mobile and group insurance, and health and accident, and there is a distinction in that field to my way of thinking.

Chairman MCCONNELL. What type of insurance are we talking about here then? And when you got 172-percent commission, and also some additional on experience rating, values, where you got some additional commissions from that, what type of insurance are we talking about here?

Mr. LIEVER. A casualty company.

Chairman McCONNELL. We are talking about casualty insurance? Mr. LIEVER. Yes, sir.

Chairman MCCONNELL. What does that cover?

Mr. LIEVER. What is that?

Chairman MCCONNELL. What does that cover?

Mr. LIEVER. It covers hospitalization, doctor calls, X-ray and lab, and surgical schedule, and that sort, but operated by a casualty company who does not sell any life insurance.

Chairman MCCONNELL. Now, are you saying that this type of insurance, if handled by a life-insurance company, would have a lower commission attached to it, so far as their agents are concerned?

Mr. LIEVER. I think they would. They would have a graduated scale depending upon if they were admitted in the State of New York, and if they are outside the State of New York chances are they would probably have the same idea as a casualty company. But I am speaking from New York standard rates.

Chairman MCCONNELL. I am still unclear on this whole thing.

Mr. RHODES. We are trying to get the reason why you pay a different commission in a life company which writes the same kind of business as you would in a casualty company. And as I recall the State of New York, you mentioned the State of New York requires that certain maximum commissions be paid on life business; isn't that true? Is that not the reason for this differentiation?

Mr. LIEVER. All insurance companies that operate in the State of New York have to file their commission schedules before they have any permission to allow to sell insurance, but most of them file the regular, what they call the so-called graduated scale commissions. Mr. RHODES. So any life company which does business in New York, more or less has to conform to that standard both on its life business and casualty business?

Mr. LIEVER. That is right.

Chairman McCONNELL. A life-insurance company would pay lower commissions than the casualty company handling the same type of insurance; would that be right?

Mr. LIEVER. I would say yes.

Mr. RHODES. It could be higher or it could be lower, could it not? You have stated that for a small deal, the commission in a casualty company would be high; and for a large deal it would be low. But in a life company, it would have to be uniform, no matter what size of the deal; is that not correct?

Mr. LIEVER. You are getting out of my line a little bit, sir, but I am assuming

Mr. RHODES. We are just trying to make some generalizations. Mr. LIEVER. I would say yes, and generally speaking I would have to answer yes.

moving so fast all over the country that, frankly speaking, I had forgotten that I had a couple of cases in my Pennsylvania office where I shared that commission.

In July of this year, when I caught up to it, because my Pennsylvania office handled it until this year, I thought I would consolidate everything over there. And, as I told you, I am also selling my business because I may be a hundred percent Californian, but I am a sort of Pennsylvanian at heart. I came across it, and I voluntarily came to the office of the American Casualty Co., in Mr. Darrel Smith's office, and I said: "I understand we still have agreements on several of these cases where I share." And I said: "I want them canceled, period, retroactive to January 1, 1954." And that is exactly what I did. Mr. DERRICKSON. Was it at your request?

Mr. LIEVER. I, myself, walked into the office of the American Casualty Co., because I consider at this particular time that I don't want those kind of deals, because the group-insurance business has matured and I don't want to operate that way.

Mr. DERRICKSON. When was that; approximately when?

Mr. LIEVER. Some time around the end of July of 1954; this year. Mr. DERRICKSON. You had forgotten that for the calendar year of 1953 you had gotten an additional check over and above the 172 percent, of two thousand one hundred and eighty-six dollars and some cents?

Mr. LIEVER. I went to the Pennsylvania office and I looked at the statement once every 6 months that the C. P. A. gives me, and that is the only time I even recall how much money they make there.

Mr. DERRICKSON. What are the present arrangements; just the 1712 percent?

Mr. LIEVER. That is correct, sir.

Mr. DERRICKSON. Mr. Liever, over this period of 5 years the total amount of commissions, plus the additional commission, as you call it, which the insurance company reported as an experience rating refund, amounted to $38,202.66. Did you know that over that same period of time that the total amount of claims paid to the people who were to get the benefits of this policy amounted only to $41,157.18? Mr. LIEVER. I assume that the figures that the insurance company have are correct, and I just glanced at them. Now, I didn't finish my statement.

