As far as insurance is concerned, there is less difference between regular and co-operative companies than is generally supposed. Regular companies assess each policy in advance for a year's insurance at a time, while co-operative societies furnish insurance only from one assessment to another. The difficulty in the way of collecting the assessment in the latter case would seem to be greater than in the former, owing to the more permanent nature of the regular insurance contract.

In compensating agents the assessment companies naturally pay in proportion to the insurance obtained, inasmuch as there is no other basis to go upon, but regular companies usually pay the agent a percentage of the premium which includes a considerable trust fund over and above the assessment for actual insurance. It is easily seen that by the last method the agent's compensation increases in proportion to the amount of savings bank business forced upon the company.

To realize how far we are from anything like a scientific, not to say common sense basis for insurance expenses, we have but to examine the following list, which gives the ratios between the expenditures for general expenses in 1889, and those for the extension of the business. For every $100 used in a general way, the different companies spend for commissions and agency expenses: $37, $66, $67, $78, $91, $106, $110, $113, $120, $140, $157, $161, $173, $175, $186, $189, $200, $202, $222, $264, $311, $346.

It will doubtless be said that I am taking a very advanced position when I say that in the ideal life insurance scheme there is no place for the commission system. Solicitors will be a necessity only so long as they are in the field, but fifty years of life insurance has taught our community its true value and, thanks to the modern press, the institution it is no more likely to fall into desuetude than is Christianity or the moral law.

For the convenience of bringing the company to the individual, the latter should be willing to pay a fee. The man who renders another a service or puts his superior knowledge at another's disposal should look to the party benefited for his remuneration. Any compensation given for such service to a go-between by a mutual company is paid by all, and the question arises, Is the advantage to the company of sufficient importance to warrant the imposition of this tax upon all its members promiscuously? The following, from the Massachusetts Insurance Commissioner's Report for 1885, leaves no doubt as to the convictions of the writer on this important matter:

"The expensiveness of the life insurance policy is not because the level net premium is too high, for the premium is absolutely just, and the policy holder gets full value; but the complaint justly applies to the excessive expense charge. A person who wants insurance, life or fire or other, should be able to buy it at first cost without paying tribute of profits to middlemen. To that complexion the matter will finally be brought by the force of intelligent opinion, whatever resistance may be opposed by persons whose thrift lies in the perpetuation of the expensive system now in fashion."

It requires but a slight degree of prophetic vision to predict that in a very few years the companies in self defense will be obliged to change their method of compensating agents.

Several companies have already begun the reform by grading commissions; granting a percentage proportional to the amount of insurance likely to be done on the policy. Other companies have simply reduced the amount of the commission rate, thus virtually withdrawing from active competition.

This will, in a certain degree, explain the wide variation in the figures given above, where it is noticed that, in five companies out of twenty-two, the total agency expenditures amount to less than the general expenses, while in six cases the companies spend more than double as much on the former as on the latter. In either class we find representatives of the five largest companies in the country.

On applying the foregoing ratios to the business of the existing companies we find that, calling the theoretical expenses $100, the actual expenditures for 1889 were as follows: $112.67, $118.34, $150.40, $194.48, $208.16, $208.53, $228.66, $235.89, $248.44, $250.79, $258.33, $258.57, $265.14, $267.19, $267.92, $274.47, $294.17, $314.96, $335.70, $377.94, $616.70.

In this discouraging exhibit there is one ray of comfort. The combined assets of the two companies heading the list amount to over $100,000,000. There is no question as to their financial standing, and both show a large increase in membership over the previous year. I may also say here that it is a difficult matter to get at the actual "cost of insurance" in the various companies. Many of them, on their own acknowledgment, do not compute the advance cost of carrying their "amount at risk," and others, for reasons of their own, do not care to state the figures. In cases where the correct figures were not obtainable, I have assumed the cost to have been 1-1/3 per cent. of the mean amount at risk.

If we should, in our comparison, omit the actual agency expenses and commissions, the ratios would stand as follows:

Where I would allow $100 the companies actually used: $43.17, $55.90, $65.21, $77.21, $82.39, $88.34, $91.99. $91.98. $92.19, $94.65, $97.15. $99.55. $99.11. $102.86, $109.35, $125.05, $133.03, $141.92, $195.90, $207.06, $287.72.

As might be supposed, the first two ratios are those companies before alluded to. These companies might have doubled their advertising account and expended $300,000 between them on agents' salaries, and still have kept within my allowance.

Admitting, for the present at least, the reasonableness of the proposed allowance for the expenses of the banking and insurance departments of the business, we have before us the problem how to equitably adjust the burden among the great variety of policies.