Officials Intrusted with Supervisory Control and Their Duties and Powers

In the great majority of states supervisory control over insurance companies has been intrusted to an insurance official, usually called the superintendent or commissioner of insurance, who is either appointed by the governor or elected by popular suffrage, and who is placed in charge of a separate department of the government. Uniformity among the states in this respect, however, does not exist, and a considerable number attach the responsibility of supervising insurance companies to some other department of the government. At the close of 1913, seven states still intrusted such supervisory control to the state auditor, four left it to the secretary of state, one made the state treasurer the supervising officer, and one divided the control between the secretary of state and the treasurer.

Many of the states have enacted a large body of statute law governing insurance, while others are still very backward in this respect. Although the legislatures and courts of the several states play a prominent part in the enactment and interpretation of insurance legislation, the actual supervision of the companies and the enforcement of the laws is performed by the insurance commissioners. These officials are usually vested with large discretionary powers. It is the duty of the commissioner to see that all insurance laws are properly complied with and that all the companies transacting business in the state are solvent according to some prescribed standard. His permission must be obtained before a foreign company can enter the state, or before an agent of such company can solicit business. Every company is obliged to render an annual statement of its condition and business in the form and manner prescribed by the commissioner, and he has also the power to require at any time statements from the officers or agents of any company operating within his state on any matters on which he may desire to be informed. To facilitate examinations he is empowered to require free access to all books and papers of any company or agent operating in the state, to summon and examine any persons under oath relative to the affairs and condition of any such company, or, for probable cause, to visit the company at its principal office for the purpose of investigating its affairs. Failure or refusal to render any statement required within the time and manner prescribed by the commissioner, or to permit any examination requested, subjects the company to heavy money fines or to the danger of haying its license revoked. His other important duties, as summarized on another occasion2 may be stated as follows:

Power is given the commissioner to suspend the entire business of any company by revoking or suspending its license if in his opinion the company does not comply with any provision of the law, or whenever its assets appear to him insufficient He must see that the company has made the proper deposits of approved securities; that it makes a correct return of the taxes which are imposed by law; and that a resident of his state is appointed the attorney of the company so that in the event of litigation legal process may be served without the citizens being obliged to go outside of the state to serve the papers. It is also his duty to see that the assets of all companies organized in the state are properly invested in the form prescribed by law. He has supervisory power over the organization of all companies from the time that the articles of agreement are arranged until the company is ready to begin the writing of policies, and in every stage of the organization and in all matters pertaining thereto, it is necessary for the organizers of the company to have his approval. Finally, he owes it to the public as well as the companies to do all in his power to exterminate improper or unlawful insurance schemes. Numerous other duties and powers might be enumerated, but those mentioned will suffice to show that the insurance commissioner is clothed with extraordinary powers, and that consequently the personality of the commissioner is a factor the importance of which cannot be overestimated.