The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-05-06
PR0UTY WOULD
Change CODE
Iowan Is Preparing Bills to
Strengthen Insurance
Laws Of District.
PLANS ] AMENDMENTS
Author of Measure Was Member Of
Insurance Probe Committee and
Experience Is Useful.
PLANS 7 AMENDMENTS
By JOSEPH p. AMIN.

Bills strengthening the insurance code
Of the District all along the line are
being prepared by Representative S. F.
Prouty of Iowa, who took a leading part
in the Congressional investigation into
two insurance companies last winter
Judge Prouty has had his measures in
mind for some time, and they are de-
signed to patch up or vitalze the ex-
listing laws where the insurance probe
demonstrated weakness.
1t is possible that Judge Prouty will
appear before the Senate District COM
mittee next Friday morning. when a
delegation from the insurance committee
of the American Bar Association has
asked for a hearing on the subject of in
surance laws in the District Judge
Prouty would not be adverse to appearing
at that time and making suggestions
born OF his own experience in District
Insurance matters. The Iowa member
made the first rough draft of the ma
jority report OF the investigating COM
mittee, scathingly arraigning the COM
panies.
Judge Prouty has in mind seven radi-
cal changes in the District insurance
code. He may carry these in one bill.
in effect recodifying the insurance and
corporation laws of the District, or he
may carry them in separate bills as
amendments to the existing law. These
proposed changes are:
Prouty's Proposed Changes.
First-Vesting the insurance department
of the District with censorial powers over
promotion literature distributed by COM
panies organizing in the District or seek
ing to sell stock or underwrite business
in the District
Second-Prohibiting the payment Of
dividends on stock from SURPRISES Gre
ated by premiums on stock: in effect re-
quiring that all dividends be paid from
net earnings.
Three-Prohibiting control through in
terlocking directorates Of insurance COM
panies by underwriting firms.
Four-ReQuiring that no real estate to
be carried by a fire insurance company
be incumbered, and restricting the
amount of unincumbered real estate to
be carried as assets by fire insurance
companies.
Five-Limiting the cost of promotion
expenses between ~ and IL per cent OF
stock actually sold, including all COM
missions and expenses.
Six-Directing companies which carry
as an earning increase in value of real
estate to charge off on their books a
fixed percentage of the original cost OF
improvements on real estate as an obso-
lescence charge.
Seven-A requirement fixing the amount
of the insurance premium income to be
held as a premium reserve.
Committees Formed Soon.
Judge Prouty has not as yet completed
the framing of these measures. 1t is
possible that unless the District Com
mittee of the House indicates a DISPOSE
ton to get to work on District affairs
Immediately after it is organized. Judge
Prouty may not introduce his measures
until the next session. The District
Committee. along with other House COM
mittees, will be organized by or before
June !, unless unforeseen compiled tons
arise to plague the leaders. 1t is the
present intention to organize committees
as soon as the tariff bill is disposed of.
House leaders expect to conclude this