INSURANCE BUREAU.
On motion of Mr. ZENOR, (the restrictions being suspended for the purpose,) Mr. Barnaby's Insurance Regulation bill, [H. R. 163,] and Mr. Browning's Court bill, were taken up for final consideration.
Mr. WILSON stating that the former bill is for the establishment of an Insurance Bureau for the protection of the people in regard to insurance. Between seven and ten millions of dollars go out of the State annually for the payment of premiums; and we have no insurance law. This bill seeks to keep at home this capital. It would save to the people perhaps $200,000 annually Besides paying the officers of the bureau it would leave perhaps as much as $125,000 in the treasury every year, more than sufficient to pay the expenses of a regular session of the General Assembly.
The bill [H. R. 163] was read through by sections.
Mr. CALKINS, of Fulton, stated the importance of the bill. He was in favor of page: 275[View Page 275] legitimate insurance business, and opposed to wildcating in any shape. But this bill was too long, and showed the doors it opens to fraud. We ought not to pass it hastily. It is so long that it requires more than ordinary consideration.
Mr. KENNEDY also said it was too long. The insurance humbug was great, and should be regulated. The bill should be printed.
The SPEAKER. If there is no amendment, this will be the third reading.
Mr. WILSON said the bill had been before the committee, and it was reported on favorably.
The bill provides all the restrictions and safeguards for the protection of policy holders, and the same thorough investigations and careful supervision that is required by the laws of New York, Massachusetts and Connecticut. It will prevent the starting of bogus or unsound companies in our State, as well as prevent such institutions from sending their agents here to do business. It will encourage the building up of sound companies at home by honest men, and by so doing will not only save a vast drainage of money from the State, but will draw largely from other sections of the country money that is now going East to get reliable insurance.
The bill further provides that every company, before it is permitted to do business in the State, shall file with the Secretary of State a copy of their charter, which the Secretary is required to record in a suitable book kept for such purpose, for which each company shall pay a fee of twenty-five dollars; all other States that have any laws upon the subject of insurance require the same, and the fees allowed therefor range from $30 to $50.
The bill further provides that the State Treasurer shall, in his official capacity, recieve the deposits for the security of policy holders required by the act, and also collect the taxes imposed upon the companies of other States doing business in this State, keeping thereof a seperate account designated "the insurance fund" for which services the bill allows a salary of $900 per annum. All States having any laws upon the subject require the same services, and inmost cases allow a greater compensation.
The Auditor of State issues all certificates of authority to transact business in the State, but only upon a certificate from the Insurance Commissioner certifying that he has made the required examinations and finds the company in a sound and solvent condition,and that all the laws applicable to such company has been fully complied with. For each certificate of authority issued the Auditor is allowed a fee of $5, which is less than the fee allowed for like services in most other States, and is not as much as the fees now allowed the Auditor in this State.
The bill provides that the Auditor of State shall appoint a suitable person to act as "Insurance Commissioner," who shall give bond in the sum of $20,000 for the faithful performance of his duty. He is required to examine all companies desiring to do business in this State, and by applying all the known tests, determines that companies are perfectly sound and able to meet their engagements, before they can get authority to transact business in the State. He is allowed a salary of $3,000 per annum and some fees for examinations and seal of office that may amount to $1,000 or $1,500 more. The State of New York allows the Insurance Commissioner $5,000 dollars and additional fees. Massachusetts allows the Commission $5,000 per annum, Connecticut allows $5,000 and additional fees, Missouri $5,000 and additional fees, Kentucky $4,000 and additional fees, California $6,000 in gold. These are all the States that have as yet created the office of Insurance Commissioner, and the compensation allowed in every case is greater than the amount allowed by this bill.
The bill provides that "the State shall not be responsible for the establishment or future maintenance of the Insurance Department, or for any services required in the execution of this act, but the same shall be paid by the fees and taxes assessed upon companies doing business in this State, and after such necessary expenses as provided by the bill have been paid, the balance remaining shall be placed in the general treasury with the other revenues of the State."
