Repository: UIHistories Project: Board of Trustees Minutes - 1944 [PAGE 33]

EXTRACTED TEXT FROM PAGE:

3> <

BOARD OF TRUSTEES

[July 25

panies has been so long engaged in the business of insurance, it may well be that they can determine with sufficient certainty, for all practical purposes, the just difference in the rates of premium between cash and note. These mutual companies, possessing the authority contained in the eighth section of this charter, namely, to take cash premiums or premium notes, are, at the present day (1858) in operation in several of the states, and it has never been supposed that the mutual principle has been thereby abrogated." In the absence of a clear and explicit provision in the policy denning the assessment liability none can be imposed. Union Insurance Co. v. Hoge, 21 H o w a r d (62 U.S.) 35; Mygatt v. N. Y. Protection Ins. Co., 21 N.Y. 52; State ex rel. Atty. Gen. v. Manufacturers' Mutual Fire Ins. Co., 91 Mo. 311; Spruance v. Farmers' and Merchants' Ins. Co., 9 Colo. 73; Given v. Rettew, 162 Pa. 638. Nor can an amendment to the by-laws of the company change this liability in the absence of a specific provision in the policy of insurance. Covant Mutual Life Association of Illinois v. Kentner, 188 111. 431. I n conclusion I would suggest that prior to purchasing nonassessable policies of insurance that a careful check of the insurance company should be made by the board of trustees to ascertain whether such company has complied with all the requirements as to surplus, deposits, filing of documents, approval by the Director and certificate of authority. Further, the policy itself should be carefully examined as to its terms with reference to nonassessability and power to change the by-laws. Subject to suitable provisions in the contract of insurance with reference to nonassessability and by-laws, I am of the opinion that the University of Illinois may purchase nonassessable policies of insurance in a mutual insurance company. Very truly yours,

GEORGE F . BARRETT

Attorney

General

R E I N S U R A N C E O F MUTUAL B E N E F I T HOSPITAL F U N D (29) T h e Advisory Board of the Mutual Benefit Hospital Fund requests authorization to enter into a contract with the Occidental Life Insurance Company of California to reinsure the Fund for 1942-1943 under the following terms, it being understood that authorization by the Board is conditional upon the ability of the Advisory Board to complete satisfactory arrangements of all details of operation of the reinsurance plan: 1. T h e premium will be $5-5° a semester and $4.00 for the summer term, a total of $15.00 a year. 2. Students, faculty, and employees of the University, and their wives or husbands will be eligible for membership. 3. Only the extra-benefit plan will be offered next year, and the three-dollar plan is to be discontinued. 4. T h e benefits under the terms of the proposal will be substantially the same as provided under the present extra-benefit plan; i.e., three dollars a day for hospital care up to twenty-eight days in any one semester plus a payment for physicians' services at the rate of $3.00 a day for two-thirds the number of days the patient is in the hospital. T h e only difference is that the company will allow only $2.50 a semester for laboratory and medical expenses, whereas the present plan allows $5.00 a semester for these items. 5. T h e University will retain twenty-five cents a membership a semester to cover the cost of administering the program. Based on past experience, the amount will be sufficient for the purpose. Although the Hospital Fund has maintained an extraordinarily good record over a period of years, there are several reasons for wishing to reinsure the Fund with a private carrier at this time, viz.: 1. Apparently, the University has no legal authority to be in the insurance business; and although this question has never been raised by the State Insurance Department, there is no reason to believe it will not be raised in the future. 2. W i t h the anticipated decline in enrollment next year and the inevitable decline of membership sales, the risk of loss becomes somewhat greater. This risk can be avoided by transferring it to a private carrier.