Evening star., 1939-04-10
Court Says Taxi ii
|nsuranceLaw
Needs Revision
Appeals Tribunal Says
Firm Should Be
Granted Injunction

Granted Injunction
An immediate necessity exists for
congressional revision of District in
surance laws pertaining to taxicabs,
the United States Court of Appeals
said today in handing down an
opinion which in effect narrows the
scope of operations of the superin-
tendent of insurance
In so ruling the appellate court
reversed and remanded to District
Court case involving the Hutchins
Mutual Insurance Co., which had
unsuccessfully sought an injunction
protecting its right to transact busi-
ness.
District Court was instructed to
issue a permanent injunction re-
straining Superintendent of Insur-
ance j. Balch Moor from canceling
the firms license.
Declared Without Authority.
At the present time, said the court,
the superintendent of insurance, j.
Balch Moor, lacks statutory au-
thc.sty to cancel licenses to write
taxicab insurance.
The ruling was interpreted as
limiting the insurance superintend-
ent's right to issue rules and regula-
tions. since the opinion held that
under authority conferred on Mr..
Moor by the Taxicab Act of 1898
there is nothing more than the
power to make reasonable rules and
regulations relating to the writing
of taXicab insurance and the fixing
of maximum rates to be charged" :"
In regard to rewriting the insur-
ance laws, the opinion, written by
Chief Justice D. Lawrence Groner,
had this to say:
That there is immediate neces-
sity for revision by Congress of the
insurance laws in the District OF
Columbia, the facts shown in this
record amply demonstrate. When
the compulsory taXicab insurance
law was under consideration by the
House, on the report of the Confer
ence Committee, Representative
Dirksen pointed out the danger of
the situation and the necessity Of
amending the insurance code before
passing the act.
Dangers Declared Demonstrated.
"The dangers he anticipated are
demonstrated in the facts of this
case. They grew out of the provi-
sion authorizing So-called mutual
company to assume fantastic labil-
tiles without provision for assess
ments on its members to make reim-
bursement, and without the ade-
uuate reserves which sound insur-
ance principles have proved to be
necessary as means of protection.
"It was doubtless the recognition
of this lack of protection to the pub
lie that induced the superintendent
to supplement the statutes with rules
and regulations. The end sought
was both wise and desirable, but in
the present state of the law its &C
complishment is possible only by
statutory amendment imposing on
all companies engaged in this form
of insurance the obligation to main
tain adequate reserves"
Thus, at the present time, the
court held, Mr.. Moor lacks statu-
tory authority to cancel licenses to
write taxicab insurance.
Regarding the insurance superin-
tendent's power to make reason
able rules and regulations relating to
the writing of taxicab insurance and
the fixing of maximum rates to be
charged" the opinion said:
THE words-to write insurance
and to fix maximum rates-given
their broadest meaning, as we have
every desire to do in the interest
of securing enforcement of the OBJ
jects of the act, can, we think, be
construed to go no further than to
authorize the superintendent to con-
troll the solicitation of the insur-
ance, the terms and conditions of
the contract, the rate to be charged
and the enforcement of the pro-
visions of the act and the general
insurance law. So interpreted, the
language of the act, considered in
relation to the provision in the gen.
eral law prohibiting rebates either
in the form of commissions or other
wise, is sufficiently broad to enable
the superintendent to prohibit un-
reasonable commissions to agents,
private or corporate, as to which
much was said in the argument,
But even so, it does not settle the
questions involved in ,the regula-
tions under consideration"
CauSo for Roynoo f;nu
The court found in law authority
In the superintendent of insurance
to revoke a company's license for
failure promptly to furnish him with
an annual statement of its true
financial condition and power to
make examination of its affairs to
determine it's solvency.
Nowhere else is authority given
to the superintendent to revoke or
suspend license, or authority to
make rules and regulations concern
ing the actual internal operation by
the company of its business" said
the court in its decision today.
Prom all of the above it will be
seen not only that there is no pro-
vision of the general law broad
enough to cover regulations govern
ing in the minutest detail the opera
ton and business of an insurance
company, but that the statute it.
self makes a clear distinction be-
tween stock companies and mutual
companies with respect to maintain
ing a reserve. Perhaps this distinc-
ton as to capital or reserve require
ments, between stock and mutual
companies, was in recognition of the
difference in the nature of the two
kinds of corporations. In the case
of stock company the purpose OF
organization is primarily to earn
money for the stockholders. A mu-
tual company, on the other hand, is
one in which the members are both
Che insurers and the insured, some