The Richmond climax. (Richmond, Ky.) 1897-1914, 1914-04-01
Effect of The Insurance Sus-
pension.
Experience Of Missouri Last Year
Shows What kentucky May
Expect

ire lnSuTdnCe com pdnleS uOlnS OuSl-
ness in Kentucky have been forced to
suspend writing because of the enact
ment of the Glenn-Greene bill, under
which they claim that it is impossible
for them to do business with safety or
profit. This Withdrawal of insurance
protection will have a very material
effect upon the business, credit and
prosperity of the state. In view of this
review of what happened in Missouri,
where the fire insurance companies
were forced to suspend operations last
year because of similarly obnoxious leg
islation, is of interest.
The general result fin Missouri was to
restrict commercial credits, check the
making of loans and mortgages, divert
business from the state, lessen business
activities and throw labor out of en-
ployment The evil effects in Ken
lucky threaten TO be more serious and
immediate than in Missouri. In the
latter state the companies gave several
weeks notice of their intention to stop
writing on given day, and the com
mercial interests had time TO protect all
their insurance requirements for several
months to come, although this fire.
quently involved double insurance. In
Kentucky, however, the bill pending in
the Legislature, imposing a heavy pen
atty upon insurance companies for sus-
pending the writing of business, made
it unsafe for them to give this advance
notice, and their suspension was mme-
diate.
The first effect of tire suspension in
Missouri, AS it probably will be in Ken
lucky, was to affect commercial credits.
Fire insurance is the basis of CONNER
cial credit, the wholesalers and manu-.
facturers insisting that their goods un-
paid for in the hands of retailers must
be protected by sound fire insurance.
AS soon as the wholesalers found that
this insurance protection was endan
gered they reduced their lines of credit
and insisted upon immediate paym ent
The important banks, life insurance
companies and other money loaning in
terests stopped negotiations for loans
and mortgages because the property
upon which their money was secured
could not be protected with insurance,
and gave notice that existing loans
would not be rene we'd The result was
that building operations il the large
ciiies of Missouri, amounting to mil
lions OF dollars, was stopped until the
insurance suspension was ended, with
losses all down the line to contractors,
supply men and thousands of workmen
and building laborers.
Dealers in grain, cotton, tobacco,
whiskey and warehouse produce, who
had been accustomed TO get loans from
banks on bills of lading, accompanied
by insurance policies, were unable stO
get such accommodation, and in conse-
quence enormous quantities of such
staples were taken out of the state or
diverted from their usual destination.
Tn addition to the effect upon large
and important business enterprises, the
small householder, who requires loan
protected by an insurance policy TO
build his home or protect his mort
gage, was unable to secure protection.
In consequence building permits fell off
and all supply and labor inter-
ests wers>affected.
The fire insurance patrols, fire pre-
vention association and other bodies de
pendent upon insurance taxation were
forced TO suspend and withhold their
protection and service to the pubic.
The insurance agents, who are u.s.
ually among the desirable citizens in
every community, were deprived of
their income and livelihood during the
period of suspension.
A great deal of properly was burned
on which the insurance had expired and
O1k1u -uOb OC ICnCWCO, tOoQltillk III a
total loss to the property owner. In con-
sequence the buildings and stocks were
not promptly replaced, as would have
been possible had they been insured.
Because of these and many other rea-
sons, and because the State vas getting
an unenviable reputation throughout the
country as hostile to business interests,
the leading organizations of Missouri
made every effort to secure a correction
of conditions. The State Bankers As
ISOLATION, associations of commerce and
commercial clubs of St. Louis and Kan
sas City and scores Of other cities, and
Influential individuals petitioned the
Governor to call an extra session of the
Legislature TO repeal the obnoxious law.
The protests of the business interests,
forced by their necessities, finally be-
came so strong that the State arranged
a compromise with the insurance COM
panies, under which they were enabled
to resume business with safety. Under
this compromise the Attorney General
declared void and illegal the specially
obnoxious feature of the Orr law, the
suits begun against the insurance COM
panies by the State were dropped. and a
commission was appointed by the Gov
ernor to formulate new and up-to date
code of insurance laws for the State,
which would secure the desirable end
Of lower rates by reducing the fires
which are the basis OF rates. instead OF
enacting laws which merely increase