JORDAN, SUPERINTENDENT OF INSURANCE,

v.

GROUP HEALTH ASS'N

RUTLEDGE, Associate Justice.

This is an appeal from a declaratory decree holding that appellee, herein called Group Health, “is not engaged in the business of insurance in the District of Columbia in violation of law and is not within the purview of any of the laws in said District relating to insurance companies.” Appellant is the Superintendent of Insurance for .the District, substituted on appeal for the original defendant, his predecessor in office, J. Balch Moor, now deceased. The then Acting United States District Attorney, David A. Pine, now District Attorney, also was a party defendant, contending that Group Health is engaged illegally in the practice of medicine. The judgment was adverse to both defendants, and the District Attorney has not appealed. Appellant contends that Group Health is' either a health or accident insurance company within the meaning of Section 653 of the Code, D.C.Code 1929, tit. 5, § 179, or a company engaged in the business of insurance or an insurance company within the meaning of various other sections of the Code,1 that it is carrying on its opera-*241lions illegally and without complying with the requirements of these statutes, and that the holdings and judgment below to the contrary were erroneous.

Group Health was incorporated on February 24, 1937, as a nonprofit corporation under Sections 121-126, Title 5, of the District of Columbia Code (1929), which authorize incorporation of associations for benevolent, charitable, scientific and other purposes, including mutual improvement.2 The corporate objects, summarized, are to provide, without profit to the corporation, for medical services, preventive and curative, surgery, hospitalization, and medical and surgical supplies, exclusively for members of Group Health and their dependents.3 Under the by-laws, membership is composed “solely of civil employees of the executive branch of the United States government service.”4 Members are elected by the Board of Trustees, who in turn are elected by the members except two chosen by the Federal Home Loan Bank Board,5 all from the membership. Members may resign at any time, remaining *242liable for thirty days’ dues, and • failure to pay dues for sixty days terminates membership. There are two classes of membership, family membership and individual membership. For the latter, dues are $2.20 monthly; for the former, $3.30 (now, as appears from appellee’s brief, slightly more).

Control and management of corporate affairs are vested in the Trustees, who may expel a member for cause on notice and hearing. The Trustees serve without compensation. On dissolution of the company, they are empowered to liquidate its assets, wind up its affairs, and distribute remaining proceeds to members in good standing.

Group Health issues no policies, formal certificates or contracts, but does give membership cards to its members for purposes of identification. Members’ rights to services are fixed by the certificate of incorporation and the by-laws, principally the latter, including various amendments made from time to time. In return for the monthly dues, Group Health undertakes to arrange for medical and surgical services6 to be rendered -by independent practitioners, not full-time staff members,7 either at the clinic maintained by Group Health or, if necessary, at the home of the member or the hospital where the patient may be. Hospitalization is by arrangement with established independent hospitals, for a maximum of twenty-one days for any one illness.

The petition alleges that the contracts with physicians and others are made by Group Health “on behalf of its members”, but they are not made on the occasion of each call or case, and do not purport to obligate the member to pay the physician for the seryice,8 or as a principal normally is bound in commercial transactions by his agent’s agreements on his behalf. The contract between Group Health and the physician undoubtedly enters into and fixes some aspects of the legal relation between him and the member. But in this r.espect its role is more nearly analogous to that of a collective labor agreement in the individual contract of the union member and the employer (entering into it So as to fix some of its terms, but not others) than to *243the ordinary contract of a principal made by his agent. The physicians and hospitals look solely to Group Health for their compensation as to the services it undertakes to arrange for. Nor is the cost of service rendered to an individual member limited by or apportioned to his contributions. For $26.40 a year, an individual member may receive much, little or no service. In effect the plan is one by which the members by making regular, limited payments receive service and supplies in variable degrees according to their needs, within specified limitations. Although this is the practical operation and effect of the plan, it is important to note the exact nature of the obligations assumed by Group Health to its members. These are contained, so far as the record shows, exclusively in the by-laws, which, in their amended and presently controlling form, have been drawn with extreme care. The pertinent provisions are set out in the margin.9

