The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1932-11-29
Propose Compulsory
Hail Insurance LQlU
0Isness May Ask Legislature to
Require All Farmers to Ac-
cept Protection
CHANGES DEPLETE FUND
Department Handicapped BY
Inability to Collect Premi-
ums on Present Basis

provisions of North Dakota's state
hail insurance laws may be advanced
to the next legislature by the state
insurance department, 1t became
known Tuesday.
Although definite decision on the
matter has not been reached, Insur-
ance Commissioner s. A. Olsness said
he is considering the idea as one
means of making the insurance more
!. serviceable and, at the same time
meeting the difficulties imposed up
on the administration of the hail in
surance law by decision of the su-
preme court in 1925.
At the beginning Of North Dakota
experiment with state hail insurance
IN 1911, the law was entirely optional
and a very small volume of business
resulted.
The 1919 law provided for compul-
sorry listing with the option of with
drawing prior to June is of any sea-
son. There were level rates for the
entire state. No provision was made
for reserve fund and warrants were
issued in payment of indemnity as
of Dec. /.
This proved unpopular, as many
farmers found it necessary to sell
warrants at discount. In 1921 pro-
vision was made for three-cent flat
tax to build up surplus or revolv-
ing fund of 100000. The flat tax
was reduced to one cent an acre in
1923 and eliminated entirely in 1927.
To meet complaints against the
level premium rate the "zoninp sys-
tenn" now In effect was incorporated
IN the law in 1925, giving patrons of
hail insurance equitable rates based
. on actual loss ratio Of their respec-
tive districts.
While the surplus fund reached the
100000 figure and resulted in drop
ping the flat tax in 1927, the state
supreme court, at the same time
handed down decision which has
handicapped the department ever
since.
Tax Status Abolished
This ruling was that the hail in
surance premiums were not really a
tax but lien against the land pro-
tected with few, if any, advantages
over liens for other purposes.
AS result, the hail insurance fund
has been seriously depleted by inabil-
ity Of the department to collect pre-
miums. OF the nominal $4,000, 900
fund amassed by the department only
about 100000 now is readily avail
able, the remainder standing out in
the form of unpaid premiums. When
the department has a loss 1t pays In
cash. When it attempts to collect
the premium it does the best it can.
AS the matter stands now the depart
ment Is compelled to accept all risks
under the compulsory listing feature
but its chances to collect the premium
tax Is no better than an open book
account. Hence a delinquency has
resulted in the surplus fund.
In 1881. the department prepared
and presented to the legislature bill
to remedy or stop this premium loss.
It provided that compulsory listing be
eliminated and optional listing sub
stituted.
It also contained the requirement
that all applicants. to obtain insur-
ance, must have paid all previous hail
taxes. These changes we're necessary
to prevent further raiding of the
fund.
Wanted Tax Restored
Realizing the Importance and an
ticipating the loss of volume of pat
ronage which would result by elimi-
nation of compulsory listing, the de-
partment hoped to offset this loss by
another provision to virtually re-
establish the status Of the hail tax.
which was lost by the supreme court
ruling.
Had the departments bill been enact
ed, it is Olsness' opinion that the
farmers Of North Dakota would have
a real hail law, operating equitably
for the benefit Of all. With the COL
lection of the indemnity tax made Sc
cure, the honest taxpayer would not
be penalized by way of increased pre-
miuns to make up the enormous
losses now incurred through failure
Of others to pay their share.
With such law, the commissioner
believes, the patronage lost by the
change would be regained in q short
time and North Dakota hail insurance
would again become household word
for service with the farmers and bus
inessmen Of the state, even with OPP
tional listing.
Continued on page four)