The New York herald., 1921-06-01
$12O,OOO,OOO WRUNG'
OUT OF INSURERS BY.
UNFAIR FIRE Rates
'Brazen Highway Robbery
Says Untermyer of the Sys-
tenn Worked to Gouge
New York Public.
GOING TO GRAND JURY
Witnesses Tell How Excess
Prices Charged Here Are
Paid to Outsiders in
Unearned Profits.
THROTTLED BY A LOBBY
Change in Law to Admit the
Mutuals Is to Be Asked to
Cut Premiums Down to
Reasonable Figures.
THRoTTLED BY A LOBBY

State laws and a powerful lobby
which has operated at Albany for
years have aided greatly in cementing
the grip of the four fire insurance ex-
changes on New York and sanctioned
I practices which barred mutual insur-
I ance companies, boosted rates, for
bade profit sharing with premium
holders and killed competition at the
expense of the property owners.
BY terms of Chapter 125 Of the in
( surance law this State has thrown
a benign and protecting arm around
a system of stock manipulation which
| Samuel Untermyer. counsel for the
Lockwood Committee. characterized
yesterday at the investigation in City
I Hall as 'brazen highway robbery"
Under this provision directors OF a
mutual insurance company were per-
D nlitted when they wanted to do SO to
submit to policy holders In that COM
pany the right TO subscribe for stock in
! q new company into which the old was
TO be converted. The policy holders are
dilcWtQ Unity udyS 10 SQoSCTlDc. anu IL
they do not act in that time the sub
scription can be taken up by the direc-
I tors and officers of the company. After
the conversion from. one form of COM
pany TO the other is made the policy
4 holders are robbed Of all their rights
excepting in their policies
By this simple process those on the
inside virtually rob policy holders OF all
particips ton ii,-.surplus and undivided
funds. In the severe. ;nstances where
such changes have been made from nu-
tual to stock companies there have been
big surplus accommodations which went
into the pockets Of the few manpula-
tors
3Iutuals Behind fn New York.
Moreover, II was shown that this State
lags far behind In the procession OF
States in tho regulation OF the insur-
ance business. Herman T.. Ekern. coun-
sel for four national associations of mu-
tual compa MES. told the committee OF
the efforts made by his interests to break
through the ranks of the all powerful
( lobby surrounding the State Capitol, but
always without success.
ear dlNtT year piuS dllIleu 10 CuID
the monopoly OF the insurance ex-
changes. to give the State Insurance
Department power to open the State to
competition, have gone down before the
opposition OF the lobby. The state off,
cials appear to have made no special
effort TO meet the situation.
When an effort was made last year to
amend the iniouitous Chapter 1875, the
Federation of Mutual Fire Insurance
Companies appealed to the Legislature
TO act, saying that the States policy of
sanctioning such a policy of converting
companies violates the policyholders'
rights. appropriates their property TO
others and undermines public conn
dence." But the lobby won. The law
etili stands.
The only power this state has in regu-
lating rates is that the Superintendent of
Insurance may remove discriminate tory
rates on property.
sff rates are equally extortionate and
are the same the Superintendent can do
nothing, can he?. 1t Is only when there
is difference" Mr.. Untermyer asked.
That Is correct" Mr.. Ekern answered.
mo matter how oppressive the rates for
Insurance may be- there is no power OF
review. not even IN the courts, in this
State"
Bills were introduced for several years
70 give the mutual companies the benefit
Of rate fixing and breaking down the
power of the exchanges But always
they went into committee and there ex-
pired.
One OF the features OF the Lockwood
committees recommendations growing
\ out of its investigation of the fire INCUR
ance companies will be series of
amendments to the insurance laws which
will give the State the whip hand In deal
Ing with exchanges, making Illegal such
combinations as now exist. and open the
New York fire insurance business to the
mutual companies for fair competition.
Rates Would Drop 20 Points.
II IL believed that with the mutual
companies In the field. operating with
out artificial barriers TO boost rates. fire
Insurance rates would drop 20 points
in the metropolitan district. That would
mean saving OF many millions. which
would go into the pockets OF hundreds
Of thousands of home owners who now
carry policies against fisc loss.
Mr.. Untcrmyer referred several times
during his examination Of witnesses TO
the operations OF the insurance ex-
changes as criminal conspiracies." The
evidence taken yesterday will be pre-
sented to the criminal courts The Of
fence against the law lies I'm the fact
that
The exchanges insisted upon maxi
ing exclusive contracts with brokers
whereby the latter received per
cent. extra commission, which came
from the property owner. IL the
broker would agrea to do business
only through tho exchange. This
Knocked out the mutual companies
The exchange allows the mutual
companies TO come into New York
only II they agree to give up their
systems of profit sharing with policy
holders.
Testimony showed that where there