The effect of the agreement or arrangement is to make available to members, if they wish to receive them, the services of the physicians contracted for by Group Health; but it is specifically provided that (1) Group Health cannot and will not regulate or control the physician in his work— he is left free, in fact required, to exercise his own judgment entirely independently as to diagnosis and treatment; (2) the only obligation which Group Health assumes toward its members is to make contracts, of the character described, with physicians and others — there is no agreement or binding obligation to provide the service or see that it is supplied; the undertaking is to contract for the rendition of the services by independent contractors, not to supply them at all events or con*244tingently; (3) further, the Trustees may determine or modify the extent of service so made available (presumably as to all members collectively) at any time on fifteen days’ written notice; (4) the Medical Director may determine the extent of the services which will be available to members in each individual case; (5) the corporation does not guarantee that any of the services will be rendered, or that any contracting physician will perform his contract to supply them; (6) the corporation assumes no liability for his failure to do so or for any act of omission or commission by him in doing so or for any breach of his contract; and (7) finally, Group Health assumes no liability, if for any reason it becomes unable to procure any or all such services when called upon to do so, or to indemnify the member for failure of the physician to keep his agreement or perform it properly, and its only obligation in such a case is "to use its best efforts to procúre the needed services from another source.” This is the basic contract relating to the primary service. In addition, Group Health arranges for limited hospitalization, by what specific terms does not appear, and itself furnishes facilities and services in connection with its clinic, all of which are merely incidental to the primary services and must stand or fall with them.10

Tenuous the obligation may be, but that does not render it illegal, or make of it a contract of insurance or one of indemnity. Correlatively tenuous is the member’s responsibility to Group Health.11 The attenuated character of the literal obligation on both sides is pertinent here, not to its essential fairness or to any question of sufficiency of consideration or mutuality of obligation (no member now questions it), but to the issue or issues before us, namely, whether the agreement is a contract of insurance or one “for the payment of indemnity on account of sickness or accident.” In our view it is neither.12

It is unnecessary for us to attempt formulation of an all-inclusive or exclu*245sive definition of insurance or of indemnity, or to distinguish them sharply.13 While the basic concepts are not identical and each has varied legal usages, they have common and primary elements which are controlling here. Fundamentally each involves contractual security against anticipated loss. Whether the contract is one of insurance or of indemnity there must be a risk of loss to which one party may be subjected by contingent or future events and an assumption of it by legally binding arrangement, by another. Even the most loosely stated conceptions of insurance and indemnity require these elements. Hazard is essential and equally so a shifting of its incidence. If there is no risk, or there being one it is not shifted to another or others, there can be neither insurance nor indemnity. Insurance also, by the better view, involves distribution of the risk,14 but distribution without assumption hardly can be held to be insurance.15 These are elemental conceptions and controlling ones. How are they to be applied to Group Health’s plan of operations?

As to the preventive phase of its work and some others, it does not appear that any hazard is involved. The examination of persons seeking employment with the Home Owners’ Loan Corporation cannot be regarded even remotely as involving risk to others or assumption thereof by Group Health. So with its supervision of that organization’s first aid service. The examination of and consultation with members who are in health, not ill, and all that large phase of its work designed to prevent rather than to treat illness, hardly can be said to involve risk of it, certainly not assumption of that risk or of the loss caused when it falls. This is prevention of hazard, not payment for the loss when it strikes. This phase of the plan is not slight or insubstantial, or, therefore, to be ignored in determining the basic question. As we have said,16 it is the plan as a whole, not artificially disjointed and segregated single *246phases of it, with which we are concerned.17 Certainly it was not this sort of activity at which the definition in Section 653, or the insurance regulations of the District, if they be separable from it, were directed.

