History of Alabama and dictionary of Alabama biography, Volume II, Part 14

Author: Owen, Thomas McAdory, 1866-1920; Owen, Marie (Bankhead) Mrs. 1869-
Publication date: 1921
Publisher: Chicago, The S. J. Clarke publishing company
Number of Pages: 724

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The "chief officer of the department" is a commissioner of insurance, who is appointed by the governor for a term of four years. He is required to enter into bond for $25,000; and receives an annual salary of $3,000. The commissioner may appoint a deputy, at a salary of $2,000; and a clerical assistant, at a salary of $1,000 a year. The department has offices in the capitol, and succeeded to all functions and property of the insurance de- partment in the office of the secretary of state. The commissioner is empowered to examine periodically the affairs and financial condition of every insurance company doing business in the State, with particular refer- ence to its ability to fulfill its obligations, and, when making such an examination, may call upon the governor for the services of an examiner of public accounts. The commis- sioner may designate a qualified actuary to assist the State examiner. It is the duty of the commissioner, after having satisfied him- self of their qualifications under the laws, to issue licenses to all insurance companies, both domestic and foreign, before they can solicit business or issue policies.

Supervision .- State supervision of insur- ance companies in Alabama begins with an act of February 24, 1860, requiring every in- surance company, not chartered under Ala- bama laws, to procure a certificate of author- ity from the comptroller of public accounts (now State auditor) before the transaction of business. Before issuing such certificates, the comptroller was required to procure from each company a statement under oath of its president or secretary, setting forth in pre- scribed detail its history and financial condi- tion, and to procure such reports in the month of July annually thereafter, upon which, if satisfactory, renewal of the authority of each company to do business should be issued.

Notwithstanding the fact that the law con- ferred wide powers of discretion upon the comptroller in connection with the issuance of certificates to foreign insurance companies, little in the way of supervision of their condi- tion and activities seems to have been under- taken by that officer for a number of years after its passage. This is partly to be ex- plained by conditions during the War and Reconstruction periods. It does not appear that any discussion or even tabulation of the insurance business of the department was in- corporated in the annual reports until 1869, and for that year is given merely a list of the names and locations of the companies which had complied with the law.

Genesis of State Regulation .- Prior to 1860 no State regulation of insurance com- panies, either domestic or foreign, had been provided for by law, and domestic companies were not brought under the supervision of State officers, except in so far as they were governed by the stipulations of their respec- tive charters, until 1897. No report was made by the comptroller or auditor of for- eign companies that had complied with the terms of the law of 1860 until 1869, and then merely the names and locations of such companies were reported. In 1870 State Auditor R. M. Reynolds made a separate re- port for the insurance department of his office, in which he recommended the exten- sion of the State's regulation so as to include companies organized under its own laws as well as foreign companies.

"Those insurance companies are deemed most safe and transact most business," he said, "which are by law required to respond to the most rigid exactions, and hold the largest reserve fund for the security of the assured . the people of this common- wealth are all interested in having sound in- stitutions only presented to them for patron- age, and I am fully convinced that the legisla- tive and executive departments should fur- nish such and only such safe depositories of trust for the assured, so that the fact that any insurance company has an agent duly authorized and empowered to issue a policy in this State, should give full confidence to the assured that his policy will not prove a broken reed in the day of loss or sad bereave- ment. This office is charged only with the supervision of 'insurance companies not in-

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corporated by this State.' No supervision is granted or required over the institutions which Alabama should carefully cherish and present as of first importance to our own citizens. There is no good reason why 'Alahama companies' should not do the larger portion of the insurance business of the State; yet they are scarcely known, and when known, they only have character or influence from the known integrity of the managers. The assured have no official guarantee of the soundness or solvency of any Home company in which he is insured."

With these comments on the existing con- ditions he submitted specific suggestions for legislation calculated to bring about an im- provement; but no action was taken by the legislature. He renewed his recommenda- tions in his annual report for 1871, stating that "it is well known that this office is not charged with any supervision of companies incorporated by the laws of this State. Vari- ous companies have been organized under the general law regulating corporations, and many of them are doing a profitable business in insurance. The people are not officially advised of the solvency of these companies from any sworn statements filed as to assets and liabilities, and their ability to re-insure outstanding risks. They have character and standing only from the known integrity of their corporators and managers.

