Ernest J Moorhead (Jack) - EJM

  • There is bound to be a controversial element in anything that enlightens the public to these differences and gives them a more intelligent basis for choice than they have at the present time.

-- Ernest J. Moorhead

1977 - SOA - Debate Resolved: The Life Insurance Business as Transacted Today is in its Terminal States, Society of Actuaries - 14p

  • Mr. Garner: Jack, you are the historian here.
    • You may want to comment on when the three factor dividend formula came in to dividend practice but my guess is it sure was not there in the first five years of participating business and that had some group such as ourselves set down the acceptable methods at that point, then we may never have seen the three factor dividend formula.
  • Ernest J Moorhead (Jack) - EJM: I believe that the history of this is of more than just trivial interest.

1984 - SOA - Dividend Philosophy, Society of Actuaries - 14p

  • We must understand that we no longer have any reasonable basis for making any assumptions whatever about the range within which interest rates will fluctuate.
    • Financing the squeeze by issuing commercial paper is just about the most dangerous thing a life company can do.

--  Ernest J. Moorhead (Jack) - EJM

1981 01 - SOA - Financial Hazards of the Cash Value Life Insurance Business, by EJM The Actuary, Society of Actuaries - 2p

  • 3 E. J. Moorhead, "The Hart Hearings in Perspective," Best's Review, January, 1974, p. 16: - <WishList>
    • "First is the massive ignorance of policyholders about their life insurance.
    • It is hard to believe that people know as little about their life insurance property as the surveys show."
  • 4 Ibid.. p. 70. Mr. Moorhead points to five probable thrusts of the Hart hearings:
    • (1) price and quality of our products,
    • (2) freedom of the agent,
    • (3) sales practices,
    • (4) sales interference, and
    • (5) efficiency of state regulation.

1974 - SOA - Consumerism and the Compensation of the Life Insurance Agent, Anna Maria Rappaport - 68p

  • (7) Ernest J. Moorhead, retired actuary and life insurance cost comparison expert. p3

1978 12 - GOV (House Report) - Life Insurance Marketing and Cost Disclosure Report Together with Dissenting Views,  Congressman Moss - [PDF-106p]

  • 1983 06 - SOA - Editorial - The Actuary - The New South Life Case, EJM (Ernest J Moorhead (Jack)), Society of Actuaries - 2p
    • The New South Life happens to be one of the (mercifully) few life companies in which a major deficit has been directly linked to miscalculation of policy reserves.
      • Two sources from ‘which the underlying facts are readily obtainable are:
        1. “New South Life: A Case Study”, by James L A&earn, in the April 1973 issue (Vol. XIX, No. 5) of Business and Economic Review; published by the Bureau of Business and Economic Research, University of South Carolina;
        2. “Report of the American Academy of Actuaries Committee Regarding The New South Life Insurance Company”, a manuscript dated August 30, 1973.
      • Until recently, the second of these,two documents was kept confidential for reasons associated with the life company’s rehabilitation.
      • We are pleased to learn that secrecy about it is no longer necessary; now the excellent work done ten years ago by an actuarial trio, Messrs. John M. Bragg, Delos H. Christian, and AIlan F. Lebourveau (who died in 1982), can and should belatedly receive our profession’s recognition.

E. J. Moorhead: A recent development in cost disclosure requirements is the Wisconsin Supreme Court decision prohibiting, by a 5-to-2 margin, the Insurance Commissioner from enforcing a proposed simplified preliminary disclosure arrangement.

I believe this case brings up the following five matters important to actuaries:

  • 1. Commissioner Mitchell is a type of regulator who, regardless of the merits of her argument in this particular case, actuaries should be glad to have in Commissioner ranks.
  • 2. It is often said that one of the advantages of state over Federal regulation is the opportunity afforded by the former to experiment on a relatively small scale with rules that may or may not prove to  be effective.
  • 3. The Wisconsin Commissioner has been prevented from experimenting with a cost disclosure plan that, by exhibiting at the outset the surrender cost index only-omitting the net payment index and the equivalent level annual dividend, might have assisted buyers in making wise choices among competing products.
  • 4. The majority opinion of the Wisconsin Supreme Court contains statements that I believe do not stand up to close examination by knowledgeable actuaries whose own products are not at stake.
  • 5. The victory of the companies and agents who took the Commissioner to court will turn cut to be of the Pyrrhic variety, and one which eventually will be regretted even by the parties who achieved it.

Having said that the majority opinion will not stand up to critical analysis by actuaries I will mention just three points without suggesting that these are the only points.

  • The first point is that if in a particular comparison the surrender cost index and the net payment index point in different directions I think the Supreme Court is clearly mistaken in indicating that buyers who rely on the surrender cost index would be seriously misled.
    • My emphasis is on the word seriously.
    • I think it can certainly be demonstrated that small differences will develop in some of the cases.
    • Obviously, if the surrender cost index and the net payment index point in the same direction the matter is moot because regardless of which is used the same conclusion would be reached.
  • The second point is the drawbacks to giving people, who really do not understand life insurance, a large array of figures to struggle with.
  • But the third, and I think the most serious flaw in the Supreme Court's argument, is that a well advised buyer purchases a life insurance policy with the intention of keeping it in force until death occurs.

-- E. J. Moorhead

1981 - SOA - Individual Life Insurance Cost Disclosure Issues, Society of Actuaries - 22p