The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1874-02-20
The Insurance Tax.

The following remarks We're made by Prem
tiss Lorng Loring, Esq, of this city, before the
Committee on Ways and Means, Wednesday at
the hearing on the bill proposals tax on in
surance premiums:
Mr.. Loring said he should confine himself to
that part of the proposition which relates to fire
insurance, with which he was mora particular
ly familiar.
The tine and investigation given by the Tax
Commissioner to the general work allotted
him, seem altogether insufficient for the wise
Inauguration of scheme SO radically chang
ing the system of taxation in this State, and
for the proper and just balancing of the great
increase involved. Mr.. Paine, however, it
must be conceded, by reason of his experience
while Insurance Commissioner has famliari-
ty with insurance matters which entities his
Official communications to consideration. The
question of taxing premium receipts of insur-
ance companies has been before our Legislature
twice within five years, and also, he believed,
in 1860, and each time was promptly and with
general consent declared to be inexpedent. The
results of the last two efforts were SO conclusive
that Mr.. Paine, then Insurance Commissioner.
in his report for 1871 says: "The distinct ex-
preston of the last two sessions not to tax for
eign companies doing business here has been
regarded as decisive of that question, aud also
as indicating that the system was not estab-
shed for purposes of revenue, but rather as q
protection of the people,"
Those who are familiar with the thorough
and candid manner in which in these two years
the claims and arguments on both sides were
pressed, and the marked unanimity with
which the Legislature, the citizens of
the State and the press sustained the
conclusions then arrived at by the COM
mittee having the matter in hand, are
led to inquire why this proposition is again
urged, especially by one who not long since, as
Insurance Commissioner, stated that the action
of two previous Legislatures ''has been regard
ed as decisive of the quest
I,sr h.,s, - 60 ~.
been such change in the conditions of the fire
insurance business in this State as to warrant
a reversal of that decision. IT not the argu-
ments and reasons which had weight then
have equal valne now, and should lead to like
conclusions. 1t is worthy of noti,e that not
single petition from the tax payers or in
surers of the State is presented in favor of
this measure, and we may fairly presume that
it is not demanded or desired by those whose
interests are involved and whose practical ac-
ton in the premises should be more potent
than any theory.
The taxing of gross premiums Of fire insur-
ance companies is wrong III principle and un-
just in its results; for it virtually levies tax
on the very large proportion of the receipts
which are returned to the citizens of the State
in loss claims. This would be more rigid
exaction than that demanded by the Internal
Revenue requirements in relation to incomes
OF individuals and corporations-now happily
among the things that were. 1t cannot be de.
feuded on the basis of justice or equity. No
argument or sound reasoning can ever lead
to the result that money paid for losses in
State is proper or just subject for taxation;
and the day is not far distant when States now
holding that system of taxation, will substi
tute for it another more righteous and equita
BILE. If insurance companies are to be taxed
for the privilege Of doing business in State,
it should be only when it has been demon
strated to be privilege, and the value of that
privilege can be determined by the results of
the business, not for one year, or two, but for
term. Now, what is true as to the State OF
Maine? What are the conditions here? What
is the value of the privilege here?
First, Maine has to-day only one stock in
snrance company land that fire and marinel
taking fire risks. Every stock fire insurance
company ever organized in Maine has failed
1t is almost an absolute impossibiity to secure
the investment of dollar in the business of
hre insurance IN this State. This is most
practical determination of the value of this
field by our own citizens.
Our former Insurance Commissioner with
laudabe desire to magnify his Office taking
the statistics of two, three or five years, has
persistently claimed that "Maine is profitable
field for fire insurance." while the companies
which have been doing business here for ten,
twenty, fifty and even sixty years, as persist
emily claim that the opposite is true, and fur
nish official statistics to prove it. Now, to
which testimony is the greatest weight TO be
given? In Mr. Paine's official statements as
to what fire insurance companies shave carried |
Ouo VI chC Neu1C, uC hcCcSSdrily mas COQuDoQ |
his statistics to very limited period, and he
avoids mentioning the expenses incident to the
business and materially changing its results,
often giving absolute loss instead of apparent
profit. In his remarks yesterday he said that
sit is no use to argue, Name is a-proftable
field, but once in awhile a company catches
it,"
To show that Maine is not profitable field
for insurance, Mr.. Loring gave a list of ten
companies, well known throughout the State,
aud transacting very large proportion of the
fire insurance In Maine, that have been doing
business here from three to sixty years, making
an average of 20a years, the losses and expen-
ses of which exceed the premiums received by
$42O, 928.58 These figures he considered form
ed solid and conclusive argument why no tax
should be levied for privilege of such doubt
full value. Mr.. Loring continued at length, oc-
cupying nearly an hour in the discussion of the
question, during which he also gave brief
sketch Of the history of fire insurance business
throughout the country, showing that the pop
ular notions as to its great proftableness are al
together incorrect For several years previous
10 1870 the average annual losses in the United
States were $33.000,00O, while since that time
they have been about $10O, OOO, 900 annually, en-
clusiue of the Chicago and Boston fires. For
considerable period since those great fires losses
nave averaged between 100000 aud $500, 900
per day in this country which rendered an adj
vance in rates absolutely necessary to save the
Companies from ruin. Their destruction would
have proved disaster to our commercial COM
munities aud interests far outweighing all Or
binary considerations