The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1874-07-29
From the Commercial Bulletin.

The last Chicago fire has brought to light how
to organize and run new insurance company,
deceive state commissioners, gull the public
and pocket handsome sum. Six OF eight
adventurers make pool of three or four thou
sand dollars, purchase several acres Of cheap
and waste. land in or adjacent to some prosper
GUS city, stake it off into city lots, then organ
ize an insurance company, issue stock, take
mortgages on these lands for sixty or seventy
thousand dollars, dealing out stock as the quid
pro quo Of the transaction. Afterwards they
have forty or fifty thousand dollars IN ban k,
placed to the account of the company, til g
transfer being understood as a temporary loa n
on interest, not to be drawn against; and so
started, print policies and solicit business at
one-thrd to one half Of the usual board rates
The rush of insurers will soon create hand
some fund from premiums, upon the strength
of which they invite the commissioners from
some easy going state to certify to the correct
ness of printed statement, and then launch
boldly out as an underground insurance com
pany for the whole Union.
The experience of insurers in Chicago who
had ventured to purchase these cheap policies
are sad enough. The poorer suburbs of that
city seem to have been well covered with mort
cages as assests for three OF four Western COM
panies, which now, being put into the market
for sale, will not bring six cents cash on every
five dollars presented.
The Philadelphia shipping list of July 18th,
states that five bogus fire insurance companies
and one life insurance company of that city are
issuing policies which are not worth the paper
they are printed on, all of which companies are
writing on risks in this city and state, though
not having conformed to the state laws, the
business being all on the under ground princi-
pie.
The deputy insurance commissioner of this
state, on his recent tour of inspection of insur-
ance companies, was invited to examine the as
sets OF company anxious to write in Massa-
chusetts, in public way, but he found the
bulk of their mortgages to represent city lots
in the wiIds of the Allegheny Mountains, while
the cash in bank, and the railroad bonds in
their safe. could show no satisfactory method
on the company's books of how these securities
were acquired. The company was not admit
ted.
Applications are daily made to Mr.. Clarke
the insurance commissioner, for information
about companies of which his records and
memoranda can give no account, and with
these inquiries come prostested drafts, that
should have been honored for losses under poll
cles, that the assured was anxious to secure on
account of the great reduction of rates.
There are companies which are not bound by
the board rates which are honestly managed
and safe for small amounts, but the late dis
tresses at Chicago seem to have involved about
eighteen which have at least questionable
method in the assure noes that losses will be
promptly met. Pohcy-holders cannot be too
careful in their selection of companies, as in
case OF loss the failure of even one company to
meetits obligations may prove serious EN-
barraSsment