The Topeka state journal., 1899-04-15
Of Passing on the Validity Of a
New Insurance Law.
MANY COMPLICATIONS
Promised by the Operation of
the 10 Per Cent Tax Law.
Designed to Protect Companies
Doing Business
Under Authority of the Kansas
Insurance Department.

W
sumo the prerogatives of a court in de-
claring a law unconstitutional, but on
the contrary notified aggrieved parties
that a strict compliance with a. new
insurance law will only be acceptable
to the department.
The law is one which was framed by
Senator Henry thinner and passed dur
ing the closing hours of the regular ses-
sion of the legislature 1t provides that
persons taking insurance from COM
panies not authorized to do business in
Kansas must pay 10 per cent on the
gross premium TO the insurance depart
ment.
OF this amount. two-fifths go to the
school fund. the remaining three-ffths
being applied to the credit of fire de-
partments in the various cities
The bill was designed to meet local
conditions in Kansas City, Kan, where
insurance companies doing business in
Missouri, with agents in Kansas City,
No. take a large proportion of the busi-
ness of insurance away from Kansas
agencies, although the insurance de-
partment receives therefrOm no reVe-
nues The law was also intended to
afford some measure of protection to
those companies which come into KAN
sas through the insurance department
and pay the necessary fees and taxes
The indications now are that the Dill
will be far-reaching in its operation
and its enforcement will work greatly
to the disadvantage of several import
ant industries in this state. Mr.. Church
was requested by ]. w Garvey OF Kan
Sas City, No. manager OF the Lun nber-
mems Exchange association. TO rule IN
such a manner as to exclude from the
provisions and operation of the law his
association, which does a large business
among lumber dealers Mr. Church eX-
amined the law carefully, after which
he said:
1T is not my province to pass upon
the constiJutionality OF this law. 1t Is
plain and is also mandatory am ab-
solutely required to enforce II. ana II IL
is bad law or if it is unconstitutional,
the questions must be settled in the
courts. My duty is plain and can not
shrink from IL.
The I-umbermen's Exchange associa-
ton is a sort of mutual organization
in which the subscribers contract TO pay
certain amounts upon fire losses In
case one subscriber has a loss the con-
tracts are assessed amounts sufficient
to pay it. 1t is said that this asSocla-
tons members agree by a note or other
written instrument to pay certain
amounts each year for a stated amount
of insurance. Then when loss or losses
occur an assessment is made II the
amount originally contracted to be paid
is not consumed, then the tuIl race OF
the premium is not called for. II the
losses should exceed in requirements to
settle the original premium contracted
excess of the premium is made
Mr. Garvey calls to Mr.. Church's at
tentiOn the fact that the ASSOCIATION IN
the strict sense of the word Is not an
a fire business and protects its mem
bers against losses. The law is plain
and includes such associations.
Many lumber firms in Kansas are in
sUred in this association and thousands
of dollars in insurance is held in KAN
sas City. Kan, alone The law requires
. that when persons enter into such con-
tracts for insurance it shall be reported
at once to the department. Failure to
comply with this law is punishable by
a heavy fine The insured, of course, is
to pay the 10 per cent tax upon such
contracts.
There are in Kansas many organiZa-
tiOns or associations of this character,
which like the Lumbermen's has no au-
thority to do business in the state
They are not admitted through the in
surance department but engage in this
mutual fire protection as an enterprise
among q few individuals to evade the
high premiums exacted by insurance
companies
The milIers have such a scheme
Several church societies also foster
them and in neighbOrhOods in various
counties such mutual institutions are
maintained for protection of farm pro-
ducts against loss or damage by fire
Then in Kansas City. Kan. the pack
ers are in a pool similar to that sus-
tanned by the Iumbermen and each con-
tributes to pay the fire losses of the
other In this way thousands of dol
lars are saved by the extensive estab-
Iishments. Yet. under this new law all
of these plans for economy in insurance
will be destroyed. Mr. Church who is
now receiving complaints from local
agents for insurance companies. will
enforce the law. The complaints ulti-
mately accrue to the advantage of local
insurance agents because when these
mutual arrangements are compelled to
come TO an end the insurance must be
Sac71ra6 through antbOrizad cOrrT1au mics