But what of the service to the sick or injured? Here certainly is risk, hazard which has descended.18 But has it been shifted to or assumed by Group Health? On this question the exact nature of its obligation becomes important. Does it assume the risk, or contract to bear the member’s loss when it falls ? Is it obligated to pay, in cash or in kind, to him or to another for his benefit or for that of a beneficiary designated by him the amount by which he is damaged or any amount? Unless the by-laws are to be discarded and ignored entirely, there can be only one answer. The agreement is not to pay to the member or to any one else the amount of loss which is caused to him. True, the physician receives his salaried compensation. But he receives no more and no less because of the falling of the loss. He is not a beneficiary; nor is he an agent of' the member; in an inaccurate; non-technical sense, he, rather than Group Health, is the one more nearly analogous to an insurer. If incidence of illness in the group is light, so is his work; if heavy, so is his labor up to the maximum of his contract. In either case his compensation is the same. Nor is the burden of Group • Health increased normally by the falling of particular losses. Its obligation to the physician remains the same. That to particular members is not at all affected by the volume of illness ,in the group whether great or small. As a matter of good faith, of fulfilling moral expectations, in epidemic conditions it undoubtedly would expand the arrangements for service temporarily, so far as its resources would permit. Sizable increase in membership would cause it likewise to enlarge the number of physicians under contract, so as to make the service generally and normally available. But this would not expand the obligation or the liability to any particular member. In any event, whatever the emergency or the experience, it undertakes not to supply the service, or see or guarantee that it is supplied, or be responsible for the failure to supply it or to do so properly, but only to “use its best efforts” to secure similar service from another source.

Tested by the nature of the member’s right of recourse against Group Health for breach of its contract with him, the matter becomes clear. Possibly he could succeed on showing no reasonable effort by it to contract with physicians or others to render the stated services; or that it was negligent in selecting incompetent ones; or that it did not “use its best" efforts” to make alternative arrangements. But barring some such showing, his attempt to recover would be in the teeth of his contract. This is not assumption of risk or hazard. It has not the sound or the sense, technically or in lay conception, of “insurance” or of “indemnity”. If it resembles anything, the analogy is rather to “agency” or representative action, or to that of an intermediary of more independent status. The contract is, in fact, unique. It does not fit neatly into established categories of “agency”, “guaranty”, “insurance”, “indemnity” and the like. As has been said, it bears some relation to a collective labor agreement.19 In a broad sense, such an agreement may be considered as one of “indemnity” against unemployment or other hazards covered by its terms. Yet no one would contend that because the employer fails to live up to his contract with the union, it would be rendered liable to its member injured by his *247breach, or that the union, because it makes contracts to this extent on behalf of and for the benefit of its members, becomes as to them an “insurer” or “indemnifier”. against the risk of such a contingency. The mere fact that the agreement has for its object the safeguarding of the worker from some of the uncertainties and insecurities of unemployment does not place it or the labor relations and risks with which it deals under the regulations pertaining to insurance and indemnity; so with this arrangement.

The same conclusion is dictated by the plan’s practical operation and effect. Although Group Health’s activities may be considered in one aspect as creating security against loss from illness or accident, more truly they constitute the quantity purchase of well-rounded, continuous medical service by its members. Group Health is in fact and in function a consumer cooperative. The functions of such an organization are not identical with those of insurance or indemnity companies. The latter are concerned primarily, if not exclusively,20 with risk and the consequences of its descent, not with service, or its extension in kind, quantity or distribution; with the unusual occurrence, not the daily routine of living. Hazard is predominant. On the other hand, the cooperative is concerned principally with, getting service rendered to its members and doing so at lower prices made possible by quantity purchasing and economies in operation.21 Its primary purpose is to reduce the cost rather than the risk of medical care; to broaden the service to the individual in kind and quantity; to enlarge the number receiving it; to regularize it as an every-day incident of living, like purchasing food and clothing or oil and gas,22 rather than merely protecting against the financial loss caused by extraordinary and unusual occurrences, such as death, disaster at sea, fire and tornado. It is, in this instance, to take care of colds, ordinary aches and pains, minor ills and all the temporary bodily discomforts as well as the more serious and unusual illnesses.23 To summarize, the distinctive features of the cooperative are the rendering of service, its extension, the bringing of physician and patient together, the preventive features, the regularization of service as well as payment, the substantial reduction in cost24 by quantity purchasing, in short, getting the medical job done and paid for; not, except incidentally to these features, the indemnification for cost after the service is rendered. Except the last, these are not distinctive or generally characteristic of the insurance arrangement. There is, therefore, a substantial difference between contracting in this way for the rendering of service, even on the contingency that it be needed, and contracting merely to stand its cost when or after it is rendered.25

