broad field over, it would appear as though the prejudicial influences of divergent insurance legislation and supervision in Canada are increasing. Public welfare, as well as fairness to all carefully conducted native and foreign companies doing business under the Dominion Act, demand the most careful consideration of this whole matter. Greater uniformity must somehow be secured, if public and business interests are to be conserved. Otherwise, conditions may tend more and more towards what President Kingsley of the New York Life characterizes as the 'inevitable chaos' which, in the United States, has followed upon the attempt to supervise the business of insurance by forty-six different authorities."1 If Canada is to profit as she should by the sad experience of the United States in the matter of governmental regulation of insurance, there will be little delay in settling whatever differences already exist between the various jurisdictions concerned. It is fair to say that there should be either only one system for chartering and licensing insurance companies in Canada, or it should not be made easier to secure a charter from the provincial legislatures than from the Dominion parliament. At any rate, the various governments should get together and, in so far as possible, minimize if not entirely do away with the disparity in regulation and supervision.2

With reference to the latter, it is not too much to say that, judged by American standards (which by no means are to be regarded as models), the insurance business in Canada is not over-supervised. In the United States, one of the most serious problems confronting the management of the large insurance companies is that of adjustment to the ever-changing and often conflicting laws of nearly fifty different states. This problem is made all the more difficult to handle from the fact that there is, on the whole, lack of uniformity in state laws. Were the insurance business confined to one state, as it was in its beginnings, it would be a comparatively simple matter for the com

1 See The Chronicle, Banking, Insurance and Finance (Montreal), February 26th, 1909.

See The Chronicle, Banking, Insurance and Finance, May 21st, 1909.

panies to adjust themselves to the laws, provided they were tolerably stable. But, as conditions actually exist today, with companies attempting to carry on their business of serving the public in dozens of different states, each having its own peculiar code of insurance laws, the problems confronting the insurance companies are of a really serious nature. It has been proposed at different times and on numerous occasions to free the insurance companies from their present perplexities by placing all interstate insurance under the control of the Federal government. The practical difficulties in carrying out this programme are too well-known to require consideration here. It is enough to say that Federal supervision, if it could be brought about, would be welcomed by many different interests. Federal control is by no means merely a theory-it has been practiced with a large measure of success in other countries of which Canada furnishes an interesting example. A very considerable revision and extension of the Dominion statute respecting insurance has recently been made; and on January 1st, 1911, such portions of the new law as did not at once become effective with the final passage of the act in May, 1910, came into operation. The nature of this statute, particularly as it relates to life insurance, the principal changes which it introduced, and the circumstances leading up to these changes will now be examined.

The movement for a revision of the Federal statute respecting insurance may be traced back to the memorable disclosures made in 1905 by the joint committee of the Senate and Assembly of the State of New York, whose published report is commonly referred to as the Armstrong Report. It was only natural that the findings of this committee should provoke considerable uneasiness among policyholders and others as to the actual conditions of Canadian life insurance companies. Moreover, some of the American companies which were brought into the limelight to their considerable disadvantage by the New York investigation were doing a substantial business in Canada. Accordingly, in response to a widespread public demand for something to be done to get more light on the subject of life insurance methods in Canada, and to restore public confidence

in the business, a Royal Commission on life insurance was appointed in accordance with an order of the Governor General in council on the last day of February, 1906. The commissioners were directed to inquire into the general subject of life insurance and of life insurance systems in Canada; the operations of the various companies chartered by the parliament of Canada, or by any province and licensed under the Federal insurance act, which were actually engaged in transacting business in the Dominion; the workings of the laws of the Canadian parliament relating to life insurance as actually carried on by home and foreign companies; and to consider and report upon any amendments to the laws which in their opinion were desirable. The commission was further empowered to employ expert assistance, and to summon witnesses who might be required to produce such books and papers as seemed necessary for a full investigation.3

