Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1900-04-28
my DIVIDE BUSINESS
Attorney General Rsmlsy Gives an
Important Opinion on Insnr.
ance Companies.
Holds That Mutuals Nay Separate
the Various Glasses Of Policy
Holders
The Losses Under Certain Class Of
Policies Assessed to Be That
Glass Only.

Des Moines. April s2.-Attorney Gem
eral Remley1 has given two opinions toll
the state auditor in answer to inquiries /
from that department.. In one OF them
he holds that any mutual insurance corr
poration may divide its business into
two classes providing that each class
contributes equitably Its proportionate |
share to the expenses of maintaining the
corporation and transacting the BUSH
ness. The state auditor has had nu:ner-
Gus applications from mutual nsurance |
companies during the past year which
desire to provide in their articles for a
division into two classes. one divisionstO
consist of fire and lightning. and the
other class to consist of tornado and
busincss. Many of them
have desired, further, to provide that in
case of loss from fire and lightning poll
cies are to be assessed to pay the loss. or
in case of loss from tornado or wind
storm only such policy holders to be
assessed. But the state auditor has new
err been confident that he had the RICH.
to authorize such procedure on the part
of mutual companies, 80 recently APP
pealed TO the attorney general. Mr..
Remley S opinion in full on this subject
is given here:
Your request for my official opinion
upon the following question has been
duly nsidered. viz:
IAN association is about to incorpor-
ate for the purpose of doing fire, light
ming and tornado business, under the
provisions of chapter 8. title IN. of the
code. The incorporators desire to pro-
vide in the articles for a division into
two classes: one division to consist Of
fire and lightning business, and the oth-
er class to consist of tornado and wind
storm busine ss. They desire. further, to
provide thatin case of loss from fire and
lightning that only those holding fire
and lightning policies are to be assessed
to pay the LOGS: and that when losses
occur by tornado and wind storm that
only those holding tornado and wind
storm policies are to be assessed; the
query being. can an association contain
ing these provisions in its articles of in
Incorporation be legally authorized to do
business under the provisions of the.
code already cited providedS bona fide,
applications for insurance to the amount
of 100000 is first obtained in each
clasp
Section 1853 OF the code provides
ANY number OF persons may, with aut
regard to the provisions of the precsd-
ling chapter, enter into contracts to and
with each other for their insurance from
loss or damage from fire, tornado, light
lining, hall storms, cyclones or wind
storms. The following sections of said
chapter imply at least that the per-
lsons entering into the contracts referred
Ito in section 1853 may incorporate, and
1.-The contracts entered into and with each
Iother are entered into by means Of the
corporation. The kind of insurance
which may be done is specified in said
section 1859. The corporation is a mu-
lstual association.
do not think there is anything to
prevent a corporation from insuring
l3against loss or damage from all the
l3causes named in said section 1853; nor
would one be justified in saying that a
company could only insure against one
l.of the contingencies or causes specified
/ in said section In fact, it would be hard
to distinguish between loss or damage
from tornadoes, cyclones or wind
lsstorns.
The only question about which there
| can be any reasonable doubt in my mind
lis whether such associations may divide
Its members into two classes. depending
upon the contingencies insured against.
| If a proper provision is made for the
Equitable apportiOnnent of the expense
| of managing the company, each class
contributing to the payment of the loss
I es occurring In that particular class,
| and each class having insurance in the
sum named in your inquiry and in the
lIstatute. see no legal objection thereto.
| The mutually required to be preserved
iby mutual companies does not necessar-
lily mean that each one shall pay the ex-
jact amount which every other member
pays. In fact, in all mutual insurance
companies the basis for contribution to
Hoses is fixed by the premium paid, or
the premium note given. Where one
class. for Instance, the class Which is in
l.sured against tornadoes. hail storms,
l.cyclones or wind storms. agrees 10 pay
1.-The losses of the members of that class
4 by an assessment upon the members Of
| THAT class, the mutually Is preserved
between the members of that class, and
the class insured against fire and light
4 ming is not required TO contribute TO the
Hoses of the other class. ~ each class
contributes its equitable proportion to
1.-The expenses of operating the company,
can not say that the nutualityis not
maintained.
4 1t is somewhat difficult to gather a
clear idea of what the legislature in
stended by some of the provisions of said
chapter 5. II is a little difficult to con-
Isideri a contract made between a copper
alton and member as entering into
Icontracts to and with each other. In
one sense. undoubtedly this is true, but
in very material sense. it is not true.
Still. constituting the different sections
as best we may. am inclined to think
that you would be justified in authoriz-
Ling a company organized under said
chapter to do business upon the plan
above suggested. if due care is taken SO
that each class shall contribute equita-
bly, its proportionate share to the ex-
penses of maintaining the corporation
and transacting the business.
General nphilifv