That an incidental element of risk distribution or assumption may be present should not outweigh all other factors. If *248attention is focused only on that feature, the line between insurance or indemnity and other types of legal arrangement and economic function becomes faint, if not extinct. This is especially true when the contract is for the sale of goods or services on contingency. But obviously it was not the purpose of the insurance statutes to regulate all arrangements for assumption or distribution of risk. That view would cause them to engulf practically all contracts, particularly conditional sales and contingent service agreements. The fallacy is in looking only at the risk element, to the exclusion of all others present or their subordination to it. The question turns, not on whether risk is involved or assumed, but on whether that or something else to which it is related in the particular plan is its principal object and purpose.26

It is admitted that the identical plan and service rendered here would not be “insurance” or “indemnity” if offered by an organization owned, operated and controlled by physicians.27 It would then be a contract “for service on contingency”, though the same element of risk and avoidance of its possible consequences would be present. We do not see how it is material to the size or relative importance of the element of risk and its assumption in the plan that the business control is in lay rather than professional hands. If the plan is for “service”, not “insurance”, in the one case, we think it is in the other. With differences such as have been pointed out, the application of statutory regulations designed to fit the one to the operations of the other could not be other than incongruous, or fatal to the cooperative. It would result, not in regulation, but in destruction of the organization.28

Whether, therefore, the decision is made on the technical legal character of the arrangements, the letter of the bond, or on a practical consideration of the functions performed by Group Health and the methods used by it in performing them, it properly cannot be brought within the laws relating to insurance or to organizations providing “for the payment of indemnity on account of sickness or accident”.

We think these conclusions are sustained by the authorities which are pertinent. No good purpose would be served by an extensive review of cases dealing with multitudinous types of organization and function holding them to be or not to be engaged in some form of insurance business.29 Only a very few deal with the specific issue presented here, namely, whether consumer cooperatives are so engaged, particularly when they assume only the abbreviated obligations which Group Health undertakes. Those to which we have been referred are favorable to the view we take, none to the contrary.30 The case most closely in point is Fishback v. *249Universal Service Agency, 1915, 87 Wash. 413, 151 P. 768, 772, Ann.Cas.1916C, 1017. In many respects the plan followed by Group Health has been modeled on the one sustained there. There are slight technical differences in the arrangements,31 but the basic features are identical.32 That case, in some respects, was stronger for application of appellant’s contention than this.33 Yet the court held unanimously that the Agency was not engaged in doing an insurance business or subject to the insurance statutes. The want of any hazard or peril, definitely assumed by the Agency, was the basis for the decision.34 There, as here, reliance was placed on the Physicians’ Defense Company Cases;35 as well as on State ex rel. Fishback v. Globe Casket Co.36 The former involved contracts to supply legal defense to physicians in malpractice suits; the latter a provision for burial. The court distinguished them, saying:

“There was in those cases a contract for indemnity against a hazard which might cause the physician loss, but, as we have attempted to show, no hazard or peril is insured against by the contract in the case at bar. So with the case cited from this court. There was an insurance against loss to the beneficiary of the insured. We cannot therefore think them conclusive, or even in point in the case at bar. [Italics supplied.]”37

Without indicating approval of the results in the cases distinguished,38 we think the distinction sound and controlling here.

