The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1922-11-08
CROOKED
AGENTS ARE
EXPOSED

s~SSS - w. - ~
missioner Attacks
Rate Cutters a n d
Unscrupulous Fire
Insurance Agents
Columbia, Nov. General rate
cutting in special cases and vari-
Gus other irregular practices to Sc
cure business is charged against in
surance companies operating in
South Carolina by Insurance Com
missioner John j. McMahan in a
statement given out yesterday.
Rate cutting" Mr.. McMahan finds,
"has become SO common as to
threaten chaos in the matter of
uniform rates for the same risks. I"
This practice OF secret legal
rate cutting, Mr.. .McMahan points
out, can be stopped by penalizing
the company and agent when they
are detected in their effort to vio-
late the Insurance law. The power
to enforce the penalties provided
by the state law lies in the insur-
ance. COMMISSIONER hands and the
law, it is indicated, hereafter will
be strictly enforced. We must
get rid of the nnscrupulous agents
and the unscrupulous companies, =
Mr.. McMahan says.
t.The companies" Mr.. Nc
Mahan says in this statement, "are
allowed to fix their own rates but
their rates must be free from dis
.crimination and favoritism, and in
case they are excessive the law
provides mode for having the
rate reviewed and corrected by
state authority. The law is strict
against rebating and rate cutting.
It contemplates that the patrons
shall be treated alike and allowed
different rates only in accordance
with differences in risk.
Secret concessions to get busi-
ness are unfair to the general pub
lie who do not share in these favors
# a class of risk can bear a lower
rate, this lower rate should be
granted to all concerned and not
in discriminatory way to enter
prising and Influential who have
been able to invoke sharp competi-
ton in the nature of bids in def
ance of the scientific principles Of
rate making and in Reputation Of
the public profession of promnl-
gated rates to all alike in the same
class. s'
Must Be Filed.
.sThe law requires that rate to
be put in operation by company
must be first fled with the insur-
ance department ten days. While
each company is given the privilege
of making and filing its own rate,
the law permits and contemplates
that the companies shall cooperate
in maintaining a rate making
agency which shall file its rates
with the insurance department, all
Of its member companies. having
notified the department that they
will observe the rates SO filed nn-
til modified by the rate making
agency or by. q company acting
individually, as required by law.
Most of the companies use the
rates of the South Carolina Rating
bureau and when a policy is
written it is sent tos this bureau to
be checked up and approved or
disapproved. Deviation from the
rates by over charge or by cut
for favoritism is thus guarded
against.
..But I find that policies return
ed by the rating bureau for cor
rection of rate are in very many
cases not SO corrected. The bu-
leau has been unable to enforce its
instructions. Rate cutting has be-
come so common as to threaten
CHAOS III tllC- nldkISI o1 oAhaASA AAA
rates for the same risks.
Hundreds OF disapproved poli-
cies have been left in suspense un-
der orders Of correction but with
little prospect of correction. Months
pass without action. Sometimes a
year thus passes and a new policy
is written, the old policy having
been allowed to hold on and serve
its purpose at a cut rate.
Hold on to Business.
Even when the company and
agent confron to the order Of the
rating bureau to correct the policy
from a cut rate to the legal rate,
they usually succeed in holding
the business though they may have
first gotten it in competition by a
secret cut rate. The assured ap-
preciates the effort that was made
to obtain for him a special favor
and if it turns out that he must
in the end pay the legal rate he
prefers to pay it to the company
ard agent who have to get by for
him with an illegal rate.
"Manifestly, the practice Of Sc
cret illegal rate cutting can be
stopped by penalizing the company
and the agent when the wrong do
ing is detected, instead Of allow
ing them to profit by their wrong.
Tho ,axu nrovides that the inSllr-