The questionnaires were sent only to class II policyholders whose policies were written between October 5, 1953, and December 31, 1954.

When the survey is completed, a complete report will be sent to Hon. Albert F. Jordan, superintendent of insurance, Washington, D. C.

ILLINOIS

There were 16,336 dailies examined, 10,940 questionnaires were mailed, and as of May 22, 1957, 990 replies have been received. There have been 135 dailies figured for misclassification and the amount of $1,476.13 has been refunded to these policyholders.

The questionnaires were sent only to class II policyholders whose policies were in force on June 30, 1955.

We are required to maintain a complete statistical record of the survey. Due to the findings of an examination made by the insurance department before our recent survey, refunds of $4,432.35 were returned to 425 policyholders due to misclassification.

TENNESSEE

There were 4,638 dailies examined; 1,829 questionnaires have been mailed as of May 23, 1957. We are in this process now.

Questionnaires are being sent only to class II policyholders whose policies were written from March 1, 1954, through December 31, 1954.

A complete report will be furnished to Hon. Arch E. Northington, commissioner of insurance, Nashville, Tenn.

WISCONSIN

There were 1,459 dailies examined; 141 questionnaires have been mailed as of May 23, 1957. We are in this process now.

Questionnaires are being sent only to class II policyholders whose policies were written from April 1, 1954, through December 31, 1954.

When the survey is completed, a complete report will be furnished to H. T. Wolberg, actuary, Wisconsin Insurance Department, Madison, Wis.

Yours very sincerely,

EMMCO INSURANCE CO.,
By SCOTT W. LUCAS, Attorney.

Mr. Lucas. In addition I would like to offer for the record a document prepared in response to Mr. Busby's request. This document shows the amount of refunds made by Emmco, by States, to June 30, 1958.

I would like to have that marked as "Emmco exhibit 5.”

Emmco exhibit No. 5 follows:)

EMMCO EXHIBIT NO. 5

EMMCO INSURANCE CO., SOUTH BEND, IND.

Report by State, results of misclassification survey through June 30, 1958

Mr. LUCAS. That is the latest, Mr. Chairman, on the refunds that we have.

Finally, Mr. Chairman, I should like to point out that the form devised by the National Automobile Underwriters Association in 1953 was the one that was put into use by all companies. In spite of this fact, Emmco, as early as August 1954, observed that the ÑAUA plan was resulting in some misclassifications. Therefore, Emmco on its own initiative, the first company to do so, devised and put into effect its own form which left room for no assumptions but required the insured to answer "Yes" or "No" to a group of questions so that the fact would affirmatively appear for its classification in the case. That exhibit appears in the brochure.

It was not until some 2 years later that the NAUA adopted a similar form. In the last exhibit offered I should like to point out the great percentage of returns was on insurance written in 1953 and 1954, policies before Emmco devised and put into effect its own form. And I should like to say this in conclusion, Mr. Chairman: a number of statements were made by the chairman and by Mr. Barnard with respect to the industry as a whole, and some pretty hard things were said about the industry with respect to some and perhaps they were O. K. But there are two things I would point out, as I go along. In other words, in the form that we sent out-in the form that the client sent out to the policyholders, one thing it says: "In no event will there be an increase in the premium charge on your policy." In other words, we stated that affirmatively in the application sent out. Another one I just noticed in going along

Senator MONRONEY. We would like to have, if we do not already have it, the inquiry form.

Mr. LUCAS. It is in the brochure. We would be glad to have you examine Mr. Gaunitz or Mr. Omacht on that as you go along. Another one I noticed was no notarization. We never required notarization.

Senator MONRONEY. You only sent out the one form that was used on all, excepting where the States sent out the letters themselves? Mr. GAUNITZ. Several States requested certain types of forms. But that is essentially the form that was used.

That is in substance just like that.

Mr. LUCAS. Mr. Chairman, that completes my short statement. I now turn the witness over to you.

Senator MONRONEY. Each of the companies that have testified, because of the importance of their testimony on specific cases, have given sworn testimony. You have no objection to taking an oath? Mr. GAUNITZ. No, sir.

Senator MONRONEY. Do you solemnly swear that the testimony you will give in this case will be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. GAUNITZ. I do.

TESTIMONY OF W. F. GAUNITZ, PRESIDENT, EMMCO INSURANCE CO., SOUTH BEND, IND., ACCOMPANIED BY GEORGE W. OMACHT, GENERAL COUNSEL, EMMCO INSURANCE CO.

Senator MONRONEY. Mr. Busby?

Mr. BUSBY. Do you have a copy of the brochure there that you have designated exhibit 1?

Mr. GAUNITZ. Yes, sir.

Mr. BUSBY. The first sentence is:

The current private passenger automobile classification

Incidentally, you are Mr. Gaunitz?

Mr. GAUNITZ. Yes, sir.

Mr. BUSBY (reading) :

The current private passenger automobile classification for collision rates was adopted by the insurance departments of the several States at varying times, beginning with Texas in 1953, and continuing through 1954, 1955, and 1956.

Our records of March 1957-and you have that before you-show that classification actually began in 1950 and ran to 1953, and that specifically the first-, second-, and third-class plan in Texas began in 1952. Would you like to comment on this disparity between your opening statement and the record here?

Mr. GAUNITZ. I cannot comment on the disparity with respect to Texas. But the other classifications that you referred to as being applicable to 1950 and subsequent dates was classifications 1 and 2, and they were in very few States, as I recall. That is too far back for me to remember. But there were some States that required classifications 1 and 2, I think prior to this. This is when the classifications 1, 2, and 3 came about, and I am sure that I thought that is the one you were interested in here.

Mr. BUSBY. Of course, the difference became greater later on. It became 35 percent.

Mr. GAUNITZ. I appreciate that.

Mr. BUSBY. It actually was instituted by most States in 1950, was it. not, as the 10-percent differential in costs between these risk categories?

Mr. GAUNITZ. I cannot say most States. I will say that I recall that it was applicable to some States.

Mr. BUSBY. Have you the table before you?

Mr. GAUNITZ. Yes, sir.

(STAFF NOTE. The table is as follows:)

91018-58-pt. 2——5