Evening journal., 1913-05-02
PROBING
INSURANCE
COMPANIES

Several mutual FIRE insurance com
panies. chartered under the laws OF
Delaware. and doing business largely
through Now York brokers, are under
Investigation by officials Of the Insur-
ance Department of the State of New
York. Those officials we're at work
here and in Dover yesterday and to-
day. Deputy State Insurance Com
missioner McCabe, of this State, is CO.
operating with them.
One OF the Investigators is James
p. Conway, many years ago a report
er on THE EVENING JOURNAL, and
a nephew Of the Rev. Peter Donaghy,
deceased, formerly pastor of st. AIMS
r. c. Church, in Wilmington. He now
Is chief examiner for the Brokers
Bureau of the New York State In
surance Department. With him is J.
L. Woods, chief investigator for the
entire department. Deputy Commits
sioner McCabe spent part of yesterday
in Wilmington with them.
The companies that are under ex-
animation are operating throughout
the United States through brokers
in New York city They are careful,
however. not to sell insurance in
New York State, as they are barred
from operating there. The New
York officials are preparing 90 take
steps 10 nut those brokers out OF
! business OF TO drive them from the
State.
They also are endeavoring to get
the Insurance Commissioner Of this
State to take action against them.
The understanding is, however, that
he does not think he has power 20
put them out of business. The law
in this State is a little vague. IL
provides that the State Insurance
Commissioner shall grant a license
to such a mutual company, where
100 persons make a contract with the
company TO enter into the mutual in
surance business, and put up securi-
/ ties amounting 10 $4,000
Il is asserted that the obligations
Of certain companies have not been
properly met. The pl.-n is to take 100
! persons from all parts + the United
States to make up their lists for
qualifying purposes. IL is asserted
that some of the companies then pay
brokers fifty per cent commissions
and direct them to tak1 risks indis-
criminately. They give better terms
than any other companies can af-
ford to give.
NO proper company could pay so
per cent. commissions and take ex-
ltra-hazardous / risks and under
write such risks on the applicants
own terms and live" % % the New
York Investigators said. Companies
which do that sort Of business keep
going until a big fire loss comes and
then they fail to meet their obliga-
tions and go out OF business. those
holding policies losing everything.
After the storm Of Indignation has
subsided the promoters organize a
new company and repeat the process.
Delaware seems to be a home for
several such companies. Most Of the
other States have en- cted laws to
protect the public against that sort
Of thing. Pennsylvania had eleven
such companies operating in one "
fee. Last year that office was rsided
and IL was discovered tnat the busi-
mess was being operated by New Yorl
brokers. The New York law pro-
vides that even the handling of that
sort of business by. brokers in that
State constitutes a violation, ever
though the brokers simply do the
actual underwriting in other States
We are here obtaining the evidence
necessary 10 warrant steps beinl
taken against the brokers fOl certain
Delaware mutual companies. and We
lalreadv have IL in hand, ready to take
il to e'ew York for use"