Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1889-07-22
ESPECIAL TELEGRAM TO THE DIsrArcH.i

HARRISBURG, July 21.-Insurance Com
missioner Forster says that although the in
surance business of the past year showed
great improvement over the preceding year,
when the companies of this State sustained
an actual loss of S217 ,085, it is still far from
satisfactory. On a capital OF ST., 16O, 600
the profit realized has only been LIT per
cent, which is greater than the average
profits for the seven prior years. Dividends
have been issued entirely from investments
of capital and surplus and not from the
business of the companies as Insurers.
Without such resources and the accumula-
tions of former years no dividends at all
could have been made.
The Insurance Commissioner argues that
the profits of insurance on capital do not
Justify the imposition by the State of taxes
in excess of taxes on other corporations, and
that, in view of the increasing competition
and the experience of number of years,
the companies cannot expect to improve
their business through any material increase
in rates, but such Improvements must be
effected by reduction in expenses and losses.
IRRESPONSIBLE ORGANIZATIONS.
As to mutual fire insurance companies
which are unable to collect enough money
by assessment to pay their losses, the best
that can be accomplished under the law is
to have their death officially declared and
their capacity for further mischief averted
The Insurance Commissioner says the easy
conditions under which mutual companies
may be incorporated under State laws invite
the beginning of weak and irresponsible
organizations.
Ten or more persons associate themselves
by articles of agreement and procure sub
scriptions to $4,000 of insurance. The
charter follows. The subscribers to insur-
ance do not all accept the insurance they have
engaged to take, as is frequently made evil
dent from the first report of the company.
That which is regarded as legal "techni-
cality" in the law was designed as sub
stantial safeguard against the organiza-
ton of companies without the necessary
basis. 1t could be made more real If the
same rule were applied as in the case of
mutual assessment life and accident COM
panies, namely, to require an advanced as
sessment to be collected and paid into bank
as a guarantee of good faith, before the is
suing of letters patent, then the subscribers
to insurance would be sure not to be dunn
mics.
SOME ADVERSE CRITICISM.
The Insurance Commissioner devotes con-
siderable space to an adverse criticism of
the valued policy idea which was sought to
be introduced in the statutes at the late ses-
sion of the Legislature. He maintains that
a law Of this kind would operate directly
against the great body of policy holders.
Companies are mainly receiving and dis
bursting agencies, and they cannot con-
tinuaily pay out more than they receive,
and increased disbursements necessitate in
creased previous receipts which would have
to be paid by insurers who never incur loss
or claim indemnity.
The provision in the general revenue law
reducing the tax on the gross premiums of
foreign insurance companies from to 2 per
cent, the Insurance Commissioner says,
brings Pennsylvania law into harmony with
the tax laws of other States having a large
insurance interest and will be highly bene-
fetal to the companies of this State
which have suffered in consequence OF
the retaliatory provisions of the laws
of the States in which they have transacted
business. He shows that the revenue de-
rived by the State from the 8 per cent tax
on premiums for 1888 amounted to 500, 900
more than in 1886, and states that in a few
years the State will obtain as large a rev.
enue from the 2 per cent tax on premiums
as she does now from the per cent tax.