The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1928-12-17
Insurance Commissioner of
Opinion Reinsurance Is Cost. 4
ing Too Much

Proposal that the law governing OPP
Grafton of the state fire and tornado
fund be amended to permit the fund
to carry all of the insurance on every
public building in the state probably
will be made by the state insurance
department at the coming legislative
session.
The reason. given in statement by
Insurance Commissioner S. A. Ols-
ness, is that the fund will build up
faster If the department is permitted
to discontinue the practice of reinsur-
Ing certain risks with private insur-
ance companies. Another reason given
by Olsness is that distribution of
these reinsurance contracts amounts
to a patronage which he would be
glad to eliminate.
The fund now has a balance Of
more than $1,OOO,OOO and Olsness'
idea is to build it up to $4,000 900.
When 1t has reached that point, he
said, the interest probably will take
care of operating costs and losses and
insurance on all public buildings
could be carried free He wants the
law revised to permit this but with q
proviSo that. In the event the fund
falls below $4,000 900 by reason of un-
Icxpectedly heavy losses, the depart
ment would have the privilege of
charging a premium until the balance
IN the fund is restored.
Spent 100000 on S1OO.OOO
During 1926 and 1927, Olsncss
pointed out. the department paid out
approximately 100000 for reinsur-
ance, whereas the total losses paid
by the department during the same
period were only about $4,000 Many
OF these losses occurred to buildings
on which no reinsurance was carried.
1T is we'll realized that there are
certain risks which at first blush
seem rather excessive in value to be
carried as net line by the state fire
and tornado fund, but these particu-
lar risks are very few as compared to
the large class Of property constitute
ing average values and which have q
very fair distribution" Olsness said.
The risk constituting the largest
value is the state capitol building and
Its contents, and it is the aim of the
insurance commissioner to enter into
contract for excess reinsurance
from three to five years in the fu-
ture. This also will apply to any 9TH
er particular risk which may be con-
sidered extremely hazardous. At the
expiration of such insurance, how
ever. the entire line will be carried
by the state fire and tornado fund"
Looks for 100000 Total
New policies on public buildings
will be written this August, and Ols-
ness believes that If all of the prem
1um Is retained by the state instead
OF paying out some for reinsurance.
the fund will reach 100000 by Au-
gust !, 1891.
The interest on this sum, he esti-
mates. will be $4,000 a year and since
the operating costs Of the department
are not more than $4,000 year and
1t has never paid more than $50. 900
IN losses In any one year, the interest
income would be sufficient to nav all
losses and leave something over.
In order to permit the department
70 obtain as much interest on it's
money as possible it is probable that
the legislature will be asked to per-
NIT It to invest its surplus in bonds Of
the state. its political subdivisions or
OF the United States. The money Of
the department Is now carried In the
6ank OF North Dakota
Data compiled by Harold Hopton.
manager OF the fund, shows that the
department has paid out $478 or A
Tor reinsurance during the last n
years. During the same period it has
collected from this reinsurance
$6O,SO324, or only Is per cent Of the
amount paid out.
from these figures, Hopton deduces
That the balance In the fund would
De more thar 100000 In excess Of the
present figure II the reinsurance fea-