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Regulation of Industrial Insurance

HEARING

BEFORE THE

SUBCOMMITTEE ON INSURANCE AND BANKS OF THE COMMITTEE ON THE DISTRICT OF COLUMBIA

UNITED STATES SENATE

SEVENTY-FIRST CONGRESS

THIRD SESSION

ON

S. 1903

A BILL FOR THE PROTECTION OF HOLDERS
OF INDUSTRIAL INSURANCE POLICIES

IN THE DISTRICT OF COLUMBIA

DECEMBER 19, 1930

Printed for the use of the Committee on the District of Columbia

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COMMITTEE ON THE DISTRICT OF COLUMBIA

ARTHUR CAPPER, Kansas, Chairman

WESLEY L. JONES, Washington.
ARTHUR R. GOULD, Maine.
JOHN J. BLAINE, Wisconsin.

ARTHUR H. VANDENBERG. Michigan.
HAMILTON F. KEAN, New Jersey.
ROBERT D. CAREY, Wyoming.

WILLIAM H. KING, Utah.
CARTER GLASS, Virginia.
ROYAL S. COPELAND, New York.
MILLARD E. TYDINGS, Maryland.
COLE. L. BLEASE, South Carolina

WILLIAM H. SOUDERS, Clerk
JAMES RING, Assistant Clerk

REGULATION OF INDUSTRIAL INSURANCE

FRIDAY, DECEMBER 19, 1930

UNITED STATES SENATE,
SUBCOMMITTEE ON INSURANCE AND BANKS
OF THE COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D. C. The subcommittee met, pursuant to call, at 10.30 o'clock a. m., in the Committee room, Capitol, Senator John J. Blaine, chairman, presiding

Present: Senators Blaine (chairman), Vandenberg, Carey and Blease.

The subcommittee had under consideration S. 1903, which is here printed in full, as follows:

(S. 1903, Seventy-first Congress, first session)

A BILL For the protection of holders of industrial insurance policies in the District of

Columbia

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That policies of industrial insurance hereafter issued in the District of Columbia shall be subject to the following conditions, in addition to any others provided by law not inconsistent therewith:

Sec. 2. If the policy provides in substance that it shall be void or voidable (a) if the insured was not in sound health at the time of issuance of the policy, or (b) if the insured prior to that time had had one or more diseases named in the policy said policy shall nevertheless be valid and binding unless the company proves (a) that at the time of application the applicant knew that the insured was in a seriously impaired condition of health, or (b) that at the time of application the applicant knew that the insured had had one or more of said diseases, and further proves that said seriously impaired condition of health or disease or diseases constituted the direct and proximate cause of the death or other claim made under the policy.

Sec. 3. Testimony shall not be received as to oral statements, or the lack thereof, on the part of the applicant or the insured in the negotiation of the contract of insurance. All statements in connection with said negotiation must be reduced to writing, signed by the applicant, and incorporated in or attached to the policy in order to be admissible as matters of defense; and in the absence of fraud as defined below all such statements shall be deemed representations and not warranties. Fraud must be affirmatively proved in order to avoid the policy, and shall not be presumed from the mere existence of disease unless the nature thereof was such that its existence and seriousness must have been known to the applicant at the time of application, and the misstatement of matters not materially affecting the risk shall not constitute fraud or avoid the policy.

SEC. 4. At the option of the company the policy may be canceled within six months of issuance upon return of all premiums paid, in which case its liability shall be limited to that accruing up to the time of cancellation. For eighteen months after the expiration of said six-month period the company shall be entitled to institute equity proceedings for cancellation of the policy upon the ground of (a) seriously impaired health at time of application, or (b) the existence prior to application of clisease as mentioned in section 2, or (c) substantial misrepresentation in the application or other statements attached to or incorporated in the policy, or (d) fraud as defined in section 3, and if said equity proceedings are successful the liability of the company shall

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