The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1889-01-07

Insurance Legislation Needed


To the Editor of the Indianapolis Journal
When the Legislature cOnvenes. no time
should be lost in passing carefully
guarded act in relation to the formation
and management of mutual fire insurance
companies. Our State is used as a dump
ing ground for sharpers and shysters of
other States to organize companies that
have no substantial foundation. Within
the last few months three of these mutual
companies have been organized in northern
Indiana--one at Michigan City, one at
South Bend and one at Elkhart. The or
ganizer is understood to be a man who is
reported to have been connected with some
Dakota companies ''Of sweet-Smelling
famen He reports himself IAN expert in
organizing insurance companies" He gets
81 600 for organizing each company, so the
president OF bank informed the writer TO,
day. The companies thus far organized
have no such connections or surroundings
as entitle them to credit or character. They
exist to do an underground business" III
violation of the laws of the several states.
The one at Michigan City has policies from
Michigan TO Alabama. 1t does not claim to
comply with the laws of the State where
the policies are sent. The business Is done
through insurance-brokers.
Section 3749, r. S. 1884, provides how mu-
and is as follows:
When applications for insurance in which
there shall be taken not less than $4,000 In
bona fide premium notes by any such company,
and proof of the same Is furnished 10 the AUDITOR
of the State by the books containing the same
verified by the secretary of the company, ex-
amined and approved by him, by evidence OF ms
certificate, such company may issue policies
Now. this law is defective in not requir-
ing the locality of the notes and property.
The law should require some LOCALITY,
and that should be in the State.
The companies before referred to, venture
to say, have no premium notes gwen Dy IN
diana property-OwnerS.
This expert organizer gets a company in
full operation in forty or sixty days. How
does he get his hottest ALI practical lnsur-
ance men know that it is a great undertake
ing TO get $50 600 In bona hide premium notes
1t takes many months of hard, persistent
work, and failure more often results than
success This expert has recently organ
lied three, and made Auditor Carr believe
that he had S150,0OO, in three companies, OF
bona fide notes. A pertinent question is,
where did he get themi Not in Indiana?
The matter needs thorough investigation,
and the Auditor should act with courage
and promptitude, If he possesses the power
The company at Michigan City does no
mutual business. 1t takes all cash premiums,
and the insured valves his rights to partlc-
ipate in the mutual department. The law
making power should at once confer upon
some executive officer full authority to
examine into the affairs of companies, and
wind them up if they are fraudulently
organized or doing business illegally. Those
spoken of are managed by a set OF young,
incompetent men. who have heretofore been
doing an underground business in Chicago.
The Legislature should act. More care
should be required in the organization.
The notes, as the basis of capital, should be
on property In the State.
HONEST INSURANCE.