REINSURANCE AND SURPLUS LINE LAWS. The laws of a number of states prohibit reinsurance of risks, either in whole or in part, in companies not authorized to do business in the state. Such laws are in force in Arkansas, Colorado, Florida, Illinois, Louisiana, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Pennsylvania, Texas, Virginia, West Virginia. The laws of Arizona and Washington prohibit reinsurance in an alien company a company not authorized to do business in the United States and not having a deposit in some state of the United States. In Delaware the commissioner may permit such reinsurance. Minnesota while not prohibiting reinsurance requires that such reinsurance be reported to the insurance commissioner, and Ohio prohibits reinsurance in, but also acceptance of reinsurance with a company not authorized to do business in the states. Massachusetts and Maryland require all reinsurances to be reported to the insurance commissioner.

Referring to surplus line insurance as distinct from reinsurance the above-named states, with the exception of West Virginia, North Dakota, New Mexico, Nevada, Florida, Colorado, Arkansas, and Arizona, make special provision for placing insurance in unauthorized companies, and the laws of Connecticut, Kansas, Kentucky, Maryland, Maine, Missouri, New Jersey, New York, Tennessee, Vermont, Wisconsin, which place no restrictions on reinsurance, make special provision for placing insurance in companies not authorized to do business in the state. The laws require a special license fee, and provide that a person so licensed must make affidavit that he is unable to procure sufficient insurance in companies regularly licensed to do business in the state before placing insurance with unauthorized companies. He must keep separate account of such business and make report of it to the insurance department. The laws of Illinois, Kansas, Maine, New Hampshire, Texas, and Wisconsin limit the granting

46

of such licenses to regularly licensed agents or brokers, while the law of New York limits the number of such licenses that may be issued to not exceeding two hundred," and Washington limits the number to "not exceeding fifty in any one city." The Missouri law limits the granting of licenses to procure insurance in unauthorized companies to agents, and any person who desires insurance on his own property or the property of his firm, or corporation in which he is interested.

Special license fees or taxes are imposed on business placed in unauthorized companies. Kansas and Ohio make the license fee $10 Wisconsin, $15; Connecticut, Louisiana, and North Carolina, $20; and Kentucky, Michigan, Nebraska, and Texas, $25. Vermont makes the license fee $10, with a tax of three per cent on gross premiums; Massachusetts, $20, and a tax of four per cent on gross premiums less return premiums, and Missouri, $10 and a tax of two per cent on gross premiums; California imposes a tax of four per cent, and Maine two per cent on gross premiums, less return premiums, and Minnesota two per cent; Pennsylvania three per cent on gross premiums, and Tennessee two and a half per cent on all premiums paid to any unlicensed company. Illinois imposes a tax of two per cent on gross premiums, and a license fee of $200 except in counties of less than 100,000 population in which case the license fee is $25, and New York requires the same license fee, but imposes a tax of three per cent on gross premiums. Washington requires a license fee of $100, with bond of not less than $500, and the same tax that is imposed on licensed companies (24 per cent less return premiums). Maryland imposes a tax of five per cent and in addition a fee of $1.00 for each policy. The tax in New Jersey is three dollars ($3.00) for each one hundred dollars of insurance or at that rate upon the whole amount of gross premiums, and in addition execute a bond in the penal sum of three thousand dollars. [For a summary of the laws and restrictions as to reinsurance see Cyclopedia for 1913-14.]

REINSURED, RETIRED, AND FAILED INSURANCE COMPANIES IN 1917. The following is a list of the joint stock fire insurance companies which ceased to do business for various causes in 1917.

