New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1891-04-15
TO CHANGE INSURANCE LAWS
SUGGESTIONS BY FIRE UNDERWRITERS.
INVESTMENTS IN REAL ESTATE AND METHOD
OF STATING THE RESERVE UNDER

OF STATING THE RESERVE UNDER
CONSIDERATIONS.
The Committee ON Laws and Legislation OF tE9 New
York Board Of Fire Underwriters, OF when Hian "
Kennedy Is chairman has been holding numerous
sessions 10 consider and suggest changes ~ uS ii
surace laws Of the State In line with the WORK III "c'
the commission appointed by Governor Hili 10 revise
the corporation laws Of the State is now engaged
William Allen Butler has assisted the committee wmeh
has received the thanks Of the commission tor inc aS
sistance which it has rendered.
The State insurance laws have become so thoroughly
umbed In the last fifty years that 1t Is dIhcult III
respects to understand what the laws are ana
the consolidation Of all the laws in force into single
act Is highly desirable The main work OF the COM
mission Is 10 classify and consolidate the state corpora
ton laws, but the scope Of the work undertaken Oy
the commission not strictly confined to this' ana
in several respects legislation has been proposed.
The fire underwriters have felt reluctant TO seem TO De
in an attitude Of asking for legislation, aud Mr. Ken
needy was asked what the committees position was
and what II was doing.
He said that the State had been generally fair and
liberal in its treatment Of the fire insurance interests
and that as a result Of thiS freedom from continual
nagging and oppression inflicted by some states inc
rates of insurance in this State much less tha
the rates on similar property Of States that were hose
to fire insurance companies AS a single ilustrauoh'
Mr.. Kennedy said that could get insurance on
one-third of what the same companies would charge
on similar property in Texas or Wisconsin, both OF
which States have legisated in hostile manner 10
insurance interests.
But, Mr. Kennedy said, the underwriters had Deeh
so cordially invited by the commission to make sug
gestions, that they had made propositions which III
few respects IL enacted, would alter the insurance
laws of the State Yet the changes suggested would
not be fundamental but In some ways would relieve
from restrictions the companies of the State, when
have been under disadvantage in comparison Win
Hartford and Philadelphia corporations The lst'er
were organized under the laws OF their sates
OF course and were not governed by New-York egula-
lions, excepting In regard TO policies issued IN New"
York State
When asked as to the most important matter under
the committees consideration, Mr.. Kennedy replied
that he thought that of the recommendations OF the
committee important as that which wpulu
allow NewYOrk companies to invest portion OF ther
capital in real estate. This privilege had always been
permitted to Pennsylvania and Connecticut corpora
tons and investments of this kind bad been exceedingly
advantageous. Yet the Home Insurance Company oil
this city, with capital of 100000 and ACCUMULATED
property of s600O,600 100000 more. could not
invest any portion OF its capital in suitable building
for It's own use. Some Of the buildings of the lie
insurance companies large enough to accommodate
other tenants, and among the most remuneiauVe
investments made by their owners.
"The necessity Of some such relief as this,' said
Mr. Kennedy, has been very urgent for some years
While there IS larger latitude allowed for invest
ment Of the fire insurance companies surplus aecumu-
lations yet the companies have been required by law
10 confne the investment of their capital to United
states bonds city and county bonds OF this STATE ana
loans on mortgages secured by real estate in the State
The latter class of investment Is not In favor with
fire insurance companies. borrowers are not IN INC
habit of running to fire insurance companies As for
New York State bonds there are none TO be had, the
Sinking Fund of the State owns all that there are.
Government bonds pay only about . IL per cent at
the prices at which the investment must be made and
the best city bonds net only about 1-2
to per cent II is in this respect that
fire insurance companies of other States have
decided advantage over our companies. This change
which advise would enable our fire companies to
stand on favorable terms with Hartford and Phladel
phia corporations"
"why should the law prohibit fire insurance com,
was asked: no,, 80. n.o,,,,, :. ". x.,noav ~
the capital of NewYOrk company was seldom larger
med were very easy ~ to Obtain tain Now when there
so many companies having each capital OF SZOoO0o
S3OoO0c0, there is no sense in continuing this restrc
ton. The idea of the restriction was that II com
1y invested any portion Of M eaP n he OF 81 S s
GENTLY mobile character in case of large fire. But
having the largest accumulated funds which are held
IL SECURITIES that cannot be sold on any day, and
therefore II VIII be safe to allow them 10 invest pOf
ton of their large assets In real estate"
Another important suggestion which the committee
will make Will be In regard TO regulating the manner
of stating the reinsurance reserve held by company.
Mr.. Kennedy explained that the unsatisfactory char
acer of the present state of affairs in this respect
would be obvious by citing the experience of com
pany. This concern examined In December by
the state Insurance Department by the method en-
ployed by the examiner in computing the reinsurance
reserve. 1t discovered that the companys capital
was impaired nearly 100000. On the last day of De
cember the company made its statement under oath
on blanks furnished by the department. and It's rein
reserve computed In exactly the manner ne
Quired, showed that II had surplus OF $4,000. a
condition OF law which would permit both these
methods 10 be employed in one month was anomalous
and absurd The New-YOrS underwriters were In
favor of requiring the highest possible standard OF
safety but they proposed that only standard should
be applied to examinations held by the State Insurance
Department and to statements required by the Depart
ment
The other suggestions and recommendations made
by the committee, Mr. Kennedy sad were Of technical
nature and not of general public interest.