Omaha daily bee., 1905-08-09
INSURANCE REFORM LEGBLA T1oN.

OOlenL anu generally worthless class OF
laborers in the world.
"
INSURANCE REFORM LEGISLATION
At the annual convention of the Amer
lean Bar association, which will con-
vene on August % at Narragansett Pier,
five recommendations will be made by
the committee on insurance legislation:
Flrst-Legislation by congress providing
for the supervision of insurance.
Second-The repeal of all valued policy
| laws.
Third--A uniform fire policy, the term Of
which shall be specifically defined.
Fourth-The repeal of all retaliatory tax
laws.
Fifth-Stricter Incorporation laws in the
several states as they affect the creation
Of Insurance companies; and a federal stat
ute prohibiting the use of the mails to all
persons, associations or corporations trans
acting the business Of insurance in disre-
gard Of state or federal regulations.
Public sentiment undoubtedly favors
national supervision and regulation of
insurance, but we doubt very much
whether it would justify the proposed
repeal of the valued policy laws enacted
by nearly one-half of all the states. On
the contrary, national regulation should
extend the principle of the valued policy
law to every state and territory in the
union. The objection raised by the un-
derwriters to the valued policy is that
these policies call for the payment of
the full amount named in the policy, re-
% h. - o. tI,s,
time of its destruction by fire, when by
rights no one ought to be permitted to
recover on a policy more than the value
of the property destroyed"
In the abstract this is undoubtedly
plausible, but in practice the fault of
overyauation is with the insurance COM
panies. The valued policy law of
Nebraska relates only to insurance
on buildings, but not on merchandise,
stocks, furniture, etc. 1t reads
Whenever any policy of insurance shall
be written to insure any real property in
this state against loss by fire, tornado or
| lightning, and the property insured shall
be wholly destroyed without criminal fault
on the part of the insured or his assign
ments the amount of insurance written in
such policy shall be taken conclusvey to
| be the true value Of the property insured
and the true amount of loss and measure
of damage.
The contention on the part of the in
surance underwriters that this law is
an incentive TO incendiarism because it
enables the owners of buildings to over
value them, with the deliberate design
of setting them on fire and pocketing the
insurance, is groundless. The insur-
ance companies are not compelled to in
sure buildings for their full value. 1t
is their privilege and their interest to
protect themselves against imposture
and avail themselves, if necessary, of
the advice of an expert builder.
The practice before the enactment of
the valued policy law was to issue polio
les for any amount owners of buildings
were willing to pay for and entirely re-
gardless of the true value of the prop
erty insured. The larger the policy, the
larger the agents commission, and when
1t is made the interest of the agent to
initiate the value of property he would
not likely interpose an objection, even
knowing that the policy calls for much
more than the value Of the structure in
sured. That surely is much more of an
incentive to incendiarism than assurance
that the company would be compelled to
pay the amount called for in the policy
II the building is totally destroyed by
fire. On the other hand, the uncertainty
of the amount which the owner of q
structure can recover, and the knowledge
that every effort will be made by ad-
justers to undervalue the property,
coupled with the menace of protracted
litigation over the the amount the in.
sured is to recover would force him
without such a law TO settle for almost
any amount the insurance company
might see fit to offer.
Under the valued policy law, the com,
pany must exercise due diligence to in.
quire into the value of every structure
for which 1t assumes a risk and its
agents must be held responsible for over
valuations. In a nutshell, the valued
policy law removes the element of fcti
tious valuation and places the fire in
surance company in the same position
that a life insurance company occupies
with regard to the persons to whom q
policy is issued, by compelling the com
pany to pay the full amount on which
premium has been collected at rate
fixed by the company. But even If tht
valued policy law were applied to mer
chandise and movable commodities, tn,
principle would still be sound. 1t woulC
simply require the exercise of greate
caution under rules that would prohibi
the assumption of mere than a certain
percentage OF the liability for the ag
gregate value of the property destroyed
|
2 The finance committee of the BOarC
D of Education assures the citizens o
7 Omaha that its tax levy is based upoI
5 estimates two years ahead, but tn,
t finance committee refuses to take motto,
5 that it's estimate was made before tn,
E State Board OF Equalization ordered
!. Is per cent raise on merchandise, whicl
: Incroasaa mo farfalIv tho, ogo,.ooo 20 ,.a1