The bill requires the payment of the following fees and taxes, viz:
| For Recording Charter or deed of settlement, in Secretaries office........................ | $25 00 |
| For Annual Reports of condition, valuations, &c....................................... | 30 00 |
| For Certificates of Authority or License to Agents........................................ | 5 00 |
For all companies organized out of the State, a tax of two per cent. on net premiums receivee in this State.
The above fees and taxes are less than are reqaired by most other States that have legislated upon the subject, and yet it is believed to be sufficient to defray all the expense of carefull and thorough examination of companies and a rigid enforcement of the law, and leave a balance to the peoples' credit in the Treasury of from forty to fifty thousand dollars per annum. The aim is not to prohibit good companies from coming here to do business, but to subject them to wholesome restrictions and supervision, and to equitable taxation.
Mr. ST. JOHN inquired in relation to the security. He understood that this requirement of the bill, as to the security, applies to all insurance companies, whether doing business in this State or elsewhere.
Mr. WILSON. Yes.
Mr. ST. JOHN. In what does it consist, and where filed?
Mr. WILSON. It is to be filed with the Secretary of State, and is just such security as that required of any corporation. After rehearsing its several provisions, he insisted upon the passage of the bill, from various consideration, in addition to the statement given before, and of premiums annually paid to companies doing business out of the State, etc., as compared with the amount of page: 276[View Page 276] losses which have been paid to citizens of the State.
Mr. McDONALD considered that the bill had been prepared with sufficient care, and would prefer the previous question, but objection to being made; he proceeded to insist upon its passage from the consideration that it is entirely safe and desirable for the protection of the people of the State.
Mr. KNIGHT. Is two per cent. of the net premiums to be taxed on all foreign companies, and does it not, at last, take that out of the pockets of the people of the State?
Mr. McDONALD. In part, indirectly; but now they take it all from us. It is not expected that they will change their rates. More than that, we will make these companies responsible; we will have these companies on an acknowledged sound basis.
Mr. WASHBURN. What is the amount required to be deposited to do business?
Mr. McDONALD One hundred thousand dollars--in United States bonds, State stocks--something that has a bottom.
Mr. WASHBURN would not vote for a bill that has not such a provision.
Mr. ST. JOHN. Every man knows that this principle and these premium notes to mutual companies have been utter failures.
Mr. WILSON said the notes were to be secured by mortgage.
Mr. ST. JOHN. The history of all mutual companies show them to have been swindling concerns; and these organizations he insisted, have been made upon the same principle for security as proposed in this bill.
Mr. WILSON. The object of the bill is to protect the people against such concerns.
Mr. ST. JOHN stated that he felt the same objection to the bill that lies against all mutual companies. They take these premium notes as a matter of form--but who does not know that they come for the payment of every one of them? Where do the securities of the company come from, if not from these votes?
Mr. SIMPSON, with others, said he had not been present with the committee when this bill was considered.
Mr. WILSON. The notice of the meeting was given.
Mr. SIMPSON could not vote for the bill if it were now rushed through under the previous question.
Mr. WILLIAMS moved to print, and make the bill the special order for Friday.
Mr. BARNABY said the bill is a literal copy from the Insurance law of Massachusetts, which is said to be the best in the country.
Mr. WILSON preferred Wednesday at 2 o'clock.
Mr. ST. JOHN proposed to amend bywords to this effect: "So that such notes as are deposited, and any part of the capital stock of any such company shall be secured by mortgage on real estate; and such notes shall not be taken out of deposit unless others equally well secured be deposited in their stead."
Mr. BARNABY proposed Thursday, 2 o'clock.
Mr. WILLIAMS accepted, and so by unanimous consent the bill was ordered to be printed, and made the special order for Thursday, 2 o'clock.
Mr. BROWNING asked and obtained leave to withdraw his court bill indicated in Mr. Zenor's motion to suspend the restrictions.