In addition several local and western township mutual companies retired and the following German and allied enemy companies (fire and marine companies) ceased business because of the war and under a proclamation issued by the President of the United States:

Aachen & Munich Fire, Aix-la-Chapelle; Allianz (marine), Berlin; Balkan National, Sofia; Bulgaria, First Bulgarian," Rustchuk; Cologne Reinsurance, Cologne; Frankona Reinsurance, Berlin; Hamburg Assurance, Hamburg; Hamburg-Bremen Fire, Hamburg; International Reassurance, Vienna; Mannheim (Marine), Mannheim; Minerva Ret. and Reins., Cologne; Munich Reinsurance, Munich; Nord-Deutsche, Hamburg; Prussian National, Stettin; South German, Munich.

RELIANCE INSURANCE COMPANY of Philadelphia was incorporated 1841. Capital, $400,000. William Chubb, president; Charles J. Wister, vice-president; William W. Haig, secretary.

RELIANCE MARINE INSURANCE COMPANY, THE (Limited), Liverpool, Eng. W. L. H. Simpson, attorney and manager, New York.

RENT INSURANCE.* Anyone who has a pecuniary interest in the preservation and protection of property and who might sustain a loss by reason of its destruction, has an interest in such property which is insurable. It follows, therefore, that a landlord may insure against loss of rents, and a tenant may insure against his continuing liability to pay rent, regardless of the occurrence of a fire.

Whether a landlord has an insurable interest to support a policy of fire insurance on rents, where the tenant is obligated unconditionally to pay rent in full, is a question concerning which there is some difference of opinion; but the courts would probably have no difficulty in discovering an insurable interest if on no ground other than that the fire might impair the ability of the tenant to pay rent. If, however, after the fire, the tenant should pay the rent in full, the landlord would be unable to show a loss. But, if the landlord should recover his rent insurance, the insurer making payment would become subrogated to the claim against the tenant. Rents, however, are not covered by an insurance upon the building, but liability must be specifically assumed thereon.

There are many different forms of rent policies, but those in most general use provide that the insurer shall make good the loss of rents actually sustained by the insured on occupied or rented portions of the premises which have become untenantable, for and during such time as, with the exercise of due diligence, may be necessary for the restoration of the premises to the same tenantable condition as before the fire. A form thus phrased covering on occupied or rented portions of the premises, is regarded as sufficiently broad to cover that portion of the premises occupied by the insured himself, and not rented. Some forms, however, remove all elements of doubt on this point by expressly declaring that, if the insured occupies any portion of the building, a fair rental value of the portion so occupied shall be considered as a part of the rents.

Insurance is also written at an advanced rate to cover loss of rents or rental value to the premises, whether occupied or vacant at the time *By William N. Bament, general adjuster, The Home Insurance Company, New York, N. Y.

of the fire. The theory upon which this class of insurance is based is that the premises have a value as rentable property and may be rented at any time; hence, if they are destroyed by fire, the insured may be deprived of the income which might otherwise accrue to him.

The older forms contain the co-insurance or average clause (usually the one hundred per cent) based on the annual rental or rental value, as the case may be; but in some of the later forms, this provision is modified in favor of the insured, in consideration of a higher premium, by changing the basis from the twelve month to the time that would reasonably be required to restore the premises to a tenantable condition, if totally destroyed.

and agree to

Most of the forms in current use cover on "rents make good the "loss on rents actually sustained." The question naturally arises whether this means gross rents or whether it means gross rents less those expenses which may be saved to the insured during the period of reconstruction, such as lighting, heating, elevator service, janitor service, collections, insurance, and the like. There has been comparatively little litigation involving rent insurance; therefore, we have only general principles and analagous decisions to guide us in reaching our conclusions.

It is possible, of course, that the courts might declare a policy thus phrased to be valued, and if so it would be construed like any other valued policy and the insurer would be liable for loss of gross rent without any deductions therefrom. It is, however, the well-considered opinion of some of the best legal minds that, in view of the strong inclination on the part of the courts to adhere in their decisions to the fundamental principle of indemnity, they would hardly go out of their way to discover a valued feature in a policy where none is expressed and where there is no evidence, except such as is remotely inferential, of its existence.

