New-York tribune., 1910-11-28
URGES INSURANCE REFORM
Merchants Association for Tax
and Commission Reductions.

The Merchants. Association OF New fofA'
In letter to the legislative INV e'lies
committee. made public yesterday,
that body to make a thorough iha"iiS
the commissions paid by fire lnsui INC
panies to their agents for securing ous'i.
and also suggests that the taxatioii VI
companies might be greatly reduceu.
These taxes. saws Frank X. Shaiiipeis
the chairman or the associations committee
on insurance. impose neaVy aHu f
unnecessary burden on the fire insurance
companies, which they naturahy 'oi"
to policyholders as q part OIL lii0 ooS
running their business. ,.L
Remedial legislation to modify VI "D
these special taxes is suggesteo o'
Merchants Association. and they want 'i'o
legislative investigating commltee W
a basis for new legislation by d 'ii't
inquiry on these two points -.
''In the city of New York, says 'io io'
ter to Edwin A. Merritt, jr., the CHAN ma.
of the investigating committee per 'e,i,
or 10 per cent brokerage is pald 10 aeoH'
upon premiums derived from the eei'-
business district increasing TO % pei
in the case Of residences, churches' e'0- -
other parts Of the state many coihpahie
pay fiat commissions TO agents OIL 10 PC
cent, others pay 20 per cent or 20 per 'et'.
and an additional commission up 10 ~ pei
cent contingent upon the profits on pu'ii'e''
secured
These large commissions" the Mer-
chants Association writes. "are, OF course
included by the companies in the Gust oA
doing business. which total cost must coiiio
out of the aggregate premiums derived from
insurers and the scale of compensation ~
statesmen or agents is materially hlShoi
than that which usually prevails III o.hei
branches Of business" Further, II Is polii'-
ed out that the cost of selling insurance 10
considerably less. or should be. than lile
cost of selling merchandise
This association" the letter continues
"calls attention to the heavy burden OF spe-
ciaI taxation laid upon insurance colnpa-
nies in this state. but actually borne ny
insurers. whereby the cost OF insurance Is
materially increased . -
Ordinary taxes represent the pay lllsn' A., ~
the government of a part OF the prolt , ue-
rived from the economic use OF WeaIth,
they saw. but taxes derived from an m
surance fund represent an a aoodsloa5i b ~ the
destruction of wealth 1T is wholly unjust
that the fund exacted from the community
to distribute the burden OF t uestl ~ o,n
should be increased by government eAac-
ton .s ~,
citing figures on the taxes exacted py
the state as a corporation tax to cover the
cost of government regulation ana super
vision of insurance companies the letter
saws that under Section 1S7 of the tax ia"
the state derived during the last f!scai
wear 81 236 913 SO; with an additional 1uh9
obtained from companies not lncorpordtea
in this state but doing business mere u
s42T O74 40. whereas the total cost OIL con.
Quoting the State Insurance Department en-
during the same period was about sZLo,oVV.
The state therefore derived net revenue
from the taxation Of insurance companies
Of about 81, ,7S9 600, because in addition 10 ti!e
taxes mentioned above there was an addl-
tional special tax of per cent on sIoss
nrerniums levied by municipalities, from
which in the citv of New York alone the
income was s3O1,577 05 during the same
period.
THE premium rates charged by Insurance.
conopanies" the letter continues, repre-
sent not only the amount necessary to NEE.
fire losses plus reasonable profit upon the
capital of the companies, but also repre-,
sent and are based upon the expense U.
conducting business and Of this expense
the item of taxation Is large ana III
nortant one This excess of taxation Is
Simply a burden upon calamity. -,...
The legislative investigating connltIes
will resume its public inquiry tomorrow
of insurance will be taken up again tnei,
because the announced plan, are 10 pursue
to a finish the inquiry into legislatlve cor COZ
rI1ption in connection with tne acuEtLiSs at.I
or the lobby which appeared in opposilloi,
~ the antf-raCetrack gambling laws paSs,eu
In 1908 With that subject cleaned up, tne
committee will turn again to It's nre Lhsur-
ouna inG1iiry. upon which an opening was
nSa 81 +he last two sessions before the
pIxSgiyinp recess.