Evening star., 1942-08-14

Revision Asked
In Maryland
legislative Council
Weighs Proposals
OF Commissioner
BY the Associated Press.

BY the Ass soclated Press.
BALTIMORE, Aug. 14.-The Leg
islative Council today considered a
proposal to repeal the bill regulat-
ing insurance companies and to
offer q new measure which would
place Maryland insurance COM
panies on the soundest possible
basis"
The proposal was made by State
Insurance Commissioner John B.
Centrum, who appeared yesterday
before the council in one of a series
of conferences between council
members and State department
heads.
At the same time Mr.. Centrum
read to the council a memorandum
he had received from John Cop
page, chief examiner for the State
Insurance Department, which said
the Maryland law governing the
investments of the assets of insur-
ance companies Is woefully weak"
Calls Capital Control Lacking.
The memorandum added that
the law governing investments
specifically exempts the paid-in
capital of an insurance company as
one OF. its provisions and by infer
ence also exempts surplus.
This means that the company
could be organized and have its en-
tire paid-in capital and surplus in
vested In cats and dogs and this
department would have no legal
authority to refuse it permission to
commence business"
Mr.. Centrum further proposed
that salaries alone be paid the off,
GERS of insurance companies, and
that contracts entered into between
the company and its officers be re-
newed each three years.
The first step, he said, would pre-
vent officers from taking sub
standard risks to increase their own
income If they were permitted to
collect a percentage on all business
written by their company.
Policyholders Would Rule.
The second step would keep con-
troll of the company with the policy
holders, he claimed.
Because when companies under
take to insure peoples lives they
should have something more behind
them than $4,000 or $25 1000" Mr..
Centrum suggested that bill be
passed to require insurance COM
panies to have a minimum of $780,
600 capital and 100000 surplus by
1858.
Maryland would be put in line
with practices in New York, Connec-
ticut, Massachusetts, "and other first
line insurance States" by adopting
such law, he said.
Another proposal concerned the
banning of management companies,
the heads of which Mr.. Centrum
said, were likely to be more inter-
ested In their own incomes than in
policies they sold.
One Project Abandoned.
These companies, formed by in
surance companies, were not to be
found in Maryland, he explained
and one had been abandoned when
Mr.. Centrum had been informed
the management company was to
get so per cent of the policy pre-
miums.
He said one management COM
pany officer had mode $240,000 per
year while the company he repre-
sented went into receivership.
In his memorandum, Mr. Coppage
made four recommendation fol
changing the insurance law. They
were:
Prohibiting the lending Of money
to insurance agents by companies
Broadening the statute prohibit
ing mutual companies from making
loans to officers and directors te
include all classes of insurance com.
panies.
Prohibiting insurance companie.
from making loans to stockholders
Prohibiting an insurance company
from making loan upon which Its
own stock was pledged as collateral