The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1867-02-03
The Insurance Company Excitemcnt.

The Insurance Company Excitement.
The excitement in financial circles for the
past two days has been furnished by the insu-
rance companies, which have contrived to
monopolize the mind Of Wall street, and to
temporarily cast railroad squsbbles and Secre-
tary McCulloch's currency eccentrioities into
the shade. The immediate cause Of the agita-
ton was the announcement that the Sun Mu-
tual, marine company, had been compelled
to retire all its outstanding scrip in order to
make good it's Losses. The SCRIP holders, in
dignant at seeing their property thus swept
away ata stroke Of the pen, called . meeting
yesterday and resolved to submit the matter to
the Superintendent Of the Insurance Bureau,
with the object Of forcing the company into
liquidation, and statements were made which
reflected seriously upon the course pursued by
the directors. This particular case will no
doubt be subjected to very thorough investi-
CATION; and in the meantime it is well for the
public to keep themselves cool and to look
calmly but searohingly around and see
whether the insurance system generally Is
secure or insecure.
The case Of the Sun Mutual has two Sides
The scrip ofthis company has been sold at very
heavy discount, In some instances as low as
fifteen and twenty per cent Many Of the pre-
sent holders Of the scrip are therefore not the
original representatives Of this portion Of the
capital Of the company, but spectators, who
have purchased the certificates Of profit for .
mere song. The right of these mutual compa-
mics to cancel their scrip when their losses rem
der 1t necessary Is Of course unquestioned.
There are some features of our present in
surance system which are open to serious OBJ
brokerage and agency system, which
now prevails to q great extent In
order to secure business SEINE compa-
MES will pay ten and fifteen per cent
commission to brokers and agents. an amount
in itself sufficient to yield fair dividend.
The fire insurance companies hire agents in
every part Of the country, and these agents,
in order to secure their commissions, will
take risks on any building not actually on
FIRE, even If it should have a gunpowder
mandatory on one side, q turpentine store
on the other, and o cellar filed with pctro-
leum underneath. Heavy losses thus fall on
the companies through the unfaithiulness of
their agents, while persons who insure through
brokers not unfrequently find themselves in
irresponsible companies, which OF course can
afford to pay the highest commissions to Sc
cure business that would not come TO them
In any other way. The only safeguard for
insurers is to insure only in companies that
IN ha nd tatIx, 10
eschew all those that are in the habit of pay
ing heavy commissions TO brokers and agents.
Another evil with all companies, marine,
fire and life, Is the desire to swell their divi-
dend and to redeem annually large amounts Of
their certificates of profits, in order to make
Hattering exhibit and increase their business.
Thus they go on swimmingly in seasons Of
profit, but as soon rs heavy losses are sus-
tanned they have no reserve capital 10 fall
back upon and become bankrupt. A prudent
company will always reserve a sufficient avail
able capital In scrip to enable II to meet any
probable run of i'll luck without difficulty.
This will be good time to look thoroughly
any legislative action Is needed for the better
security Of the public. The superintendent OF
the Insurance Bureau should make it his BUSH
ness to report upon the subject forthwith.
Many persons believe that the capital Of all
insurance companies, like that Of banks,
should be paid up However this may be, the
laws in relation to insurance should be thor
oughly overhauled, and ifany further safeguards
are needed for the protection Of the insurer they
should be supplied. In the meantime there
seems to be but little necessity for any panic
among policy holders The experience among
old insurance men is that In the marine busi-
ness season Of loss comes periodically
In about every ten or twelve years-and last
year appears TO have been one Of these unpro-
pitious seasons. AT present no persons seem
to have suffered but those who have, during
prosperous years, pooketed their profits from
mutual companies and now, in season Of mis-
fortune arc called upon To bear their share OF