The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1885-12-25
EVADING THE STATES LAW.
Insurance Companies that Do Not Com
ply with the Legal Requirements.
The Difficulties Under Which the Authorities
Labor in Their Efforts to Suppress Them
WORTHLESS Insurance Policies


partment of the State Auditors office, yester-
day. by journal reporter, regarding two foreign
accident insurance companies which have been
dong an extensive business in this State it was
found that they had not complied with the In
diana law Surprise was expressed that no steps
had been taken by the State insurance officer
toward prosecuting these companies for doing
business illegally.
I'VE can't do anything replied the insurance
commissioner.
'Whyl'
Because no one will file information against
them, and besides, if they are prosecuted, moth
ing can be accomplished by it. The law is very
loose, and they can easily evade it."
I'm what way!"
IF an agent of company that has not com
piled with the law is prosecuted, he will 60 into
court and swear that, in placing the insurance
in these companies. he was representing the
assured, upon whose orders he was acting, and
the company is not responsible for him. He will
show you that he received orders to place so
much insurance, and the COM
panies not complying with the
law are the ones that offer
the lowest rates, usually, he will show that they
were specially designated in the order received
from the assured. On this testimony, Of course,
no case can be made against the company"
Are there many companies doing business in
the State that have not complied with the law"
II suppose there are fully forty that have
been doing business at different times There
is nothing new in this discovery. We have been
aware all the time that some of these assess
ment companies were operating in the State
illegally, but we are unable to suppress them.
They do not have established agencies. and there
is no way of getting hold OF them. They send
representative into the State, who solieits all the
risks that he can get, and then
cross into Indiana territory. About year ago
man named Pearce came here as the agent of
foreign company that had not complied with
the Indiana law, and canvassed the city, solicit
ing risks at cheap rates We succeeded in get
ting him indicted by the prand jury, but he
skipped for Chicago and never appeared in court
for trial. His bondsman was John c. S. Harri
son, who failed about three weeks after the
rest of Pearce. The offense happens to be one
that does not come under the extradition laws
although it is of criminal nature"
State Auditor Rice was asked for further in
formation regarding the extent of the illegal in
companies are the mutual assessment
frauds" he said, land one thing that prevents
them from complying with the law is the provis
ion of the statute requiring them to furnish an
official certificate showing that Indiana assess
ment companies are allowed equal privileges in
the State where they were organized. Most Of
them cannot do this"
Are there any stock companies doing bust
ness in the State that have not complied with
the law2o
''Yes, there are several. They are all frauds,
and do not comply with the law, simply because
they cannot They haven't the requisite amount
of capital stock, and if they should apply
for admission they would be refused. They
do not establish agencies, and after soliciting
business for three or four months they withdraw
their representatives from the State. They take
risks at low rates, and consequently can get
business easily, because people are always ready
to be swinded on the cheap plan. The agents
cannot be punished, because, if you succeed in
getting them prosecuted, you can't get informa-
ton to make case against them. When we did
get one of them Indicted in this city about year
ago, howl was raised against for trying to
prevent the people from getting cheap insur
anee."
rs company doing business in the State
without complying with tho law legally liable for
the payment of its policies!"
cali such insurance is wholly worthless The
companies cannot be sued in the Indiana courts
They are not legally incorporated, because they
have not complied with the law. They never
pay heavy losses, and nothing can be collected
from them on their obligations. because they are
not responsible. They pay small policies, usually
as an advertisement to draw other patrons-not
because they have to- 1t is easier for a sub
stantial and reliable company to comply with
the law than to evade it. The law Is for their
protection"
The fact, however, that an insurance COM
pany has complied With the State law is not
very reliable evidence of its trustworthiness.
it is little more than proof that the
company has q capital stock of $780,
COO The mere compliance with the law
gives the policy holders security against loss.
The fraudulent assessment companies have used
the certificates of the State officers as in dorse
ments, and have deceived many people with
them. Inquiries so frequently received from
persons who have been made to believe that
these certificates are official Endorsements that
the State Auditor has prepared the following
printed form as reply:
Replying to yours of -, the company or
association referred to has complied with the act
of the General Assembly of this State approved
March g. 1883, but as said act does not require
any deposit of money securities, none is
made. The only bond required is given by the
treasurer of the - -, to be approved by the
board of directors thereof, and cannot be CON
sidered any security to policy certihcate-hold-
ers or their benehcaries. Very respectfully,
MANY people suppose" said the Auditor of
= State. that the bond that the law requires to
be filed in this Office is for the security of policy
holders, but it is only for the protection of the
directors against loss by the Treasurer. It's re-
markable how many people think that the Audit
ors certificate. which is given to the company
when it complies with the laws is an indorse-
ment They cannot understand why it should
De issued to fraudulent company. They do
not know that company can comply with the
INDIANA laws and still be a fraud.'
Presentation to- superintendent Lang.
a pleasant episode occurred in police circles
last night Superintendent Lang had been
cleyerly managed in securing his nrasapca az tb a