If the policy is not valued, it should be construed like any other contract of indemnity; and there is no logical reason why, on rents rather than on any other class of property, one should recover more than his actual loss. The fact that the policy limits liability to loss on rents "actually sustained " lends emphasis, if any were needed, to the view that the policy is not valued; and these words, if they have any significance whatever, should be controlling.

Our highest courts have held that, where there is a contract of indemnity and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount that the indemnifier is bound to pay, and the insured is entitled only to be placed in the same condition, pecuniarily, that he would have been if there had been no fire.

In the light of the authorities, it seems clear that, unless the policy should be declared valued, it is ncumbent upon the insured (under a rent policy) to prove what his actual net loss is, after making proper deduction for everything in the way of salvage that may come to him. In many cases there would be no diminution in the regular running expenses: but in event of a serious damage too, or the total destruction of the building, there might and probably would be quite a material saving in expenses, and, if so, this would be a very important factor.

66

Nearly all rent losses are partial; the forms, covering simply on rents " and differing somewhat in phraseology, have been in use for many years; the loss record has not been unfavorable; very little difficulty has been experienced in adjustments; settlements are usually made on a compromise basis, and many claimants, no doubt, take into consideration the salvage in expenses in their negotiations, so that the question does not arise very frequently as a practical proposition.

In some portions of the country, however, notably on the Pacific Coast, evidently with a view to avoiding discussion, policies are issued covering net rents or net rental income; but the practical effect of this form will be to permit the insured to collect his gross rent in many instances (because all expenses frequently continue in event of partial loss), whereas the coinsurance or average clause will be applied to the annual net rental; hence in cases of partial loss such form would be quite advantageous to the insured.

RESIDENT AGENTS' LAWS. Laws requiring policies of insurance to be placed through "regularly commissioned and licensed agents resident in the state are with two or three exceptions in force in all states and apply to fire insurance. In a few states the laws are general, applying to all, or any form of insurance, while in a larger number the laws are made to apply to the placing of the different lines of casualty or miscellaneous insurance as well as fire insurance. As a rule regular life insurance companies and assessment and fraternal associations are exempt. The following is a statement of the laws now in force with date of enactment:

Alabama (1907); Arizona (1913 and 195); Arkansas (1901 and 1903); Colorado (1907 and 1915); Connecticut (1893); Delaware (1901 and 1917); Florida (1899 and 1903); Georgia (1896 and 1901); Hawaii (1903); Idaho (1911, 1913, and 1915); Illinois; Iowa (1897); Kansas; Kentucky (1916); Louisiana (1902 and 1916); Maine (1903, 1905, and 1913); Maryland (1900); Massachusetts (1907); Michigan (1912); Minnesota (1905); Mississippi (1902 and 1916); Missouri (1897); Montana (1907); Nebraska (1909); Nevada (1901); New Hampshire (1899 and 1911); New Jersey, New Mexicao (1901 and 1913); North Carolina (1905); North Dakota (1905); Ohio (1917); Oklahoma (1909); Oregon (1899); Pennsylvania (1899); Rhode Island (1896); South Carolina (1900 and 1915); South Dakota (1895); Tennessee (1899); Texas (1903); Utah (1907); Vermont (1908); Virginia (1906); Washington (1911); West Virginia (1901); Wisconsin (1911); Wyoming (1910 and 1915). [For full text of laws see Cyclopedia for 1913-14 and 1915.]

The laws of all the above states apply to fire insurance, and the law of Alabama specifically mentions life insurance, while also applying to all other classes of companies. The laws of Arizona, Idaho, Michigan, New Hampshire, New Mexico, North Dakota, Oklahoma, Rhode Island, Virginia, West Virginia, Wisconsin, and Wyoming are general, applying to any and all companies. The laws of Arkansas, Colorado, Georgia, Kentucky, Nebraska, North Carolina, South Carolina, and Texas contain special provisions applying to the different classes of casualty, or miscellaneous companies, and the laws of Mississippi and Utah apply to all companies, except life, and,