Imagine it is May 9, 1924. Calvin Coolidge is president and J. Edgar Hoover will be appointed to head the Bureau of Investigation the next day. There is a slight recession, it's a presidential election year, and Metropolitan Life Insurance Company, in one of its many public policy ads of the first half of the century, is urging people to vote. Perhaps most relevant to some, however, it has been three years since the New York Insurance Department sent letters to life insurance companies warning them and their employee agents against high pressure methods.
The department has forbade bonuses, prizes, rewards, and all increased or additional commissions or compensation for agents and brokers based upon the volume of any new or renewed business or policies written.
However, cheap items and tokens, like a pin, a ribbon or perhaps even a tin loving cup, are allowed as recognition of merit to keep the agent work force spirits up.
Results have been encouraging since the directive — for a while. Some life insurance companies' behavior apparently slipped to the point where they were misunderstanding, or worse, even ignoring the department's rules.
Not a good idea in New York, then and now.
Silver tea services, briefcases, fountain pens and Eversharp pencils, among other things forbidden as agent prizes may be making a comeback, and that could be a problem, according to New York insurance superintendent at the time, Francis Stoddard Jr., in a letter to all state-authorized life companies.
However, Stoddard suggested — oh so slightly — that he would allow some leniency in light of unnamed conditions and allow for a sliding scale of prize values depending on the scope of the contest, the amount of premiums involved, the frequency of contests, and other factors.
"I am of the opinion that the phrase in [insurance code] § 97 'small intrinsic value' should not be given a narrow interpretation in view of present day conditions," he wrote.
But what New York is most concerned about are new abuses that go beyond the giving of a special pen or a quality umbrella (were there any other kind, then?) to life insurance agents.
This may be a good time — before heading to the NAIC summer meeting in Indianapolis; life industry meetings in New Orleans, California, Fort Lauderdale and Cancun; or to all those far-flung International Association of Insurance Supervisors (IAIS) meetings in Brussels, Basel, Bonn, Gibraltar and Paris — for insurance professionals to take heed.
