The San Francisco call., 1898-02-19
The Purpose of the Office of Insurance Com
 missioner.
Attitude of the Present or ficial Antagonistic to the
 Underwriters.
Much Dissatisfaction Is Shown Over Mir. CIunie's Business
 Methods.

office was created to protect the people by restricting the privilege cf issuing poli cies in this State to companies finan- ciaIly safe; and, that the Commis- sioner might be fully able to accom- plish this purpose, he was clothed with very broad discretionary powers in in- ouiring into and deciding upon the ability of a company to meet its ohli- cations. To this end he can ask any sort of questions which he assumes to touch insurance, and he can compel witnesses to testify before him, as pro vided in Code of Civil Procedure for civil cases; and refusal to answer any inquiry relating to the business of in surance is punishable by fine of $500.
 The endowment of this broad power presuppoSeS the selection of we'll bal anced officer, who will exercise it with conservatism and discretion, for 1t is authority which may be too easily abused, to the annoyance of underwrit- ers and with no benefit to either policy holders or the States revenues; and it is possible for the Commissioner, unre- strained by the courts, to prohibit all
  scribed. If the companies could not be married into abandoning their expensive plants and retiring from the State, an incompetent or ill-dispOsed Commits sioner can on some trumped-up preteXt resort to wholesale cancellation of h- censes. It is therefore no idle assertion that the most important business 1n- terests can be put in jeopardy in this Commissioner unrestrained by reason or justice.
 Our Commissioners have heretofore been generally able and always con- servative in the exercise of this broad power, but the present attitude of Com missioner Clunie, in his indiscriminate onslaught upon all underwriters, would seem to indicate that Governor Budd had used the very poor Judgment of turning a bull loose in our underWrit- ing china shop who, if not restrained, may do infinite harm to the very inter ests he was appointed to protect.
 The Insurance Commissioner has made certain demands on the fire un- derwriters, which they hold to be un- reasonable, impracticable and not in accordance with the law Such efforts at compliance as have been made have not met with the approval of the Com missioner; and he has pro 2eded from one demand to another. with steadfast refusal to submit his views of the law to the courts, in test case, ending by notifying practically all companies Tn the State to cease Issuing policies, threatening dire penalties for any pol icy issued by them.
 From this arbitrary attempt to not only ruin their business but to stop all commercial transactions which require insurance protection the companies laye appealed to the courts, and the Restraining order issued by Judge Mor- row of the United States Circuit Court, in the case of the insurance companies against the Insurance Commissioners, indicates that the controversy has reached that point where facts and the law will be substituted for loose state ments, dogmatic pretensions and dis quieting menaces.
 The business men of San Francisco and other cities, and property owners generally throughout the State, are deeply interested in this matter. Fire insurance Is at the bottom of credit and solvency, and while its cost should be restricted to a price only sufficient to give full profit to the capital em- ployed, any arbitary rulings which may compel the underwriters to tenn porarily suspend writing or force any considerable number of companies tc withdraw in body from the State could not have other than disastrous effects Business generally cannot be transacted without the security of the fire insurance contract, because busi- ness generally is done on credit, and by compelling the fire underwriters tc cease writing for even a single day loans on houses and goods and sales o1 improved realty would virtually cease wholesale merchants would have tC withhold credit. Building operations could not be continued. Policies ex- piring could not be renewed, new poli- burning of such uninsured risks would entail a total loss to owners. Business generally would be suspended as long as underwriting was suspended.
 The business men of the city have just begun to take Insurance Commis sioner Clunie seriously, and to realize that there is a disturbance in the ma chtnery of the State which concerns them as we'll as the underwriters Judge Morrow's restraining order is therefore welcome evidence of the reso lution of the underwriters to continue to guarantee indemnity for loss by ire in spite of the technical instructions and wild threats of the Insurance Com missioner. It is not doubted that the courts will compel the Insurance com missioner to respect the undoubted le' gal TlRnIS or IIc uIiQSl oS cOnstrue the law the same as all hls nredecessors have construed 1t.
 The official totals of California pre- rniuns and losses are misleading. The 1InfavorabIe figures of a number of re- tired companies are not included, and the liability for Qosses to be incurred under) unexpired risks ranging from one day to five years does not appear in the loss totals, though the premiums on such unexpired risks are included in the premium totals.
 Ii is a fact. not generally known, that practically all the profits in the busi- ness of fire insurance, everywhere, are drawn from the investment branch. The average fire insurance dividend in the United States, the most profitable field in the world, is only 9 per cent; and this percentage does not take into ac- count the vast amount of fire insur- ance capital destroyed by conhagra- tions or bad management. This per cent average dividend is almost en- tireIy the product of the investment or banking feature of the business; Tor the average underwriting profit in this country has been less than per cent of the premiums, which with other income has been added to the reserves to meet confagration losses. Indeed if we add fo the total of paid losses