i, chap. 10, 132–154. sessment Life Insurance," in H. P. Dunham's The Business of Life Insurance, i, 432.), CHAPTER XXI INDUSTRIAL INSURANCE The Purpose of Industrial Insurance.— Industrial insurance, as the name implies, is a form of life insurance especially designed to meet the requirements of the wage-earning or industrial population. Its primary purpose is to provide for this large element in our population an absolutely certain method of acquiring the funds necessary to assure a decent burial and the payment of the expenses for medical attendance during the last illness. But while this special purpose has caused industrial insurance to become popular among wage-earners, its beneficent influence in other directions deserves special mention. Just as we found that ordinary life insurance constitutes a powerful factor for inculcating thrift, so the weekly premium plan used in industrial insurance has been one of the important means of educating a large class, which naturally finds it difficult to provide for contingencies, in systematic saving. Weekly premium payments -five, ten or twenty-five cents a week to meet the cost of insurance soon develop a habit of saving which will have its wholesome effect in other directions. Industrial insurance also renders the further service of familiarizing the masses with the benefits of insurance, and has thus been responsible for greatly increasing the uses of other kinds of insurance. The wage-earner of to-day becomes the shopkeeper and salaried man of to-morrow and, having become acquainted with the beneficial results of industrial insurance, he will be in a much better position to appreciate the value of >ther forms of insurance, such as ordinary life, accident, health, fire, etc. Magnitude of the Business.-The success which the in |