the law presumes that he can support himself, unless in fact further dependency is shown. The right to receive compensation is personal to the dependent and is in no sense a vested interest, so the dependent has nothing which he can pass on or which his personal representatives are entitled to receive in event of his death.

CONSERVATION OF COMPENSATION PAYMENTS

It is the object of the compensation system that the payments to the injured, or to the dependents in fatal cases, shall be made in substantially the same manner as wage payments, at regular intervals and in regular amounts. The party who makes the payments, therefore, either the employer or his insurer, is required to see that the payments are made as specified by law or by the commission, and that they reach the person or persons for whom they are intended. In order that the beneficiaries may have the full benefit of the payments it is usually provided in the statutes that any assignment of the right to compensation shall be invalid, and also that any payments that may be due shall be exempt from attachment while in the possession of the employer or of the insurance company.

It is intended to keep the procedure to determine and enforce the right to compensation as simple and informal as possible, and in view of this simplicity in procedure there is nothing to prevent a claimant from acting as his own attorney in compensation proceedings, particularly in those before the commission; if an appeal is taken to the courts it may be necessary for the claimant to be represented by an attorney. The aim is, however, to keep all litigation down to a minimum, and to keep the expenses of any litigation that is necessary as low as possible. As the authority to regulate the fees of physicians is given to the commission, in the interest of the employer, so in the interest of the employe the authority to regulate the fees of any attorney that may appear for the claimant is usually given to the commission.

It was one of the practical defects of the common law system that, when liability was recognized and a settlement was made, or when for any reason a settlement was made without suit, or when a judgment was collected after recovery by suit, the amount which the injured received was paid to him in one sum. The effect of this practice was that the money received was frequently dissipated,

and the injured was then no better off than he had been before the recovery of his damages. The provisions of the compensation laws regarding the frequent and regular payment of indemnity were adopted in order to overcome this defect in the operation of the common law system, and this practice in compensation administration negatives the idea that the benefits should be paid to the injured in a single amount, or in several amounts each one of which would be much larger than the small periodical payments. The law, however, recognizes the fact that in some cases there are reasons why a lump sum settlement to be paid in one amount, or a settlement which shall be made in several larger amounts rather than in numerous smaller amounts, may be advisable, and in recognition of this fact the different laws have provided for commutation of the future payments under certain circumstances. In practice this provision of the law is very closely guarded by the administrative authorities, for if such settlements were generally allowed that practice might almost nullify one of the fundamental principles of the compensation system, that of the conservation of compensation payments. As a general rule a petition for the commutation of the future payments into one amount or into several amounts may be made to the commission by either the employer or the employe, but such a petition will not be granted unless reasonable grounds are shown for its advisability. The basis on which a commutation is usually made is that of the present value of the future payments at the time of the commutation, discounted at a given rate of interest. In cases where the length of disability is practically certain the commutation is a simple matter; in cases where the length and nature of the disability is uncertain the commutation must be made on the basis of an estimate.

INSURANCE OF THE COMPENSATION OBLIGATION

The important element of the compensation system as far as the interest of an injured workman in it is concerned is that he shall have his right to compensation determined with as little delay as possible, and then when the right to compensation has been established that he shall receive the payments as provided by the law. Inasmuch as the insurance of the obligation is an essential factor in affording security for the payment of compensation, the insurance adjuster, as a representative of the insurer, assumes a position of

much importance in the performance of this function of the system. When an accident has been reported to the insurer by a compensation policyholder it is the adjuster who makes the investigation in order to determine whether or not the accident is covered under the compensation law. The report of the adjuster and the information furnished by him is the basis for any ruling that the insurance company may be obliged to make as to the coverage of the accident. If there is no question as to coverage and the disability lasts beyond the waiting period it is the adjuster, as the representative of the insurer, who sees that the injured gets his compensation according to the law. Any medical questions that may present themselves are discussed with the physicians by the adjuster, and the adjuster frequently represents the insurer in any negotiations with the administrative authorities that may be necessary. In those negotiations with the authorities which are merely formal the adjuster may also represent the injured, and assist him in any matters in which there is no conflict of interest between the claimant and the insurer. It will be seen, therefore, that the position of the insurance adjuster is a vital one in the compensation system.