"It will be seen by the list of companies hereinafter given, that the Central Insurance Company, of Selma, and the Home Protection Fire, of Huntsville, have invited examination, by a voluntary compliance with the laws gov- erning 'insurance companies not incorporated by this State,' and have filed annual statement of condition, &c. Believing that many of our home companies would gladly comply with an exacting law, and being fully convinced that it would largely increase their business, I would recommend that the laws be so amended as to require supervision of all home companies in the State, by filing satisfactory evidence of solvency before transacting any business of insurance through their agents.

"It is estimated that less than one-fifth of the perishable property in this State is cov- ered by insurance. Life insurance extends to less than one-tenth of the adult population of the State whose lives are insurable. This leaves a large field for insurance, which should be occupied chiefly by home compan- ies. It is evident that most of the business is now done by companies organized in other States, and, indeed, without change in the laws regulating home companies, which would place them upon a known solvent hasis, it becomes indispensable to the welfare of the people that foreign companies should con- tinue to do the greater part of the business of insurance in this State."

And again in 1872, he urged: "I would urgently recommend the enactment of an in- surance law which would secure full and rigid supervision of all corporations of insur- ance doing business within the State of Ala- bama. All patrons of insurance wish to be

well advised in relation to the solvency of companies in which they insure, and if they cannot be officially guaranteed as to solvency, they can profit by a thorough official exami- nation into the condition of such companies as they wish to patronize. The present laws are entirely inadequate to secure proper ex- amination and supervision. It is with pleas- ure that we record the fact that the policy- holders of the State have not lost money to any considerable amount by the bankruptcy of foreign insurance companies, yet we are as frank to admit that this prevention of loss did not arise from a rigid supervision of insurance under existing laws. The im- portance of a general insurance act for this State cannot be over estimated, provided that Its provisions will secure solvency in all com- panies who may secure certificates of author- ity from the head of the department, and place the business of insurance upon a perma- nent basis in the State. The State should. through her officers, protect patrons of insur- ance from loss, and the corporations should secure consideration at the hands of the legislature."

Insurance Commissioner Ex Officio (1897.) -A new insurance law was enacted in 1875, but it applied only to foreign companies as before. In 1897 the whole system of insur- ance regulation was reorganized, and its administration placed in the hands of the secretary of state, who was made insurance commissioner ex officio, and was allowed a deputy commissioner to assist him. The juris- diction of the new ex officio department ex- tended both to domestic and foreign com- panies, and thus, for the first time, companies organized under Alabama laws were brought under the supervisory functions of the execu- tive department of the State. Provision was made in 1909 for the investigation by a State executive officer of the origin and circum- stances of fires affecting insured property, whether in urban or rural communities; and in aid of such official investigation, mayors of towns and villages, chiefs of city fire de- partments, county sheriffs, and other public officers are required to report to the insurance commissioner within one week the occurrence of every such fire.

Fire Marshal .- In the proclamation con- vening the legislature in extra session, 1909, Gov. B. B. Comer included in the list of sub- jects to be considered the question of investi- gation of fires by the insurance department, acting directly through its officials, instead of through the county officials as formerly. While the law of 1897 governed the activities of the department, all inquiries into the origin of or the circumstances attending fires had to be conducted by a jury composed of three property holders, appointed by the sheriff upon request of the insurance commis- sioner, or by a regular grand jury. But under the provisions of an act approved August 31, 1909, the appointment of a special deputy insurance commissioner was authorized, whose salary was fixed at $2,000 a year, pay- able from the proceeds of a tax of one-fifth

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of one per cent on the gross premiums re- ceived by insurance companies on business transacted in Alabama. The deputy was re- movable at the pleasure of the commissioner and was required to furnish a surety bond of $5,000. He was given ample powers to investigate the origin, causes, and circum- stances of all fires which affected insured property, whether in cities or rural communi- ties, and to assist him in the discharge of his duties, mayors of towns and villages, chiefs of city fire departments, county sheriffs, and other public officers were required to report to the insurance commissioner, within one week, the occurrence of every such fire. This official was known as fire marshal. In 1911 this law was so amended as to authorize the employment of such special assistants or legal advisers as might be needed in conducting in- vestigations of fires.

