Insurance commissioner

“ The Insurance Commissioner had the honor of addressing the insurance committee of the General Court relative to the control of life-insurance companies by other corporations or by syndicates. For some years it has seemed to impartial observers who are conversant with life-insurance matters, and have also seen the eager quest by promoters for funds to finance all kinds of enterprises, and the determined struggle to grasp every opportunity for speculation, that there would be no cause for wonder if covetous glances should be turned toward the massive accumulations of life-insurance companies. ”

“ He shall furnish the insured a statement showing the financial condition of the insurer and such other information as the insured may require. He shall report to the insurance commissioner in detail the amount of insurance placed and the premiums paid therefor, and shall pay to the insurance commissioner the additional license fee herein provided. ”

“ The parallels between ceding commissions in indemnity insurance and agents' commissions in direct insurance, on the other hand, are chiefly nominal. The commission paid to the insurance agent in a direct insurance setting is an administrative expense to remunerate a third party who helps to facilitate the sale; the agent's commission is akin to a salary, and to other sales expenses of writing new policies, such as administrative overhead. ”

“ In 1853 he published “Life Insurance Valuation Tables” (2d ed., revised and enlarged, 1871) , and in 1858 he secured an act of the Massachusetts legislature to organize an insurance commission, on a basis that required the annual valuation of the policy liabilities of all life-insurance companies in the state. He was appointed insurance commissioner of Massachusetts under this act, which office he held until 1866. ”

“ Thus, a foreign insurance company which, after revocation of its entry license, continued to collect premiums on policies formerly issued to citizens of the forum State was in fact continuing to do business in that State sufficiently to render service on it through the insurance commissioner adequate to bind it as defendant in a suit by a citizen of said State on a policy therein issued to him. ”

“ It is the contention of the insurance company that the action of the commissioner in undertaking to exact from it as a condition of receiving a license the investment of at least one fourth of its reserves in the securities as required by the commissioner, and in accepting from other insurance companies, which had complied with the requirement of the commissioner, the bond of a surety company, and issuing to them a license, was discriminatory. ”

“ To exercise this right, as indicated by the statute, it must apply to the Insurance Commissioner and pay the additional license fee for such agent. It is plainly no interference whatever with the right of the individual to carry on the business of an insurance agent, or class legislation in this respect. It is obvious that, as pointed out by the Supreme Court of Oregon, in order that an agent may be licensed to represent a company there must first be a compliance by the company with the requirement of the statute ”

“ There is food for thought here for the policy-holders of American insurance corporations who have intrusted to the "System" and its upholders the billions of their savings, to which they are adding every year hundreds of millions. To them I recommend a reading of the Forty-eighth Annual Report of the Massachusetts Insurance Commissioner, dated January 1, 1903, and the decision of the New Jersey judge who passed on the case. These men are surely not to be accused of exploiting my story. ”

“ That the summons in that action was served on the commissioner of insurance for Pennsylvania, the defendant association not having appointed an agent in that commonwealth upon whom process could be served nor having appeared by an attorney or representative. 3. That, the insurance commissioner not having appeared in the action, judgment was taken against the defendant; and that is the judgment here in suit. ”

“ An Old Man at an Overwhelming Task The generation which has known the administrations of such insurance commissioners as our recent officials in New York, may profitably study that of Elizur Wright. Here was an insurance commissioner who took his task seriously, who actually scrutinized life-insurance management ”

“ These instances have no relation to one another, and no relation to the transactions upon which the judgments were based. Between the first two and the last two there was an interval of three years, and yet it is insisted that there was such connection between them that they constituted doing business continuously in the state, and the defendant was hence precluded from revoking its power of attorney to the insurance commissioner. The contention of plaintiff, so far as based on the instances adduced, encounters a great difficulty. They were not new business. ”

“ It does not appear that any certificate has been unpaid, nor is any failure shown to levy assessments required under the original articles.
It is doubtless true that the assessments have increased owing to the lesser number subject to assessment, and the death of members. What would have been realized from assessments had there been no change of plan is matter of conjecture. The business is still that of mutual insurance, notwithstanding changed methods of operation. The new plan has been legally adopted and approved by the insurance commissioner of the state. ”

“ Insurance companies frequently pair conventional and modified coinsurance agreements in such a proportion that the ceding commission is roughly equal to the reinsurance commission, with the net effect being that very little money changes hands. ”

“ It is probable that time will develop the necessity of greater uniformity of insurance laws and more definite requirements in the way of published reports and expert inspection. At present, insurance commissioners often have the confidence of neither companies nor people, and no expert knowledge is demanded in the candidate for that office.
The desirability of insurance by government direct is questioned so long as governments themselves are unstable and popular will favors laxity in the business machinery. ”

“ Charting one's course through the intricacies of the Internal Revenue Code on the basis of first principles rather than statutory text can be hazardous. Intuitively, the Court concludes that the ceding commission a reinsurer pays to indemnify a direct insurer on its policy risks constitutes the purchase price for a capital asset because it produces a stream of future income. The same intuition should lead to the conclusion that the commission a direct insurer pays to acquire policies that will bring future profits constitutes a capital expenditure. ”

