The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-01-30
ALL SHOULD Be EQUAL
COMMISSIONER DEARTH FAyORs A
JUDICIOUsLY IMPOSED DIS
ELIMINATING TAX
AGAINST FOREIGN COMPANIES

| AGAINST FOREIGN COMPANIES
Reply to the Manager of the Royal
| ON the subjecteof the Availability
of Prohibitfug Companies From
| Reinsurinss I'm zUnauthori.ed Conn
! panies--AFGunaents Bearing ON n
Bill Pending I'm the Legislature.
| Insurance Commissioner Dearth has
gotten into controversy with Mana
ger E. F. Beddall, of the Royal Insur-
ance Company OF Liverpool. : Mr..
Dearth Is In favor off, enactments pro-
hibiting insurance companies from re-
| insuring in unauthorized companies,
and as there Is now pending in the leg
| islature bill on this very subject, the
commissioners arguments may be of
special interest at this time. The fol-
| loving explanatio eofs Commissioner
Dearth in reply to the Royals man
ager appeared in the Chicago Inter
Ocean OF yesterday:
About one month ago there appeared in the
public press an article prepared by 3. F.
Beddail OF the Royal. which he terms as
reply to my address delivered at the national
convention of insurance commissioners, in
| September last had fully intended that
| the delivery of my so-called Milwaukee adj
| dress should close the matter. as far as I
personally was concerned as L had no in
| clination or disposition to continue. the agi-
| tation of the question. as would be. clearly
| inferred by any impartial mind upon reading
| the preface to my original remarks. Inas-
| much, however, as Mr.. Beddall has given.
such wide circulation this article particu-.
| larly among my own constituency here in
Minnesota. have finally decided, as a mat
| ter of seh-defense, to make a brief reply to
| Mr.. Beddall.
| Commissioner Dearth states that in
considering the subject, in spite of Mr..
| ReddaH's assertion to- the contrary, he
entertained no prejudice or animosity,
and that he did not even suggest any
discrimination against foreign COM
panies. Mr. sDearth says, in part, In
| his reply:
Now that I have been thus practically
forced to give this matter further attention,
simply on the ground of justice to myself,
may go farther than / did in my original
statements. as to the matter of discrimina-
| ton, and would therefore remark: Is 1t
not judicious for us, as Americans, by leg
| islative enactments, to prohibit insurance
| companies from reinsuring in unauthorized
companies, and is 1t not proper for a people,
| who believe in protecting native interests. to
| at least give home insurance companies an
| equal chance with those of other countries,
| by imposing discriminating tax equal to
what these foreign companies escape and
| this country otherwise loses? Now as to
the foreigner. MT. Beddall says that, as the
manager OF a large foreign insurance COM
! pany, doing business here for profit he real
! ICES that such aaw would benefit his in
! terests, etc., but warns the public that leg
| islation prohibiting such companies from
insuring in on-admitted companies would
| be detrimental to them; that supply and de-
man-terms that are not being much used in
| these days of trusts and combinations-regu-
| late the price, that such prohibiton-the
supply to such an extent being reduced, the
demand remaining the same-prices must go
| I'm. in M ors unydr- -nrop at,1pT1d
mote reasoning surely for this day and gen.
| Grafton, particularly as far as insurance
! transactions are concerned.
Now let US see If such be the fact in the
| fire insurance business will not even go
outside OF my own state for an illustration.
| There Is not one place in Minnesota, and I
will not even except at the present time our
larger cities. where the business Is at ali de-
sirable, that has not more insurance -compa-
| MES than required. to furnish the neces-
| sary indemnity. and in many instances far
| In excess of the number needed. Every COM
pany in every town lis exerting ITSELF to the
| utmost to increase the, sale: of its policies-in
| other words, to secure business. Many strong
| companies remain to do little or nothing
while many more equally strong, fail to
get into large percentage of the towns, and
! yet prices do not go down. No, Mr.. Beddall
cannot agree with you,s. that if, you
I prohibited from sreinsuring in non admitted
companies prices. vtnego up; nor can see
| any force in your supply and demand argu-
\ ment, as applied to the fire insurance busi-
ness AS to this question of reinsurance in
| alien companies, by English companies like
his own doing business in the United States
Mr.. Beddall says that eff Commissioner
| Dearth intends to assert that the practice
| complained of reduces competition, he is
clearly in error" Mr.. Beddall takes care
| not to go far enough He wishes to imply
that. by securing large line. for the pur-
| pose of reinsuring part of it with his friends
| in England. he is increasing the supply of
! insurance, and not decreasing competition,
| but increasing it. Every American under
| writer knows that the ultimate purpose of
Irin nj m hncin ~ ho
| sold at a profit abroad-is to destroy Grip
| pie the American insurance companies one
| by one. and to break down the American
agency system, which surely must be clear
| to the mind of any insurance man. at least
| it will result in reducing competition. Then.
in that event, the American public would
| have to pay foreign insurance com Dnies
| dearly for it's indemnity.
| One by one the American companies, with
| the exception only of the strongest of them,
i such as the Hartford, Home Continental.
Aetna, Phoenix and several others that I
could name, would have to make way for
the ambition to secure business by these for
| eigners. Mr. Beadall picks out one Ameri-
| can company as having a low expense ratio.
| He carefully onlts to state that the company
! referred to (the Insurance Company of North
America, as indicated by the expense ratio
| given in his comparative statement covering
| only eight American and eight foreign COM
| panies) does a large marine business, and
| that the low expense of the marine business
| reduces very materially its total expense ra-
| ito; but Mr.. Beddall was not evidently hunt
| ing for exact parallels accurate SMILES.
| For example: In comparing one American
| company tthe German American) with another
| (the ContinentaD, whose taxes were smaller
per cent than those of the German American,
| he says: How this difference arises the COM
missioner can probably determine. for l N.Y.
| self am unable to offer any satisfactory
! PLANTATION" Was Mr.. Beddall very careless
| in making this comment for certainly
| could not for one moment suggest that he is
| stupid, or did he intend to misiead his read
| ers by Intentionally emitting what ought to
| stead of taking the gross premiums of the
| two companies, without deductions for REIN
! surance. he took the net premiums in each
case. The German-American reinsures large
| ly with unrepresented companies Its deduc-
| lions from gross premiums for reinsurance
etc.. were over 81, 100, 600. If Mr.. Beddall had
| taken the gross premiums of the two COM
a difference in percentage. He also. without
] doubt, must personally be aware CT the fact
! that the Continental writes very la1-e farm
and country business while the German
American confines itself very largely to cities;
| consequently. as he doubtless also well knows
/ the Continental is relieved from paying the
1 per cent fire department tax, required in
| while the German-American, on the other
hand, is required to pay this tax on practi-
! cally the total amount of its premium receipts
| In such states where the additional 2 per cent
| fire department tax is required.
| Without any feeling of animosity but
/ rather, the other hand. the kindIiest SEN
timents toward anything that may be of for
| commonwealth, which, by nature and ira
dftion, believes in protecting it's home or do
nestle institutions, / fail to see any argument
| against judiciosiy imposed discriminating