The daily morning journal and courier. [volume] (New Haven, Conn.) 1894-1907, 1906-05-16
DOUBT AS TO SOLVENCY
OF The FIRE COMPANIES
SWEEPING STATEMENT BY III. III,
DAWSON BY HOUSE
COMMITTEE.

companies VIII hnOW HOW IneN
Stand Until They Have Paid Their
San Francisco LOsses--DiscussiOn of
a Model Insurance Regulation Act.
Washington, May 15.-"There is not
fire insurance company in this country
that knows whether it will be solvent
or not when it pays its San Francisco
losses" This statement, coming from
Miles M. Dawson, actuary for the Arm
strong committee of New York, some-
what startled the house committee on
the judiciary to-day. Mr.. Dawson was
discussing the question of model in
surance regulation act for the District
of Columbia. His argument previously
had been confined to life insurance, but
he made this slight depression to point
out what he deemed faulty provisions
in the Ames bill regarding fire compa-
nies.
The result of the Chicago fire was, he
said, to put most all of the American
companies out Of business, while not
one of the British companies failed, not
withstandlng they paid every loss they
had in that conAagration. Since that
time the British companies had been
constantly increasing their business.
This was not because the English COM
panies had any more money nor were
any better insurance men, said Mr..
Dawson, but because the laws of this
country required American companies
to hold a reserve fund amounting to so
: | oF batv M oil hn rae
of the British companies was but 80 per
cent. This allowed these companies a
larger capital to meet such a loss as
was occasioned in Chicago. The lesson
should have been learned then that it
was not large legal reserve that made
company solvent. American oompa-
, nies which could not get into their so
per cent. reserves went into the hands
Of receivers. British companies which
could use their capital down to 80 per
cent. lost through the demand.
, Mr.. Dawson suggested that the bill
should provide for a SO per cent re-
serve, with a further provision that
two-fifths of this so per cent. might be
used to meet conhagration losses.
On the subject of life insurance Mr..
Dawson gave the committee the benefit
of his experience with the Armstrong
committee. He drew the first draft Of
the Armstrong insurance Legislation
which has just been enacted by the
t New York state legislature. This legis-
lation, he said, was not intended in any
sense as a model law, but was re-
= stricted, in accordance with the con-
! clusion of the Armstrong committee, to
! correcting evils which were shown to
, exist by the testimony taken during the
investigation.
q In his long previous experience as
f consulting actuary, he said, he had OBJ
| served that federal supervision of the
! right kind would be very desirable,
, State supervision, with the exception of
Massachusetts, and possibly New York,
/ had proved monumental fatture. In
I New York, he said, scandals had arisen
! three times, all Of which were Of great
/ magnitude.
Mr.. Dawson went over the Ames bill
suggesting amendments in many places
II was, he said, undoubtedly to be de-
sired that this bill should partake OF
the nature of a model measure. How
: ever, he realized the many difficulties
in the way Of this accomplishment.
t Previous to hearing Mr.. Dawson
e Commissioner O'Brien of Minnesota
Representative Ames and Major Ash
il worth were heard briefly in addition to
: their statements Of yesterday.
0 H. j. Messenger, actuary for the
h Travellers Insurance company gave his
: support to the bill. He suggested sew
g eral changes which would be necessary
e and expressed the belief that the legis-
:. lation would be beneficial.
n Mr.. Dawson concluded his observa'
e tions with the suggestion that the
Q committee would do well to obtain the
n authority from the house to continue
it's inquiry during the summer months
not for the purpose of investigating in
surance companies, but to investigate
insurance laws. There would be many
developments, he said, during the sum-
It mer which would be Of valuable as
sstance to the committee in drafting
a model bill.
The working of the Armstrong law ir
= New York and the action to be taken by
: the Wisconsin state commission, which
g he commended, were mentioned in thi;
g connection.
! In answer to a query by Mr.. Parker
n as to who he would suggest to aid the
}. committee, he said, first, Charles E
Hughes, and second, Senator Arm
strong.
Mr. Dawson urged the committee t.
= carefully consider the question of in.
Guiding in the bill a limitation to b.
i placed on expenditures of companie:
Il for obtaining new business He thor
: oughly endorsed such limitation which
c with a publicity feature, he said, would
safeguard the interests of the policy
holders as far as it was possible to dC
so.
IS The Ames bill was made the subjec
# of analysis by A. A. Welsh, second vict
= president and actuary of the Phoeni1
l. Mutual Life company; James NJ. Craig
J. actuary of the Mutual Life; John X
Gore, actuary of the Prudential, and j
H Mcintosh, general solicitor of thu
New York Life company.
= Chimney Was on Fire.