In Hall D’Ath v. British Provident Asso., [1932] 48 Times L.R. 240, it was held that the English statutes regulating insurance were intended to apply only to concerns organized for profit and not to charitable or non-profit associations contracting for definite benefits in case of sickness. This, of course, goes beyond what is necessary in this case;39 but it *250does support the view, pertinent here, that statutes designed to regulate the business of insurance or that of indefnnity, growing out of experience with and evils developing in them, were not intended for application to all organizations having some element of risk assumption or distribution in their operations.40 This is evidenced by decisions in this country exempting various, types of agreements involving such elements from operation of the insurance laws and by conflict in the decisions as to others, a few illustrations being given in the margin.41 It becomes *251when the purpose and the more evident nature of many of the statutory requirements are considered, particularly those relating to the maintenance of reserves or “guarantee funds” and .to the regulation of investments and financial operations The object of these is protection of the insured and thus of the public against the insurer.42 They assume separateness of identity, with consequent diversity of ownership and possible antagonism of interest between them,43 as well as definite assumption of liability, legally enforceable, by the insurer to the insured. Such requirements can have meaning, purpose and useful effect only in relation to definite and binding obligations as to which, in their absence, there is danger of default. They are entirely inappropriate where no such risk is assumed, no danger of default can exist, and the control rests ultimately, as here, in the hands of those to whom the very limited obligation runs. Imposition of the requirements in such circumstances would be not only useless, but an economic waste. It is not the function or purpose of Group Health to pile up vast accumulations of capital to await the needs of a distant day; it is rather to keep a steady flow of funds, with as small a margin as possible, running from patient to physician as nearly contemporaneously with the reverse flow of service from physician to patient as can be. It is a distributing, not an accumulating agency. To require it to maintain a guarantee fund of $25,000 or of $100,000, in accordance with the provisions of Section 653,44 would be to divert funds from its primary purpose and keep them in idleness to no end of security for its members. These consequences we are confident the Congress did not intend when it enacted Section 653, or the other insurance laws of the District.

We think also that Group Health falls clearly within the exempting of Section 65345 and the similar, though more extensive46 one of the Revenue Act of 1937. It is not disputed that it is a “relief association, not conducted for profit.” Both from the language of the section and its asserted purpose, however, appellant contends that, in view of Section 1, Article 2, of the By-Laws,47 its membership extends beyond that permitted by the proviso. The question is whether Group Health’s membership is composed “solely of employees of any other branch of the United States Government Service” than the Army or Navy. The by-laws limit membership to “civil employees of the executive branch of the United States Government Service”, and purport to include employees of the Home Owners’ Loan Corporation within that category. Members of the military services and employees and members of the legislative and judicial branches of the Government service, as well as all other persons not connected with the executive branch, are excluded. Appellant says, however, that the word “branch” is used in a less extensive meaning, not ' as designating the entire executive branch (excluding the military services) in the constitutional sense as distinguished from the legislative and judicial branches, but something less. Just what unit is intended does not appear with clarity from the argument, although it is asserted that Congress intended to exempt “only the comparatively small and inconsequential relief associations composed solely of officers and enlisted men of the United States Army, those composed solely of officers and enlisted men of the United States Navy, and those composed solely of employees of any other single departinent or independent agency of the Government. It did not intend to exempt an as*252sociation which would or could include within its membership all of the civil employees of the executive branch of the government.” [Italics supplied] It is contended that, in any event, the employees of the Home Owners’ Loan Corporation are not employees of the executive branch.

