The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1891-08-14
MUTUAL INSURANCE ALL RIGHT.
State COMMISSIONS Weir Defines as
sets"-Stock Deposit Unnecessary.

StSte Commissioners weir Defines las
sets"-Stock Deposit Unnecessary.
OLYMPIA, Aug. Ia-ISpscial. ITO eomnuni-
cation from member of the seattle board OF
underwriters to Insurance Commissioner Weir,
crilc1slng thst officers ruling that under sec
ton of the insurance law mutual insurance
companies may do business in this state, Mr..
Weir today transmitted a reply, showing clearly
the Interpretation of the law by the insurance
department. He says in part:
The intention of the law undoubtedly is that
eaen insurance company foreign 70 this state
put organized within the United states must
nave paid-up and unimpaired working capital
70 the amount OF $4,000 before such company
can De licensed TO do business in this state.
ihe section referred 10 requires the In
surance commissioner 10 issue his license TO
sucn company when be Is satisfied thai the CON-
pany mas the amount OF capital stock ana assets
required by the act. The term assets would
seem to cover everything which such company
may have in the shape Of property. In othf
words, the law undertakes 70 regulate tLs
amount of financial ability which the company
must have in order % do business in this state,
rather than 10 regulate the method or plan upon
Whieh such company Is orgauized. 10 say that
an insurance company must have its working
capital represented By certificates Of shares of
stock, simply because the law uses the term
capital STOCK" would seem to be strained
construction. corporation organized on the
basis OF a mutual insurance company can be
legal corporation in this state, much as a
joint stock company can, and 10 undertake to
business on the joint stock plan Father than on
the mutual plan would De, think. exercising
unwarranted authority BY the insurance depart
ment in the absence OF language in the law
positively and Enthusiastically making such pro-
vision
mutual insurance company may have prop
erty against which Judgment for debt would
run, with the security TO the creditors equally as
safe and valuable as if that property were in
vested in shares Of stock. The shares OF stock
in most all OF the stock companies organized
within this state have been paid for and are rep
resented by negotiable notes, mortgages, etc
These securities constitute the ssassets' of the
company. and for the purpose of determ ing
their value we make personal examination and
investigation at local banks where the parties
liable on such notes are well known and trans
act their business.
The all-important thing. then, Is not that such
company has issued certificates of stock to the
amount of 5000, but that sueh Stock eertii-
Gates, or the property, notes, negotiable paper or
other thing OF value represented BY such stock
certificates. have an actual bankable value equal
10 that assigned 20 them.
Secretary Weir agrees with his correspondent
that it is the intention OF the insurance act to
protect the policy holders of this state against
irresponsible organizations. but he declines to
accept the proposition that mutual companies
are necessarily worthless institutions" as sug-
gested by his critic.