The protection by insurance of the employer against the liability imposed by the common law was extensively practiced prior to the adoption of the compensation system, and it may be supposed that the insurance of the compensation obligation is but a natural and logical extension of this practice of carrying insurance to protect against the common law obligation, but the difference in the basis on which the insurance of each obligation rests is radical. The policy which was issued to the employer to protect him against his common law liability was for the protection of the employer rather than for the security of the employe, and it was an agreement between the employer and the insurer, limited in its extent, in which the employe had no legal interest. The policy covering the compensation obligation, on the contrary, is issued for the benefit of the employe, is unlimited in its extent so that it must provide for the assumption of the whole compensation obligation, and the employe can enforce the obligation directly against the insurer.

This difference in basic principles will account for the difference in the attitude of an insurance company in adjusting a claim under an employer's liability policy and one under a compensation policy. The liability companies have been subject to much undeserved

criticism for their alleged practices in adjusting liability claims, but a considerable proportion of this criticism has been due to a misunderstanding of the function of liability insurance, for it was assumed as a basis for the criticism that the liability policy was carried for the benefit of injured employes, and that an insurance company was attempting to evade its obligations when it failed to make immediate settlements. The answer to this criticism is that the insurer under a liability policy accepts only the common law liability of the employer, and has the same right to deny liability and contest a claim that the employer himself has and, in addition to this, the element of the measure of damages is so indefinite that it is often exceedingly difficult for an injured employe and an employer or his insurer to agree upon any reasonable amount in cases where hability exists, for the demand of the injured in such cases is usually far in excess of what an employer or an insurance company would pay without a contest, so the only alternative is to leave the matter to the courts for determination. The attitude of an insurer under a compensation policy is that the claims which may come under the law will be paid with all reasonable expedition in order that the purpose of the law may be carried out, and that claims for compensation will not be contested unless there is some reasonable basis, either in law or in fact, for contest. This is the spirit of compensation administration generally, and it is much to the credit of all administrative authorities in the United States, both the courts and the special administrative bodies, that, as far as the indemnity payments are concerned, the laws have been administered with an honest intent to execute their purpose, and in a spirit of fairness to all who are interested in their administration.

THE PUBLIC SUPERVISION OF WORKMEN'S COMPENSA

TION INSURANCE1

By E. H. DOWNEY,

Special Deputy, Pennsylvania Insurance Department.

The essentially social character of workmen's compensation insurance is, happily, no longer open to debate. Experience has shown, and informed opinion has everywhere recognized, that efficient insurance is indispensable to the public purposes for which workmen's compensation laws are enacted. Work accident insurance is thus affected with a public interest paramount to every private consideration, and the right and duty of the state to conserve that interest, either through direct governmental agency or through public supervision of private insurers, will scarcely be denied even by the extremest advocates of private enterprise. Therefore, as respects those jurisdictions which allow commercial insurance to exploit this field, it becomes important to define the aims, the instrumentalities and the limitations of public supervision.

The objects aimed at in public supervision should evidently be coincident with the public interests which supervision is designed to conserve. These interests comprise the prompt and full payment of accruing compensation benefits, security of deferred payments, equitable rates as among insurants, encouragement of accident prevention and the furnishing of insurance at reasonable cost.2 These objects are sought to be attained through the supervision of claim settlement, the licensing of insurance carriers, supervision of reserves and rate regulation. The first of these administrative divisions falls without the scope of the present inquiry; it is not specifically a problem of insurance, but belongs to the general sub

'This paper overlaps to a considerable extent an article on the "Organization of Workmen's Compensation Insurance" in The Journal of Political Economy for December, 1916, which article had already gone to press when the request for the present paper was received.

For a fuller statement of the social ends of workmen's compensation insurance see an article by the present writer in The Journal of Political Economy, Dec., 1916.