The inquiry of the Royal Commission extended over a period of nearly a year, its report being submitted to the Governor General on the 22d of February, 1907. A searching examination was made of the twenty-seven old line companies and fraternal societies which had been chartered either by the Federal or by a provincial government, and which were then transacting life insurance in Canada. Respecting the British companies which came within the scope of the commission's inquiry, the principal information was obtained either directly from British actuaries and insurance managers or from an examination of the report of a committee of the House of Lords which, in 1906, had conducted an investigation respecting certain aspects of the insurance business. With reference to United States companies operating in Canada, the commission considered, among other data, the report of the New York investigating committee already referred to; the report of a commission which was made to the Governor of Massachusetts in June, 1906, on the recodifying of the insurance laws of that state; the report of "the committee of fifteen"; and the reports of committees investigating the insurance business in the States of Wisconsin and

Report of the Royal Commission on Life Insurance, Ottawa, 1907, p. 1.

Indiana. The information respecting Canadian companies was obtained in various ways. The commission held public hearings in the cities of Ottawa, Toronto, and elsewhere, at which a number of the leading insurance officials were among those who gave testimony. The Canadian Life Officers' Association submitted a carefully prepared memorial embodying its suggestions and recommendations respecting desirable insurance legislation. Of these, some observations will be made in another connection. A circular letter was addressed to the various companies concerned asking for a great amount of data which involved an enormous expenditure of time and labor in the offices of the companies; in some cases returns were demanded covering transactions reaching back over a period of fifteen years. For these and other movements which were styled in some quarters as a "fishing expedition," the commission, for a while at least, was subjected to a volley of adverse criticism and newspaper caricaturing; besides, a certain section of the press lost no opportunity to paint in its inimitable style the largely imaginary short-comings or wrong-doings of the companies as they passed in succession before the public view. As might be expected, some abuses and irregularities were found, chiefly in the investment of funds; many sins which the companies were supposed to have committed were found not to have been committed at all. Moreover, it does not appear that the practice of such irregularities as were unearthed resulted in actual loss to the policyholders; on the contrary, there seems to have been, on the whole, financial profit from which the policyholders stood to gain. This fact is no justification, however, for the unwarranted violations of the trust imposed upon the companies as guardians of the funds of the insured; besides, repetitions of irregular investments might,

See the Report of the Royal Commission on Life Insurance, p. 6.

For the text of this memorial, see The Chronicle, Insurance and Finance, November 16th, 1906.

See The Chronicle, Insurance and Finance, March 8th, 1907; also an address by Honorable George Ross, delivered before the National Association of Life Underwriters, Detroit, September 10th, 1910, published in The Bulletin, Toronto, October 1st, 1910.

and probably would, result in the ultimate disadvantage of the policyholders.

The recommendations of the Royal Commission were embodied in a so-called "draft bill" with accompanying schedules, together totalling seventy-five pages, which was submitted with its report. At this time the public mind was in a state of hostility towards the insurance companies. But in view of the fact that no actual scandals were unearthed, and that such irregularities as were found to exist were not of nearly as serious a nature as those which had been reported by the New York investigating committee in 1906, it was expected that the commission's report would be moderately conservative, and that no sweeping changes in the law would be recommended. Such, however, was not the case. Some of the clauses in the draft bill looked towards much-needed reforms; others were regarded in insurance circles, and justly so, as extremely odious and drastic, especially those sections which followed the New York law almost verbatim. The appearance of the draft bill produced a disturbance of no mean proportions among the high officials of most of the Canadian companies. Among other things, it was claimed that the commissioners had been unduly influenced by the New York investigation; that they should have sought wider actuarial advice than they had availed themselves of; and that the advantages of certain "borrowed" sections of the Armstrong law should be demonstrated by their actual beneficial workings before they should be recommended for adoption in Canada. A full discussion of the various changes recommended would require more space than is available here, although the main points will be considered later in connection with the new insurance law which finally was passed by parliament and which, as already stated, has recently become effective. In the meantime, however, some interesting developments were to take place.

With the report and draft bill of the Royal Commission before it, the not easy task devolved upon the administration of bringing before parliament a suitable measure looking

'See The Chronicle, Banking, Insurance and Finance, May 13th, 1910.