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NINTH ANNUAL REPORT OF THE
INSURANCE DEPARTMENT

His Excellency, Governor Richard I. Manning, Columbia, S. C.

Sir: In accordance with law, I herewith submit the Ninth Annual Report of the Insurance Department of South Carolina.

From the reports as of date June 30, 1916, the life, fire and miscellaneous insurance companies of other States now licensed in South Carolina had invested in South Carolina State, county and municipal bonds, first mortgage bonds of real estate, first mortgage bonds of South Carolina corporations whose improved property is located in South Carolina, and in deposits in banks of South Carolina an aggregate of $17,432,000.

This shows an increase of investments in six months of $1,517,000. On account of repayment of loans and maturity of bonds the actual results are even greater than those indicated. The life insurance companies of other States alone during the six months actually made 328 new loans aggregating $1,552,000, showing the average loan made to have been about $4,900. This is probably the lowest average loan made by life insurance companies in the history of the State. It means that the small borrower is now getting the benefit of these loans.

The above figure does not include investments in railroad stocks and bonds nor in loans to policyholders on the security of their policies. It is likely that if these items were taken into consideration the total investments in all classes of South Carolina securities would aggregate probably $35,000,000.

It is somewhat interesting to note the increase in investments in South Carolina State, county and municipal bonds, real estate mortgages and deposits in banks and bonds of domestic corporations whose improved property is entirely within the State since the establishment of the Insurance Department. No accurate figures are obtainable preceding December 31, 1910, when the first report in detail was made. From the best obtainable information, however, at the time of the establishment of the Insurance Department the aggregate investments in the securities named by all insurance companies of all classes of other States did not

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exceed about $326,500. The following are the figures for each year since the reports have been made in detail:

LICENSE FEES COLLECTED.

The license fees collected by the Insurance Department for all purposes from insurance companies licensed to do business in the State for the year ending December 31, 1916, were $179,674.08.

Time and again the Insurance Department has emphasized the fact that its main function is supervision and is not one of revenue. Nevertheless it is appreciated that the amount of revenue being concretely shown seemingly is of great interest to the people. Therefore it may be worth while to give the amounts collected by the Insurance Department and turned into the State Treasury for each year since its establishment. The Department was established in March, 1908. During 1908 and precedent thereto county taxes and license fees were paid to the several county treasurers. The Supreme Court in 1908 having declared the system of county taxes unconstitutional, the Legislature in 1909 passed an Act requiring all State and county taxes to be paid to the Insurance Commissioner. Therefore the receipts for the first year are not on the same basis with those of succeeding years.

It must be borne in mind, too, that by the reduction in license fees allowed on account of investments, the rate of taxation to insurance companies has been materially decreased since the establishment of the Department. The increase in revenue is largely due to the increase in business and to care in collections.

The following amounts have been collected for each year since the establishment of the Department and turned into the State Treasury:

Merely for the purpose of stating what are facts, reference is made to "An Act to Prevent Fire Insurance Companies, Associations or Partnerships doing a Fire Insurance Business in this State to Enter into Any Compact or Combination with Any Other Fire Insurance Companies, Associations or Partnerships", commonly known as the Laney-Odom Act, passed at the session of 1916 and approved on March 2, 1916.

This Act is made up of Sections 1819 to 1823 inclusive of the Code of 1912 and which was the law of this State from 1899 until 1904 with an amendment to Section 1819 permitting the companies to employ a common agent "to prepare and furnish maps and other data as to risks." These sections make up the first five sections of the Act. The 6th section is what is known as Bill No. 6 recommended by the National Convention of Insurance Commissioners at its meeting in December, 1914, and which was a part of a general Act drawn by the Convention for the regulation of fire insurance companies after a consideration by the National Convention of Insurance Commissioners of the matter for about eighteen months.

The 7th Section is very similar in language and of like effect as Section 2730 of the Code of 1912 regulating life insurance companies and their agents.

The 8th Section is the exempting section.

WITHDRAWALS NOT EXPECTED.

I believe I am warranted in saying that the Legislature when it passed this Act never imagined that any company would withdraw from the State on account of it. Certainly the Insurance Commissioner did not think so and he had what he thought were reliable assurances to contrary effect. While a number of the leading agents of the State who were favorable to the continuance of the South-Eastern Underwriters Association did protest to Your Excellency against the signing of the bill, the companies

in no manner protested to Your Excellency though the bill lay on your desk for about two weeks before it was signed.

Therefore it brought considerable surprise when almost immediately after the signing of the Act the largest fire insurance companies in the United States which had been doing business in South Carolina commenced to withdraw from the State. This continued until about 78 of such companies had withdrawn from the State or did not renew their licenses on April 1, 1916.

COMPANIES WHICH RENEWED LICENSES.

The companies which did renew their licenses on that date

were:

The American Druggists' Fire Insurance Co., Cincinnati, Ohio. The Equitable Fire Insurance Company, Charleston, S. C. The Georgia Home Insurance Company, Columbus, Ga. The New Brunswick Fire Insurance Company, New Brunswick, N. J.

The New Jersey Fire Insurance Company, Newark, N. J. The Pacific Fire Insurance Co., New York City. The Palmetto Fire Insurance Company, Sumter, S. C. The South Carolina Insurance Company, Columbia, S. C. The Southern Home Insurance Company, Charleston, S. C. The Southern Stock Fire Insurance Company, Greensboro, N. C.

The Southern Underwriters, Greensboro, N. C.

The Underwriters of Greensboro, Greensboro, N. C.

The Germania Fire Insurance Company of New York City and the Milwaukee Mechanics Insurance Company of Milwaukee, Wis., did renew their licenses, but they remained quiescent and have not done an active business in the State.

Subsequent to April 1st the following companies were admitted to do business in the State during the year:

The Commercial National Fire Insurance Company, Chicago, Ill.

The First National Fire Insurance Company, Washington, D. C.

The Guardian Fire Insurance Company, Salt Lake City, Utah, and

Lloyds New York, New York City.

COMPANIES ORGANIZED.

There was organized in the State The Fidelity Fire Insurance Company of Sumter, The New South Fire Insurance Company of Bamberg, and The Prudential Fire Insurance Company of Greenville.

There were likewise licensed 23 cotton mill mutual fire insurance companies, 2 cotton seed oil mill mutuals, and 31 mutual fire insurance companies of various classes, all of other States, some doing special lines and some doing general lines of insurance.

Likewise there were licensed in the State 19 domestic mutual fire insurance companies, 4 having been organized during the year, these being The Farmers Mutual Fire Insurance Company of Florence, The Farmers Mutual Fire Insurance Company of Orangeburg, The Farmers Mutual Protection Association of Sumter, and The Greenville Mutual Fire Insurance Company of Greenville.

REINSURANCE FACILITIES.

At first the companies which did business in this State found great difficulty in securing reinsurance connections. The companies which retired from the State refused as a rule to make such reinsurance treaties. And many of the companies which usually did only reinsurance business seemed to hesitate to make reinsurance treaties with the companies doing business in South Carolina for fear of antagonizing the companies which had withdrawn. So at first it was with difficulty that reinsurance was obtained.

THE BROKERS LAW.

Under the operation of a law passed at the session of 1916 entitled "An Act to Provide for the Licensing of Insurance Brokers", 39 former agents in this State were licensed as insurance brokers. These at first had some difficulty in finding companies which would accept business from them, but gradually the facilities offered them were increased and before the end of the year practically there was no difficulty in securing satisfactory coverage for nearly all lines in the State. Some exceptions must be made of very large cotton hazards which were covered with difficulty, and in some instances the rates on these risks were considerably increased. This applied particularly to the class of