Fire Prevention .- As a part of the work of reducing the loss from fires in the State, and supplementing the efforts of the State fire marshal in the same direction, the legislature adopted a joint resolution, September 25, 1915, requesting the governor to issue his proclamation designating October 9, 1915, as Fire Prevention Day in Alabama, to be ob- served by "fire drills in public schools, the inspection of fire apparatus everywhere, and the removal of all dangerous rubbish from public and private buildings and premises." The date selected was the anniversary of the great Chicago fire, and had been designated as National Fire Prevention Day by the Safety First Federation of America. The proclama- tion was issued, and the day generally ob- served in the State with appropriate exercises.

PUBLICATIONS .- Reports. 1898-1914, 17 vols .; Preliminary Reports, 1906-1915, 7 vols .; Ala- bama insurance bulletin, 1908-1914, vols. 1-7; Fire marshal publications, 6 vols .; Insurance codes and laws, 1893-1915, 12 vols .; Insurance agents' directory, 1901-1916, 13 vols .; Reports of examinations, 1905-1912, 7 vols.

See Auditor, the State; Fires; Insurance; Insurance, Fraternal; Secretary of State.

REFERENCES .- Codc. 1867, secs. 1180-1191: 1907, secs. 4543 et seq .; Acts, 1859-60, pp. 113- 117; 1874-75, pp. 142-147; 1896-97, pp. 1377 et seq .; General Acts, 1909, pp. 321-326; 1911, pp. 685-689; 1915, pp. 132, 834-838, 882-883, 915.

INSURANCE, FRATERNAL. Death bene- fits, funeral benefits, or benefits on account of temporary or permanent physical disa- bility, either as the result of disease, accident, or old age, paid or contracted to be paid by "any corporation, society, order or voluntary association, without capital stock, organized and carried on solely for the mutual benefit of its members and their beneficiaries, and not for profit, and having a lodge system with ritualistic form of work and representative form of government. . . In their insur- ance activities in the State, fraternal socie- ties are governed by the act of April 24, 1911, "for the regulation and control of fraternal benefit societies"; and, except as therein pro- vided, are "exempt from all provisions of the insurance laws of this State, not only in gov-

ernmental relations with the State, but for every other purpose, and no law hereafter enacted shall apply to them, unless they be expressly designated therein." However, by its own terms, the act is administered hy the State commissioner of insurance, (see Insur- ance, Department of) the same as other in- surance laws; and the license, or permit to do an insurance business in the State, of every fraternal benefit society is issued or annually renewed by him, for which a fee of $50 is charged.

Section 30 of the act provides that "every fraternal benefit society organized or licensed under this act is hereby declared to be a chari- table and benevolent institution, and all of its funds shall be exempt from all and every State, county, district, municipal and school tax, other than taxes on real estate and office equipment." The act regulates many details of the transaction of assessment or "benefit" insurance, as the character of the benefits which may be paid and the sources from which the necessary funds may be obtained, with the mode of their collection; the degrees of kinship of beneficiaries to the insured; the qualifications for beneficial membership; the nature and scope of the benefit certificates is- sued; the creation and maintenance of emer- gency, surplus, or sinking funds; the methods of disbursing such funds; the investment of funds, with the character of securities in which investments may be made; the mode of organization and the forms of constitutions and by-laws; methods of internal govern- ment; the relations between supreme, or grand lodges and their subordinate bodies; the responsibilities and liabilities of general and of local officials; and numerous other details which cannot be here enumerated.

In addition to those named below, there have been active in the State at different times, several other fraternal Insurance socie- ties, among them the American Patriots, An- cient Knights and Daughters of Africa, Emi- nent Household of Columbian Woodmen, Grand Lodge Knights and Ladies of Hon- or, Knights of Honor, Knights of the Mystic Chain, North American Union, Order of Calanthe, Praetorians, Rising Sons and Daughters of Protection, Southern Wood- men, Supreme Lodge Masons' Annulty, Uni- ted Brothers of Friendship and Sisters of Mysterious Ten, and others.

The appended list shows the title and the headquarters of the 39 fraternal benefit socie- ties licensed in the State for the year 1916. American Workmen, Washington, D. C.

Brotherhood of All Railway Employees, Chi- cago, Ill.

Brotherhood of Locomotive Firemen & Enginemen, Peoria, III.

Colored Knights & Ladies of Honor of America, Birmingham, Ala.

Columbian Circle, Chicago, Ill.