I walked into the American Casualty Co. and I said, "From now on, any experience rating to be in this policy, I want it to be given to the policyholder; that is for the American Casualty Co., and for my end of it," and I canceled that voluntarily all of the way down the line. Mr. DERRICKSON. Did they agree to that?

Mr. LIEVER. They certainly did.

Mr. DERRICKSON. Did they agree to give up their share of this, as well as yours?

Mr. LIEVER. That is correct, sir.

Mr. DERRICKSON. There was no misunderstanding on your part that you weren't only giving up your 50 percent of this saving, but they were to give it up, too?

Mr. LIEVER. I made it pretty clear to them.

Chairman McCONNELL. May I ask a question here? What are the arrangements in other insurance companies for a similar type of busi

ness? Do they have this arrangement of experience rating and so on, additional commissions?

Mr. LIEVER. Mr. Chairman, I think that I can answer that if I may, and I would say for the last 3 years, since I have grown in stature in the business, and all of us have learned this business from its infancy, I wouldn't put a case on the books unless there is a contingent arrangement with the company; or in other words, how much they take which includes my commission, over and above any savings effected from the claims going to the policyholder. That is how I operate.

Chairman McCONNELL. Now, what is the practice in the country? That is what I had asked?

Mr. LIEVER. I am sure that there are a lot of business sold even today by companies who do not operate in a large volume group insurance case, and who are what we call casualty companies, and not life companies, that write life and disability, and this is a casualty company that writes fire and automobile. I am sure that they still, on small cases like that, they still pay agents around 20 percent, on a 30,000 or 35,000 annual payment.

Mr. GRAHAM. Do you have the same arrangement with any of the other insurance companies that you deal with?

Mr. LIEVER. I have canceled everything, and I only had a couple of cases with the American Casualty Co., and that is the only company I have ever had.

Mr. GRAHAM. You said it was more or less of a common practice. You also, as a broker, represent other insurance companies?

Mr. LIEVER. At that time I only did business with the American Casualty Co., and I would say 90 percent, and I was only starting in. Mr. GRAHAM. But this arrangement was in effect up until the middle of this year?

Mr. LIEVER. I have no other arrangements on any other business other than what I have told Mr. Derrickson.

Mr. GRAHAM. You said it was a common practice, though, among other companies?

Mr. LIEVER. I understood at that time, in 1948, it was.

Mr. GRAHAM. With what other companies?

Mr. LIEVER. Well, I understood it was a common practice of insurance companies in the casualty group to handle a small case like that, and to do that kind of business. For instance, I sell fire in

surance.

Mr. GRAHAM. Let us keep to this. You said it was more or less of a general practice. You are a broker, and you sell for all insurance companies?

Mr. LIEVER. I am an agent and a broker.

Mr. GRAHAM. And so what other companies had the same policy that you had knowledge of?

Mr. LIEVER. Well, I assumed that was the practice, and I didn't know, on group insurance I don't particularly know; no. I assumed it was the practice.

Chairman MCCONNELL. Now getting back to my original question. In the practice as far as you knew in the country, it is generally to pay 20-percent commission to brokers; is that correct?

Mr. LIEVER. No; I didn't say that, Mr. Chairman.
Chairman McCONNELL. I thought you said that.

53814-54-pt. 2-2

Mr. LIEVER. I said in 1948, on a small case, where a casualty company handles a small case like thirty or thirty-one thousand dollars annual premium, I am assuming the local agent, that it was general practice for them to get 20-percent commission.

Chairman McCONNELL. What would be the general practice now? That is what I asked.

Mr. LIEVER. It all depends on the size. Now, for example, if I have a case that has a couple of hundred thousand dollars premium and I have a retention with the company of 15 percent, and include my commission and my commission may be standard graded, 3 or 4 or 5-and it all depends on the size of the case. I don't think or I don't have any cases as far as I am concerned that that is a practice, at this particular time.

Chairman McCONNELL. Are you saying that there is no general practice as to commissions in the United States; is that correct?

Mr. LIEVER. I would say that there is no general practice, if you call it that.

