February 17, 1979, Page 20 The New York Times Archives Savings bank life insurance.
The door has been open for some time for “Liberating Savings Bank Insurance” (editorial Feb. 13), and it is not the “indifference of the State Legislature” that blocks the way. It is, in fact, Savings Bank Life Insurance, which won't relinquish special privilege to walk through that door.
S.B.L,I. is the only life insurer in New York with a specific chapter of our laws devoted to it exclusively and by name. This chapter of our banking law gives S.B.L.I. special privileges as well as restrictions in capitalization, regulation, investments, taxation, disclosure and marketing. Notably, for example, its special organization allows it to reduce dramatically its Federal taxes to about one‐fourth those of a comparable competitor. It escapes a significant share of its New York taxes in the same way.
The legislative purpose for creating S.B.L. I. in 1939 was to provide small low‐cost policies for people of modest means as a competitive alternative to home‐collected debit policies, and the S. B. L. I. law was devised with that spe cial mission in mind. By its own admission, however, S.B.I..I. has not succeeded very well over the years with that mission.
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It is interesting to note that based upon recent dividends actually paid, S.B.L.I. cost to the insured barely makes the top 25 percent among its competitors in New York — hardly “consumer's dream,” when you and I are paying most of its taxes. Not surprisingly, though. the pay of its salaried sales people often depends upon productivity, and they have to meet sales quotas, too. That probably helps to keep expenses in line with competitors who use commission incentive instead of salary incentive.
Taking into account the Consumer Price Index since 1939, about $14,000 would be today's equivalent to appropriate S.B.L.1. limits. The current $30,000 limit is almost twice the average life insurance purchase per U.S. family and more than enough for S. B.L.I.'s special mission by any test.
Bin if S.B.L.I. now in fact wishes to turn from that special mission to enter the life insurance market as a true competitor without special privilege or restriction, it needs only to abandon its special law and reorganize as a life insurance company under New York insurance law. It will not be opposed by the industry if it honestly seeks to play in the same game, under the same rules and referee.
There are fully “liberated” life in?? associated with savings institutions such as, for example, the CUNA Mutual Life. It was organized without benefit of special law by the Credit Union National Association — and without industry opposition. That door is open to S.B.L.I.
Selective tampering with the special S B.L. I. laws, however, will continue to encounter justified opposition by informed people in the industry and the??tature. Liberation, anyone?
Executive Vice President New York State Association of Life Underwriters Albany. Feb. 14, 1979
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