Columbian Fraternal Association, Washing- ton, D. C.

Columbian Woodmen, Atlanta, Ga.

Cycle of Equity, Birmingham, Ala.

Fraternal Aid Union, Lawrence, Kas.

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HISTORY OF ALABAMA

Grand Fraternity, Philadelphia, Pa.

Grand Union Order of Odd Fellows (Col.), Selma, Ala.

Heralds of Liberty, Huntsville, Ala.

Improved Order of Heptasophs, Baltimore, Md.

Independent Order of Brothers & Sisters of Consolation, Uniontown, Ala.

Independent Order of Immaculates, Florence, Ala.

International Order Twelve Knights and

Daughters of Tabor, Montgomery, Ala. Loyal American Life Association, Chicago, Il1. Maccabees, Detroit, Mich.

Masonic Mutual Life Association, Washing- ton, D. C.

Modern Order of Praetorians, Dallas, Tex. Modern Woodmen of America, Rock Island, 111.

National Order of Mosaic Templars of America, Little Rock, Ark.

National Council of the Knights & Ladies of Security, Topeka, Kas.

National Slovak Society of U. S. A., Pittsburg, Pa.

National Union, Toledo, Ohio.

Order of the Golden Seal, Roxbury, N. Y.

Order of United Commercial Travelers of America, Columbus, O.

Protected Home Circle, Sharon, Pa.

Royal Neighbors of America, Rock Island, IIl. Sovereign Camp Woodmen of the World, Omaha, Neb.

Supreme Camp American Woodmen, Denver, Colo.

Supreme Forest Woodmen Circle, Omaha, Neb.

Supreme Lodge Knights of Pythias (Insur- ance Department), Indianapolis, Ind. (See Knights of Pythias.)

Supreme Ruling of the Fraternal Mystic Circle, Philadelphia, Pa.

Supreme Tribe of Ben-Hur, Crawfordsville, Ind.

Travelers Protective Association of America, St. Louis, Mo.

United Order of the Golden Cross, Knoxville, Tenn.

United Order of Good Shepherds, Montgom- ery, Ala.

Woman's Benefit Association of the Macca- bees, Port Huron, Mich.

See Insurance; Insurance, Department of; Knights of Columbus; Knights of Pythias.

REFERENCES .- General Acts, 1911, pp. 700-722; Fraternal insurance regulations (n. d., pp. 16) ; Commissioner of Insurance, Annual report, Dec. 31, 1916 (1917), pp. 1050-1051; Supreme Com- mandery of Knights of Golden Rule v. Ains- worth, 71 Ala., p. 436; Southern Mutual Aid Association v. Boyd et al, 145 Ala., p. 167; Fra- ternal Union of America v. Zeigler, Ibid, p. 287; United Order of Golden Cross v. Hooser, 160 Ala., p. 334; Mutual Life Industrial Asso- ciation of Georgia v. Scott, 170 Ala., p. 424.

INTERNAL IMPROVEMENTS. The State of Alabama is prohibited by its constitution from engaging in works of internal improve- ment. Section 93 of that instrument provides that, "The State shall not engage in works of

internal improvement, nor lend money or its credit in aid of such; nor shall the State be interested in any private or corporate enter- prise, or lend money or its credit to any in- dividual, association, or corporation." A similar prohibition was also contained in the constitution of 1875, but not in previous con- stitutions. When the conservative white people of the State met in the convention of 1875 to draft a new constitution, they came with their minds made up to prevent a repeti- tion of the frauds and venality in connection with public aid of private enterprises which during the previous 10 years had caused much trouble and litigation, and resulted in piling up an enormous State debt.

