THE POWER OF THE STATE TO REGULATE RATES CHARGED BY SURETY COMPANIES

Courts usually recite the general statement that bonds "entered into for a consideration by surety companies engaged in such business, are in effect contracts of insurance, and the contracts are not to be construed according to the rules of law applicable to the ordinary accommodation surety.'' "Being a surety paid for its suretyship, the law adjudges its contract and its adjustment on that basis." The idea that a contract insuring against mercantile losses is one of insurance "and should be treated as such" had its inception over thirty years ago when the courts were first presented with the problem of the classification of contracts by compensated sureties. To ascertain if all corporate surety undertakings "are, in fact, policies of insurance," it becomes necessary to determine first, what constitutes an insurance contract, and, second, whether all insurance law is applicable to contracts to which a compensated surety is a party'.