Organizations and Associations for Insurance Companies

There are all kinds of insurance organizations in many different territories. All of these organizations are company organizations. Commission scales have also been regulated in the large cities by associations of agents and brokers on the local level.

At least outwardly, no cooperative associations exist among life insurance companies for the regulation of commissions on term life insurance rates. In spite of this, commission scales paid by the large Eastern companies tend to be more or less standardized; here and there, of course, there are a few variations among the major companies.

Many of the medium-sized and smaller companies offer higher commission rates to attract agents in competition with better-known companies. The amount of commission that a life insurance company can pay may be restricted in some states by statutes that limit the companies' expenditures for the acquisition of new business. The maximum commission rates allowable often become the standard rate payable.

In addition to rate making, standardizing life insurance policies, and regula­tion of commission rates, cooperative organizations exist for a number of other functions.

For example, national, state, and local associations of insurance agents are organized to promote the welfare of the agent. These associations engage in lobbying activities, pro­mote educational programs for their members, and in general pro­tect the interests of the agent in his relations with the company.

Similar organizations, known as associations of life underwriters, operate on local, state, and national levels in the life insurance busi­ness. There are also life insurance general agents' associations which study problems of interest to their group.

The Insurance Federation, on state and national levels, is another lobbying organization designed to protect the private insurance companies that offer different types of life insurance from undesired governmental interference and competi­tion.

The National Board of Fire Underwriters is an association of capital stock fire insurance companies devoted to fire protection and fire prevention. Other associations engage in loss-prevention activities in other lines of insurance. The insurance industry also has its social organizations, such as the Order of the Blue Goose, a fire insurance society.

A number of associations among companies exists in the insur­ance business to provide insurance facilities for a particular industry or for a given class of properties. These organizations are formed to furnish greater insurance capacity for large or perilous exposures than would otherwise be available from individual companies act­ing alone. For example, a life insurance company would be able to offer no medical exam online life insurance quotes when otherwise they would not be able to.

The associations can perform rating, loss-adjustment, and engineering services for certain lines far more economically and efficiently than could each company operating by itself.

Examples of these associations are the Cotton Insurance Association, com­posed of 36 member companies, formed in 1905 to insure cotton in transit; the Factory Insurance Association, composed of 117 mem­bers, formed in 1890 principally to meet competition from the fac­tory mutuals in connection with sprinklered risks or risks of high-grade construction; the Oil Insurance Association, composed of 84 members, organized in 1918 to insure properties of the oil, gas, or related industries or properties employing manufacturing methods similar to those used in the oil and gas industries; and the Under­writers' Grain Association (56 members), organized in 1918 to in­sure terminal grain elevator properties and their contents.

To continue listing and describing the cooperative associations of the insurance business would consume space beyond the value of such an undertaking. Suffice it to say that the insurance business is probably the most organization-happy of all industries. Just name the type of organization, and the insurance business probably has it.

One last point is of interest in a discussion of the organization of insurance carriers: the company fleet. Insurance companies often operate in interrelated groups. For merely a few random examples, there are the Aetna group, the Royal-Liverpool group, the Kemper group, and the North America companies.

A group or fleet is com­posed of more than one company owned or managed by the same interests and working together. Sometimes, the president of one of the companies will be vice-president of the others.