However, for the first several years the State had no regular organized system of revenue, and partly for that reason, the legis- latures were slow to adopt a policy calling for continued expenditures. Upon one principle nearly every one agreed: The future develop- ment of the State, agriculturally, commer- cially, socially and politically depended upon the connection of its northern and southern sections by some ready means of communica- tion and transportation. From the first ses- sion of the legislature until the completion of the South & North Railroad (q. v.) in September, 1872, this belief continued to be the crux of the internal-improvement ques- tion. The means first suggested for accom- plishing this desideratum, as we have seen, was the construction of roads and the im- provement of rivers and large creeks, shortly followed by propositions for digging canals to connect the streams which were already navi- gable. Pike roads and plank roads later came into prominence as the most economical and efficacious means of connecting the isolated communities in the State. Almost contem- poraneously with the advocacy of the plank road, the promotion of railroad enterprises began, and later they were the principal re- cipients of State financial assistance. Some companies were chartered both as plank road and railroad companies, the construction of one or the other being optional with the boards of directors. After the adoption of a definite policy of public aid to internal im- provement enterprises, the assistance was for several years rendered by means of appropria- tions from the two and three per cent funds as loans, for which the companies were to fur- nish ample security to the State, and pay in- terest. Later, loans of money from the State treasury, the endorsement of railroad bonds by the State, and the loan of State bonds to railroad companies became the usual practice in assisting such enterprises.

Early Recommendations .- The necessity for a system of internal improvements was recognized from the organization of the State. The first governor, William Wyatt Bibb, discussed the desirability of encourag- ing or assisting, or both, the construction of public roads and other means of communica- tion between the towns and settlements of the young Commonwealth by the granting of franchises with certain exclusive privileges,

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or the loan of public funds to individuals or companies who would undertake such im- provements. In his message of October 26, 1819, he recommended the passage of a law providing for the appointment of a "skillful engineer, whose duties it shall be to examine the rivers within our limits, and to report as soon as practicable, to what extent, in what manner, and at what expense, the navi- gation of each may be improved, and also the nearest and most eligible approaches which can be made between the waters of the Tennessee and Mobile Rivers." He called attention to the provision of the constitution to the effect that "the General Assembly shall make provision by law for obtaining correct knowledge of the several objects pro- posed for improvement in relation to the navigable waters and to the roads of the state and shall make a systematic and economical application of the means appropriated to those objects." In accordance with this recommen- dation the legislature passed a law authoriz- ing the examination of various improvements by a competent engineer under the direction of the executive.

Gov. Israel Pickens in his message of No- vember 10, 1821, discussed the question and suggested that the funds arising from the sales of land granted to the State by the Fed- eral Government, known as the two and three per cent funds, could be used for the con- struction of roads and highways and the im- provement of navigable rivers. The amount realized from this source during the previous 13 months, he said, was $7,899.07, and it was assumed that an equal sum would be received during the following 8 years. This amount he did not consider sufficient to accomplish extensive improvements, but thought it would provide for thorough examinations and sur- veys of the prospects, and possibly for the accomplishment of some of the least expen- sive enterprises. He further recommended, as the means best adapted to secure the de- sired results, the establishment of a board of improvement whose membership should not exceed five, chosen annually or biennially by the legislature, and the members to receive compensation from the State for their actual expenses. The advantages of this system, he said, would be "the greater probability of a disinterested exercise of duty: From the common public spirit and intelligence of those who would most probably be selected as mem- bers of the board, and owing their appoint- ment to the legislature of the state, they would be relieved from that local obligation which is often so much felt by representatives from counties." Among the projects which he thought should first receive the attention of such a board if created, were the construc- tion of the canal to connect the Hiwassee with the headwaters of the Coosa River, and the one between the Alabama and Tombigbee Rivers.

The board recommended by Gov. Pickens was not authorized by law until the passage of the act of January 15, 1830, which created a body known as the "president and directors

of the board of internal improvements." It consisted of six commissioners, biennially elected by joint vote of the two houses of the legislature. The governor was ex officio president of the board. In order that it might be nonpartisan, it was provided that one member should be selected from each of sev- eral districts selected with reference to their contiguity to the streams whose improvement was likely to be brought under the considera- tion of the board. The financial resources at the disposition of the board were restricted to the accumulations of the three per cent fund, which were to be held in the State bank sub- ject to the draft of the president and direct- ors. Practically nothing was accomplished by the board, and the act creating it was repealed January 21, 1832.

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History of Alabama and dictionary of Alabama biography, Volume II, Part 14

Author: Owen, Thomas McAdory, 1866-1920; Owen, Marie (Bankhead) Mrs. 1869- Publication date: 1921 Publisher: Chicago, The S. J. Clarke publishing company Number of Pages: 724

Author: Owen, Thomas McAdory, 1866-1920; Owen, Marie (Bankhead) Mrs. 1869-
Publication date: 1921
Publisher: Chicago, The S. J. Clarke publishing company
Number of Pages: 724