“ Although indemnity reinsurance is different from assumption reinsurance in some important ways, none of them go to the function and purpose of the ceding commissions. Whether the reinsurer assumes direct liability to the policyholder in no way alters the economic role that the ceding commissions play in both kinds of transactions. The only rational business explanation for the more than $1,500,000 that petitioner paid in ceding commissions to Transport is that petitioner was investing in the future earnings on the reinsured policies. ”

“ The issue in this case is whether ceding commissions for indemnity reinsurance may be deducted by the reinsurer in the year in which they are paid, or whether they must be capitalized over the estimated life of the underlying policies. Petitioner writes and reinsures life, accident, and health insurance. In 1975 and 1976, petitioner entered into four indemnity reinsurance agreements to reinsure blocks of life insurance policies written by Transport Life Insurance Company, the ceding company. ”

“ All the remaining surplus is distributed annually to the policy-holders, beginning the first year and continuing every year while the insurance is in force.
"The accounts are kept by the commissioner of insurance and audited as the accounts of other state officers. Valuations and reports are required the same as from life insurance companies. The bonds of the state treasurer, the commissioner of insurance, of all county, city, village, and town treasurers, and of every state depository, must include a liability for all premiums and other money received for the life fund. ”

“ Respondent, a general life insurance agent, after the termination of his agency contracts and services as agent, made assignments in 1924 and 1928 respectively of renewal commissions to become payable to him for services which had been rendered in writing policies of insurance under two of his agency contracts. The Commissioner assessed the renewal commissions paid by the companies to the assignees in 1933 as income taxable to the assignor in that year under the provisions of the 1932 Revenue Act, 47 Stat. ”

“ There is no more than one Health Insurance Exchange operating with respect to any one State. (3) The State provides assurances satisfactory to the Commissioner that approval of such an Exchange will not result in any net increase in expenditures to the Federal Government. (4) The State provides for reporting of such information as the Commissioner determines and assurances satisfactory to the Commissioner that it will vigorously enforce violations of applicable requirements. ”

“ The commissions never belong to the ceding company until they are paid over in exchange for the right to share in the future income from the reinsured policies. The term "return premiums" more naturally refers to premiums that the insuring or reinsuring company has been paid and then must remit to the individual policyholder or ceding company, as, for example, pursuant to an experience-rated refund clause, which readjusts the amounts of policy premiums paid over to the ceding company to reflect unanticipated savings. ”

“ Commissioner, 15 B.T.A. 635, that 'amounts received as accident insurance' because of the death of the insured were includable in the estate of the deceased. [2] The Board of Tax Appeals recognized that 'there is a distinction between life insurance and accident insurance, the former insuring against death in any event and the latter * * * against death under certain contingencies * * *.' The Court of Appeals in the case now before us considered this distinction between an 'inevitable' and an 'evitable' event to be of crucial significance under the statute. ”

“ The liability to those who have incurred disability is not a fixed sum, but remains a contingency, still uncertain in duration and amount. Reserves held for such a contingent liability are true reserves in the insurance sense.
We find it unnecessary to discuss the extent to which such a regulation might, under different circumstances, be given retroactive effect by virtue of the statutory power of the Commissioner. [18] Nor do we find it necessary to discuss the argument that the policy behind the special treatment afforded life insurance companies does not warrant allowing this deduction. ”

“ Whatever view one may take of the scope of the venue requirement of § 4 of the Clayton Act, 15 U.S.C. § 15, 15 U.S.C.A. § 15, it cannot be doubted that that section precludes the Georgia Commissioner of Insurance from being made a defendant in this suit unless he 'resides or is found or has an agent' in the Southern District of Florida, or has consented, by formal appearance or by some other form of waiver, to be sued there. ”

“ The representative has secured professional liability insurance, or equivalent insurance, which the Commissioner has determined to be adequate to protect claimants in the event of malpractice by the representative. ”

“ The unearned premium or reinsurance reserve for every insurance company when no other statutory provision is made tberefor, shall be computed by the commissioner by setting up fifty per cent of the premiums received on all risks that have one year or less to run, and pro rata of all premiums on risks that have more than one year to run. In the case of perpetual risks or policies, the whole amount of premium paid shall be set up as a reserve. ”

“ The agent's compensation, being a percentage of the premium, bears a direct relation to the rate charged the insured. The percentage commonly allowed is so large that it is a vital element in the rate structure and may seriously affect the adequacy of the rate. Excessive commissions may result in an unreasonably high rate level or in impairment of the financial stability of the insurer. It was stated at the bar that the commission on some classes of insurance is as high as thirtyfive per cent. ”

“ I am heartily in favor of the appointment of such a commission for it will bring order out of chaos in matters of insurance and at little expense to the State. There are public-spirited men, I am sure, who would willingly serve without pay other than their mileage and per diem when attending meetings of the board. ”

“ In case any insurer is convicted of a violation of this act, every local agent of the insurer in this State shall be entitled to the same commission or compensation, or other thing of value, for business done for the insurer during the calendar year in which the discrimination took place, on risks in this State, and any local agent may recover from the insurer in any court of competent jurisdiction, the amount of such excess commission or compensation, or other thing of value, if any, to which he may become entitled under the provisions of this act. ”