The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1900-08-14
IN CAUSES 4 CONFLICT
COMMISSIONERS a,su.UcuNEssY
FLIES EXCEPTIONS TO THE
soMERvrIIE BILL
ANNUAL REPORT Is READY
Insurance Department Presents
Some Meaty Figures ON the Insur-
ance Conditions Existing in
Minnesota at Present.

nua4 report for $685. which has been
compiled with great care by Commission
er O'Shaughnessy and Deputy Commits
sioner Austin, and is the most conpre-
hensiVe and exhaustive report ever is
sued by that department. When COM
-pleted it will make a volume of from
500 to 300 pages, and will be neatly bound
in cloth, and it Is safe to say will be
highly valued by all companies and rep
resentatiyes of companies interested in
Minnesota insurance business.
Some of the interesting features of the
Introductory portion of the report are
as follows:
The general condition of fire underwent
ing in the United States during the past
few years has not been very enc0Urag-
ing. With an increasing number of con-
LagrationS, and the consequent enormous
fire waste, have come also the raVaSes
of rate wars, in which every principle of
good underwriting has been sacrificed TO
the apparently Unsuitable greed for bust
ness by both companies and agents.
While this condition OF affairs has been
general in its consequences, Minnesota
appears to have been an exceptional 10
callty. A reference to table B, showing
gains and losses on underwriting, dis
closes that most all fire companies lost
money on general underwriting.
During the past year the premium re-
ceiptS in this state Of the joint stock and
the mutual fire companies engaged in a
general business amounted to 81, 176, 97S.
an Increase over the previous year of
$4S2, 400. But the losses incurred shows
only an increase of 1928, 761, the total for
the year being $2.163.3 800. The total risks
written by all such companies in the
| state aggregated 1929, DAT 615. an Increase
of S42,g30. 449 oyer the total for the pre-
yious year. The average premium rate
on Minnesota risks decreased five cents
on the hundred, dropping from $1.a for
1898 to $1.26 for the year 1899 The ratio
Of losses incurred to premiums received
for the year is 81 per cent. as against 49
Per cent for the year 1893.
| Under the present laws of this state 1t
is required that companies shall, before
insuring any structure, cause the Same
to be examined and the fnsurable value
determined which value shall be definite
ly stated in the policy. 1t Is further pro-
vided that any company that Wilfuliy
tnSures any property for more than its
real value shall forfeit to the state school
fund double the premium collected there
on; that the policy shall contain pro-
vision whereby the contract shall become
void If the assured shall secure additional
insurance without the assent of the COM
pany already insuring the risk; and that
in event of q total loss under such policy
or policies upon1the amount payable shall
in all cases be the full amount insured
thereby, and the company barred from
and defense on the grounds of the value
of the premises at the time of fire. This
law became opera tive Oct. ], 1855.
Although there has scarcely been suf-
f1cient time since the enactment of this
law to. determine It's exact effect upon
the loss ratio as compared with previous
years, 1t Is my belief that the, favorable
conditions experienced by the companies
since It went into effect was partially due
to its provisions. 1t has had the effect
of forcing companies to determine values
before the fire instead Of after. as had
previously been too often the case. 1t
has seriously impressed the local agents
with their responsibilities and duties.
Both companies and agents have become
far more careful and conservative 1t
was urged against the passage OF this law
that the loss ratio would increase and
force higher rates upon property own
ers. Such has not been the apparent
consequences During the last four years
the average loss ratio has been 48 per
cent, q remarkably low figure as cen4-
pared with other sections of the country.
and during the same time the average
premium rate has dropped from $1.51 to
SIPS per $190 of insurance. In=6contrast
to these figures 1t is shown that the loss
ra ito in this state for the four years I'M
mediately preceding the passage of this
law was 81 per cent? the premiums re-
ceiVed Estimating the expense element
of underwriting at 40 per cent. which Is
generally conceded a9fair average. this
Is a. change in favor Of the companies
from a two pei: cent less to a twelve per
cent profit on underwriting, and at the
same time q decrease Of premium rate
of % cents per hundred to the policy
holders.
Over insuring necessarily increases the
moral hazard.
During 1900 the total amount Of ma
rine insurance written shows an increase
of $50. 900 over the amount written dur
ing the previous year. and the total pre-
miums collected show an increase of
1897, S4S, the losses Increasing from $4S.-
TT TO $685., 665 The premium rate per
hundred increased from 22 to 80 per
cent of premiums collected
Information was received Nov z, 1899,
that certain conlpa Mes which belong to
an association known as the Western
Union, were violating the laws, complain
ant charging said association with at
tempting to crush competition This
charge was based upon a resolution to
pay an increased commission to agents
on certain classes of risks only upon
condition that such agents represent
companies belonging to said union"
Pursuant to that agreement the cemmu-
nication written their respective agencies
in this state by several companies of the
union contained propositions substantially
to that effect. 1t was commended tt ~ this
new proposition amounted to a onlbina-
ton against companies not members of
the union" Some of the union" COM
panies simply requested their agents to
send a list of the various companies rem
restented by them. and If such list was
found satisfactory. the increased COM
mission would be allowed.
In an opinion rendered Nov. 16. 1899, to
this department. the attorney general
held that this was violation Of chap
ter 35s, Of the Laws Of 1889. known as
the antitrust Laws" This depart
ment Immediately notified the president
Of the association Of the opinion thus
rendered. Upon request, a hearing. was
granted. Notice Of this fact was there
upon mailed to all fire companies au-
thorfzed to transact business In this
state, with a request that wherever Of
fers of increased compensation had been
made to agents, en- the condition that
such offers should be withdrawn Ali
companies agreed to this proposition, and
gave prompt notice Of their compliance
with the request.
requiring every foreign corporation, or
ganized for pecuniary profit, to have a
public Office in this state at Which to
transact its business, and to appoint an
agent duly authorized to accept service
of process, and required such corpora
ton to file its articles or certificate of In
corporation with the secretary OF state.
and pay into the state treasury certain
fees. This is known as the SomerVille
law chapter So. -
Inasmuch as the insurance code of
this state provides that all insurance
companies shall make such filings with
this department, and as such filing with
The secretary of state was, In fact, a
duplication, many felt that 1t was an
imposition to ask a duplicate fling and
extra fees but, nevertheless, they all
complied. Heretofore the insurance com
missioner WAS the duly appointed attor-
ney for all companies. to accept service
Of process. This was as it should be.
and the insurance Commissioners should
be the only attorney upon whom local
process can be served. He Is then in a
position to knqw at all times the exact
condition Of affairs pertaining to such
companies. As3it now stands, the agent
of the company has, under the Sonrmer-
Vile law, received 1.-The same authority
to accept service, aud the information
which should be resolved at this Office
will hereafter pc in part diverted and