Osborn v. Ozlin - 310 U.S. 53 (1940)
U.S. Supreme Court
Osborn v. Ozlin, 310 U.S. 53 (1940)
Osborn v. Ozlin
Argued March 27, 1940
Decided April 22, 1940
310 U.S. 53
As to casualty and surety risks in Virginia, insured against by corporations authorized to do business in that State, a Virginia law requires that the insurance shall be "through regularly constituted and registered resident agents or agencies of such companies" and that such resident agents shall receive "the usual and customary commissions allowed on such contracts," and may not share more than one-half of a commission with a nonresident licensed broker.
1. That the regulation is constitutionally within the power of the State, even though one effect of it may be to increase the cost of "master" policies negotiated by brokers in other States, through which an assured may obtain a reduced rate and commission by pooling all of his risks, in and out of Virginia, in one contract. Pp. 310 U. S. 62-65.
2. As a basis for this legislation, the legislature was entitled to act on the belief
(1) That, by requiring participation by responsible resident agents, it would lessen the difficulty of enforcing the Virginia system of insurance regulation and detect unlawful rebating. P. 310 U. S. 63.
(2) That the limitation on sharing of agents' commissions would assure the use of resident agents for the procuring and "servicing" of policies covering local risks -- functions which, when adequately performed, benefit the company, the producer, and the assured and, by minimizing the risks of casualty and loss, redound to the benefit of the community. P. 310 U. S. 64.
(3) That the agency system in view is better calculated to further these ends than other modes of "production." P. 310 U. S. 64.
3. The regulations are well within the power of the State over insurance against local risks. P. 310 U. S. 66.
29 F. Supp. 71 affirmed.
Appeal from a decree of the District Court of three judges dismissing a bill to enjoin the enforcement of a statute regulating insurance in Virginia.