We do not find these arguments convincing, or sustained either by the language or by the clearly apparent purpose of the proviso. The idea that only “small and inconsequential” associations were intended to be exempt is negatived both on the face of the proviso and in the light of its purpose as disclosed by the commonly known facts regarding other organizations clearly exempted. An association composed of all of the officers-and enlisted men of the Army, or one similarly composed from the Naval service, would not be “small or inconsequential”48. Nor would one composed “solely of employees of the District of Columbia government”, as provided in the Revenue Act of 1937. One made up “solely of employees of any individual, company, firm, or corporation” might consist of 50,000, 100,000 or more members. In fact, this provision covers literally, and we think purposively, the so-called “relief departments” of railroads, manufacturing and mercantile establishments, existing commonly when the act was passed and now, many having extensive memberships.49 In the light of these facts, arguments based on a strained and narrow construction of language from emphasis upon particular words are not convincing, especially since equally effective contentions can be made in the same way for the contrary view. We think that the evident and dominant purpose of the exemption, apparent from all of its provisions, was to exempt organizations, whether large or small, for other considerations than mere size. The exemptions were intended for relief activities which would be incidental to a more basic relation, that of employment, whether it comprehends many or few. It was the check provided by the employment relation, on management and control, on profit, on membership, on abuses, not the size of the employer or the number employed, which was the basis of the exemption. Furthermore, limitation of the exemption to “small and inconsequential” units very possibly would have the effect, practically, of nullifying it. Numbers are important for sound insurance. Expensive duplication of overhead and equipment would be required. The exemption was designed to encourage, not to prohibit, employee relief, whether by self-organization or by cooperative arrangement of employees and employer. We are not required to decide whether an association composed solely of employees “from the civilian branches of the government service” would be within the exemption, as appellee contends. Clearly none of Group Health’s members comes from the legislative or the judicial departments. We think an association limited to employees of the executive branch, as distinguished from the legislative and the judicial, is clearly within both the letter and the spirit of the exemption.

For the purposes of the exemption the employees of the Home Owners’ Loan Corporation are and should be held to be employees of the executive department.50 It is true that for some purposes the organization is a separate entity by specific authorization of Congress;51 but that does not remove it from the executive department or render its functions non-governmental, hence non-executive, in character. It is doing work essentially of the executive department, is subject to its supervision and control through the Federal Home Loan Bank Board and the Department of the Treasury,52 and its employees are not more segregated from other execu*253tive employees than those of the Department of State, for instance, are from employees of the Department of Labor. The word “corporation” as used in the exemption (“or solely of employees of any individual, company, firm or corporation”) obviously refers to private concerns, not to governmental agencies, at any rate if they are included within the preceding classifications.

By virtue of the exemption, therefore, Group Health is relieved from the requirements of Section 653 and of Section 8, Title 2 of the Revenue Act of 1937. As stated previously, we do not find it necessary to decide whether the exemption or the definition of health and accident insurance companies contained in Section 653 has any effect upon the regulations prescribed by other sections of the Code relied upon by appellant. Apart from any specific exemption, its business is not that of insurance so as to bring it within those sections.

No contention is made from the fact that dependents as well as members receive service. In view of the almost universal practice of relief associations and departments, we regard this as properly within the function of relief to the member.

Appellant argues also that Group Health “is not authorized under valid provisions of its charter to engage in the business of insurance.” The contention, so put, may be admitted. The argument, however, appears to challenge the validity of Group Health’s incorporation. If it were engaged in the business of insurance or indemnity, and nof? specifically exempted from the regulations pertaining to them, appellant would have standing to raise the question. He has no standing to challenge generally and without regard to features of insurance or indemnity, the validity of appellee’s incorporation.

Appellant visualizes serious consequences for the effective regulation of insurance activities from a decision such as we have reached. We do not share his concern. Experience to date with consumer cooperatives, organized and limited in their activities, management and membership as is Group Health, has not shown that they are susceptible to the abuses feared. If they or others should appear, measures for their control should be enacted by the legislature, not prescribed through judicial expansion of existing statutes designed for other organizations’ activities and abuses.

The decree is affirmed.