BankingState Insurance Carriers
State insurance carriers offer hail insurance, life insurance (http://www.equote.com/li/nomedicallifeinsurance.html), workmen's compensation insurance, unemployment insurance, disability insurance, second-injury funds, and Torrens title insurance. Of course, in the beginning not every state had all these funds. In fact, only Wisconsin had a life fund at first; and very few states had hail insurance, title insurance, or disability funds.
Hail insurance funds were established in North Dakota, South Dakota, Montana, Oklahoma, Colorado, and Nebraska to indemnify subscribers for losses to their tillable acreage resulting from hailstorms. However, only North Dakota, Montana, and Colorado had operating plans for some time. The oldest of these funds is the North Dakota fund, established in 1911.
The law relating to this fund underwent several changes since then and represented an interesting practice in state insurance. The fund was under the direction of the insurance commissioner and was operated by an appointed manager. The insurance was actively solicited by the district tax assessors. In addition, the county auditor stood by to accept applications between June 1 and July 15.
The amount of insurance written for each applicant was limited to either $5.00 or $8.00 an acre, to be stated at the time the insurance is written. Premiums were paid in the form of an indemnity tax which was levied at the next tax period after losses were experienced. The size of the tax depended upon losses and expenses for the period. The maximum overall tax was limited to 10%, although this maximum would vary from district to district.
At the inception of the plan a surplus fund was established from a special tax on all tillable land to assure its solvency. Loss adjustments were handled by officials of the fund, and loss payments were made by means of tax warrants on the state treasury. It should be obvious that the cost of operating such a fund was low and that the insurance it provided was inexpensive.
An affordable life insurance (http://www.equote.com/info/life-insurance-info.html) fund entirely controlled and operated by the state of Wisconsin was established after the state legislature in 1911 authorized the commissioner of insurance to issue life insurance on residents of the state. The state assumed no liability other than the fund itself.
The first policy was issued in October, 1913. Administration of the Wisconsin state fund was in the hands of the state treasurer. The conduct of the business was left to the insurance commissioner of the state. The State Board of Health assisted in medical selection. The treasurer of the state was the treasurer of the fund. The secretary of state audited the accounts submitted to him by the audit board, all other members of which were officials.
The fund had no agents and did not engage in the type of advertising undertaken by the Savings Bank Council on behalf of savings bank low cost life insurance. There was no management or occupancy expenses, only some clerical salaries. Applications were taken through designated state, county, and city officials and state banks, by which they were forwarded to the commissioner.
At least partly as a result of what amounts to a government subsidy (state payment of management and occupancy expenses from other funds), the rates of the fund were generally lower than those of commercial old-line participating companies. Despite generally favorable rates, progress of the fund was slight, apparently from the lack of either sales effort or advertising (which is simply a form of sales effort).