New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-18
Reinsurance Law
Violated Here by
German Concerns
American Branches Do
Business With Firms Not
Approved by State

To protect It's citizens the State of
New York forbids insurance companies
from reinsuring any part of its risks
with company not approved by the
State Insurance Department. Other
states have a similar law.
German companies, and more par
ticularly the reinsurance companies
which have the aid of Senator Freling-
huysen, of New Jersey, in their fight for
exemption from the provisions of the
trading with the enemy act. habitual-
~ evade this provision of law. They
reinsure their business with companies
in Germany and elsewhere not admitted
to business in this country.
This is done, it was explained TO a
Tribune reporter yesterday, by the filing
of statement by the American man
ager of the company that he has not
permitted any business to be rein
sured in any unapproved company. So
far as this statement goes it is cor
rect. The joker lies in the fact that
the home Office does as it plesses in this
respect.
Funds Turned Over to Pools
Some of its liabilities it reinsures in
small companies. Moro of it is turned
over to pools or svndicates of some
strength in normal times. but weak TO
the point of worthlessness in the pres
ent situation.
This practice has been met in a meas
ure by the New York department re-
curing from time TO time what is
known as "home Office statements" II
is admitted at the Offices of the de-
partment that these statements are
not of much value because some Ger
man companies do not segregate their
assets-they mix life, fire and other
funds promiscuously.
These assets have, in large measure,
consisted of German government Sc
curities. Reports from Germany be-
fore the entry of this country into the
war indicated that all Of the companie.
had been compelled TO dispose of good
securities to take up the new issues of
the imperial government, making their
position considerably weaker.
Germans Unable to Pay Risks
This state of affairs shows that the
theory on which reinsurance is con-
ducted-that of spreading risks over a
number Of concerns able to pay their
share of the possible losses-does not
hold in the case of German insurance
or reinsurance companies.
An argument in support Of the FIRE.
amendment is that the ex-
istence OF such companies in this coun-
try is necessary If large risks in areas
where CONGREGATIONS are feared are to
be covered. Some of the larger Ameri-
can companies, it is stated, have more
of this business than they care for.
Just how valuable German insurance
may be at the present time is indicated
by the experience of those who lost
property in the. San Francisco fire. The
German companies were then in good
standing and were in a position to get
funds from Germany. The report Of
the San Francisco Chamber Of Com
merce shows that Of ell of the COM
psnies doing business in the stricken
city the only ones which refused TO
meet their contracts were German COM
panies and companies with German
connections.
Room for Reinsurance
There is, however, an abundance Of
reinsurance available if 1t is needed.
An insurance company president, who
has dug into the reinsurance situation.
in a statement to The Tribune, says:
There are nineteen French fire in
surance companies. These are amply
able to take care Of all Of the business
formerly done and now done with
enemy companies. Furthermore there
are any number of small American
companies that are in a position to
take much OF this business. II is all
question of taking the trouble to
make the necessary connections"