Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-01-05
CHANGE IN THE LAW
Probable Outcome of the In
surance Investigation.
ONE RESULT OF PROBE
Belief That No Legal Fault Will
Attach to Local Companies.
WITNESS BEST QUESTIONED
New York State Insurance Depart
ment Under Fire-Attorney Ca
rusi Makes Pointed Statement.

rusi Makes Pointed Statement.
When the johnson subcommittee which
Is conducting the investigation into the
insurance situation in the District of
Columbia, finished its session at the
House office building yesterday after
noon there was a we'll defined impression
upon the part of committee members and
insurance men, who are in daily attend
ance at the hearing. that a recommends
ton will be made to change the insurance
laws of the District. and that no legal
fault will be found with the conduct OF
the Commercial Fire Insurance Company
and the First National Fire Insurance
Company. both of which are named in
the resolution authorizing the present in
quiry
The homeStretch OF the investigation
has been reached, and Attorney Charles
+. Carusi late yesterday closed long
cross-eXamination of the insurance eX-
pert. Albert NJ. Best. with a rather start
ling charge against the honesty of some
Of the officials of the New York state In
Surance department.. which ne asserted
is responsible for the present troubles
OF the TWO local HSuTdntt Colul'aiL'|'
Mr. Carusi drew plain answers to ques-
tions put to Mr.. Best. to the effect that
the Commercial Fire Insurance Company
is solvent. although Mr.. Best stuck TO
his opinion that some OF the literature
produced as testimony claims little too
much to be SubStantiated by the facts.
II the subcommittee recommends d
change in the insurance laws III VIII De
following the repeated recommendations
of the Commissioners Of the District or
Columbia.
Cross-Examination Resumed.
Mr. Carusi resumed his cross-examina-
ton of Mr. Best as soon as the commit
tee reassembled after the noon recess
yesterday. and began his attack on the
New York state insurance department.
There is nothing in the New York law
" hich prevents a fire insurance company
from owning real estate. is there? ne
asked and the witness shook his head in
the negative.
Mr. carusi asked several questions
about the ratio which real estate assets
should bear to total assets of a fire IN
surance company, leading up TO the pro-
posed establishment of the fact that the
Commercial and First National companies
were not transgressing the practice of
good companies The lawyer and the ex-
pert witness discussed the desirability OF
having assets in liquid form. easily con-
vertible into cash In case large demand
should be made on an insurance company
after cOnflagration. such as the Balti-
more and San Francisco fires.
'is there likihood of serious fire
in Washington. such as there might be in
New York and Boston,?
NO"
There is no great fire hazard here.
them?
MIR Rest explained tnat n Washington
company's risk from fire depended
great deal upon the territory from which
it drew It's business.
1.-The Commercial. said Mr.. CaruSi.
sis not operating in Boston or New
York. Therefore If We eliminate these
cities eliminate a potent factor in
risks Mr. Best assented to this propo-
Sition.
Other Companies in Review.
The lawyer then produced lists of big
companies and had the expert read off
the amount OF assets and tell how much
was in real estate. In this list were the
National Union of Washington, with
s175,oO0 worth of real estate: the Airing
ton. real estate s2l4.oOo: F'iremen's.
$4,000: Hanover of New York. with
nearly s4.9oO.oO0 in assets. of which ST.
1900 is real estate; Virginia State of
Richmond. s519.O41. real estate. $685. $50;
state INSURANCE SOlupdHN VI iO"o,
s4os $40 real estate, sl6O.Ot1: Royal of
England, with sll.s4"90c assets in the
United States branch of which s4140,902
is in real estate.
Turning from that. Mr.. Carusi took
up the uniform blanks which all in
surance departments of states use in
gathering information about comDa-
MES They are fixed in form. said the
witness, by the national convention of
insurance commissioners. They show
two general divisions of insurance in
come the underwriting department
and the banking department. and Mr..
Carusi paid particular attention to the
banking department in which the in
terest on investments and apprecia tion
of real estate and other assets are ac-
counted for.
ION these FORMS said Mr. Carusi.
..tha appreciation in value of real es-
tate would be classed as income, would
it not?'
Yes.
Mr.. Carusi then referred To the reso-
luton of the directors of the Cemmer-
cial dated November II. 1912 which. in
part, stated Whereas the capital and
surplus of the company have been re-
Gently materially Increased. and the
company has earned for its stockhold
ers a large sum of money in addition
to paying the regular II per cent divi-
dend" it had been determined 20 raise
the price of the stock from S11 to s12.
Questioning Mr.. Best about this in con-
nection with the forms used by the
state insurance departments, he re-
ceiyed the reply that the increase in
the company's assets WAS there owing
TO the appreciation in the real estate
assets.
Insurance and Banking Operations.
Further questioning brought answers
from Mr.. Best to the effect that the
banking operations of fire insurance COM
NAMES would be about > per cent. and
that real estate holdings Weld an aver
age of > per cent: that the unearned
premium reserve could be counted ac-
tl,allv az an asset. although carried as
q liability. if the business should be done
AZ a profit There was further technical
testimony the subject of cut rates,
EXPENSES ratio of expense, etc. and the
witness said that the insurance super
intendent of the state of New York could
exclude company from operating in
that state for any reason or no reason
that his power practically Is absolute
and that the superintendent studies or
caniza ton expenses very carefully in
determining whether an insurance COM
pany is safe enough to be granted a IL