Chairman McCONNELL. From your knowledge, what range would there be in commission plans to agents? Would they range from 15 to 20 percent, would you say?

Mr. LIEVER. It all depends on the size of the case, sir.

Chairman McCONNELL. In other words, a small case would be higher, and therefore about 20 percent, you would say?

Mr. LIEVER. Well, in a case of $31,000 annual premium, and coming from a casualty company-and keep in mind a casualty company operates on a different scale of commissions than a life company. A life company operates on a graduated scale, 20 percent, and if you are a general agent you get 23 percent, and down the line, graded. Chairman McCONNELL. If it is large, how low would they go in their commissions?

Mr. LIEVER. I have some cases where I get 2-percent commission. Chairman MCCONNELL. How much?

Mr. LIEVER. Two percent, on an annual premium of about $90,000 or $100,000. But that is on a level basis over a 10-year level instead of getting the first year 20 percent graded, which is standard commission of all life companies. I sometimes take the so-called level basis, 2-percent level over 10 years, or 1.9 percent or 2 percent

even.

Chairman MCCONNELL. Are you speaking of the same type of business as we are talking about here, where you got 172 percent, and are you saying now that there are some that only get 2 percent?

Mr. LIEVER. Well, in a large case, coming from a life-insurance company, and there is a difference between a casualty company and a life-insurance rate, and that is what I don't seem to make myself understood on.

Mr. GRAHAM. Are you being specific, Mr. Liever, that a life-insurance company handling casualty insurance, or a life-insurance company handling life insurance

Mr. LIEVER. Every time I say a life-insurance company I mean a life-insurance company that handles life, and disability and insurance. And they do not handle fire, or automobile, or casualty or anything like that; as against a casualty company who does not have any life insurance, as the American Casualty Co. which has auto

mobile and group insurance, and health and accident, and there is a distinction in that field to my way of thinking.

Chairman McCONNELL. What type of insurance are we talking about here then? And when you got 172-percent commission, and also some additional on experience rating, values, where you got some additional commissions from that, what type of insurance are we talking about here?

Mr. LIEVER. A casualty company.

Chairman MCCONNELL. We are talking about casualty insurance? Mr. LIEVER. Yes, sir.

Chairman MCCONNELL. What does that cover?

Mr. LIEVER. What is that?

Chairman MCCONNELL. What does that cover?

Mr. LIEVER. It covers hospitalization, doctor calls, X-ray and lab, and surgical schedule, and that sort, but operated by a casualty company who does not sell any life insurance.

Chairman MCCONNELL. Now, are you saying that this type of insurance, if handled by a life-insurance company, would have a lower commission attached to it, so far as their agents are concerned?

Mr. LIEVER. I think they would. They would have a graduated scale depending upon if they were admitted in the State of New York, and if they are outside the State of New York chances are they would probably have the same idea as a casualty company. But I am speaking from New York standard rates.

Chairman McCONNELL. I am still unclear on this whole thing. Mr. RHODES. We are trying to get the reason why you pay a different commission in a life company which writes the same kind of business as you would in a casualty company. And as I recall the State of New York, you mentioned the State of New York requires that certain maximum commissions be paid on life business; isn't that true? Is that not the reason for this differentiation?

Mr. LIEVER. All insurance companies that operate in the State of New York have to file their commission schedules before they have any permission to allow to sell insurance, but most of them file the regular, what they call the so-called graduated scale commissions. Mr. RHODES. So any life company which does business in New York, more or less has to conform to that standard both on its life business and casualty business?

Mr. LIEVER. That is right.

Chairman McCONNELL. A life-insurance company would pay lower commissions than the casualty company handling the same type of insurance; would that be right?

Mr. LIEVER. I would say yes.

Mr. RHODES. It could be higher or it could be lower, could it not? You have stated that for a small deal, the commission in a casualty company would be high; and for a large deal it would be low. But in a life company, it would have to be uniform, no matter what size of the deal; is that not correct?

Mr. LIEVER. You are getting out of my line a little bit, sir, but I am assuming

Mr. RHODES. We are just trying to make some generalizations. Mr. LIEVER. I would say yes, and generally speaking I would have to answer yes.