# Popular Science Monthly/Volume 26/April 1885/A Chapter in Fire Insurance

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* A CHAPTER IN FIRE INSURANCE.
By GEORGE ILES.
LAST year was not extraordinary in its fire record. It bore no such calamity in its course as 1871 or 1873, when the nation was called to mourn for Chicago or Boston. Yet there is good reason to believe that during 1884 fires cost the United States $160,000,000. This ​enormous sum includes estimates of the amounts paid by insurance companies for losses and expenses; of the losses for which there was no insurance; and of the outlay in maintaining fire departments in towns and cities. The devastation by fire during the past year equaled in value the insurable property in, say, so large and wealthy a city as Buffalo. Still more woful than the destruction of property by fire were the sufferings of thousands by bodily injuries, and the losses of hundreds of human lives. Of minor but considerable importance is the prevailing dread of fire which its imminent risk creates—a dread deducting so much from comfort and peace of mind, particularly among the people who work or live in tall and unsafe buildings.
All competent students of the subject are agreed that this tax on life and treasure is largely avoidable—avoidable by care in construction and use of buildings, and attention to tried and proved means of extinguishing fire. The fire-tax is the most onerous one paid by the nation, and it was but natural that the first scientific attempt to reduce it should have been made by a class of capitalists upon whom the cost of insurance was most oppressive.
The textile manufacturers of New England have shown how best the risks, losses, and expenses of fire can be reduced to a minimum. In 1835, when Hon. Zachariah Allen, of Providence, established mutual insurance among the mills of Rhode Island, the rates charged by stock companies varied from 11/2 to 21/2 per cent. Even at these high figures the business was unprofitable, and the placing of risks often a matter of difficulty. Within the fifty years since 1835, the cost of insurance to the factories of New England has been reduced to two-sevenths of one per cent. This, too, while the ordinary rate of insurance throughout the United States is nearly one per cent on property considered to be on an average less hazardous in character. I will endeavor to state how this result has been brought about.
Principally by full inquiry into the causes of mill fires, which has shown that the three elements of safety are good construction, adequate quenching apparatus, and thorough discipline in its use. Safe construction can not always claim the much-abused term "fire-proof," but it may be practically the same thing, "slow-burning." It need be but little more expensive than the customary bad methods, and proceeds on a few simple rules:
1. Timbers for the frame of both floors and roofs should be made in such solid manner as to burn slowly; all should be open, smooth, with the corners chamfered off.
2. Floors and roofs should be of thick plank, with mortar or sheathing-felt between the planks and boards of floors. No boxed, hollow cornices should ever be constructed.
3. There must be no concealed space under a door, behind a furring, or in a partition, where a "fire can lurk out of the reach of water, or where a rat or mouse can build a nest.
​4. Elevators, stairways, and other openings from floor to floor should be cut off by properly constructed hatches, doors, or other means, automatic in action, if possible.
5. Openings in party-walls and exposed windows should be protected by wooden doors or shutters, covered with tin, preferably self-acting.
6. Rooms in which special danger exists should be plastered on wire lathing close to the surface of the ceiling, and following the line of the timbers. All iron posts in exposed places, or iron or stone posts, on which the safety of a building greatly depends, should be protected from fire, either with wood or tin, or by wire lath and plastering.
Of materials for walls, brick is best, and sandstone next best. Limestone calcines and crumbles at high temperatures, and granite breaks and cracks most dangerously. When gas is used in lighting a mill, it is proper to have a controlling valve external to the mill, so as to cut off the supply in case of fire. Sometimes gas is carbureted with gasoline, in which case, fifteen minutes before a mill ceases work at night, the uncarbureted gas is alone permitted to be used, so as to take up any liquid deposited in the pipes. When electric lighting is adopted, approved rules for its installation and use must be observed.
Whenever possible, mills should not exceed one story in height. When so constructed, they can be better lighted than lofty buildings, and they are much less liable to costly vibration. This latter source of loss in a mill four or five stories in height may absorb a fifth of the motive power. A one-story mill, in case of fire, is much more safe and manageable than a lofty structure. It is pleasant to find so potent economic arguments against the tendency which, in recent years, has piled up factories so high, and crowded them together so closely.
Steam-pipes, for heating purposes, have been found quite as effective when suspended from the ceiling as when placed upon the floor; while, in the former case, they do not furnish lodgment to cotton-waste, paper, shavings, and other combustible material. Similar refuse is apt to gather dangerously about a steam-pipe rising through a floor—the means of safety here being its inclosure in a cast-iron shield of conical form. Steam-pipes require careful protection from contact of inflammable substances. Of non-conducting covering materials, asbestus, hair-felt, cork, fossil-meal, magnesia, and rice-chaff are the best.
The rules here presented in mere outline arc given in detail by Mr. C. J. H. Woodbury, inspector of the Boston Manufacturers' Mutual Insurance Company, in his work on the "Fire Protection of Mills." They are the outcome of the long and varied experience of the Mutual Companies of New England. Of these companies, the one I have just mentioned is the foremost, and I am indebted to its president, Mr. Edward Atkinson, for data included in this sketch. From an analysis of the causes of fires in which his company was interested ​during the twenty-nine years ending January, 1880, it appeared that spontaneous combustion had played a leading part. Cotton-waste, saturated with oil, and used for wiping machinery, then carelessly cast into wooden boxes and cupboards, had clearly led to immense losses. Losses quite as serious were traced to the firing of similar materials secreted by rats and mice. This suggested an exhaustive inquiry into the spontaneous combustibility of the oils in common use as lubricants, the Massachusetts Institute of Technology lending its aid in the work. Astonishing were the results—certain popular oils were proved so hazardous that the mills using them had been unknowingly courting calamity. Other brands were found comparatively safe, and a few quite safe. A rule was then adopted by the Mutual Companies prohibiting certain oils from use, and recommending certain others. Generally, mineral oils were approved, and animal and vegetable oils condemned.
The benefit of the inquiry did not cease here, for it suggested to Mr. Woodbury a series of experiments whereby he has determined the value of oils as lubricants. Since friction is one of the main sources of expenditure in the use of motive power, and a noteworthy cause of fire, Mr. Woodbury's reduction of lubrication to a science is a valuable gift to manufacturing industry. His researches were presented to the American Association for the Advancement of Science at its meeting in Boston in 1880, the published proceedings giving his results in full.
Oil is not only a lubricant, and a substance liable to spontaneous combustion, but has an extensive application in wool-manufacture. One of the collateral inquiries instituted by the mutual underwriters on behalf of their clients has led to an immense saving in wool-oils through the exact determination of their comparative efficiency.
Spontaneous combustion, according to Mr. Atkinson's compilation, was shown to occur not only with respect to oil and charred wood, but also in dyeing operations. Certain kinds of coloring-matter enter rapidly into combination with atmospheric oxygen, and reach a dangerously high temperature. Fans employed to produce a strong air blast aggravate this danger, against which the best safeguard is the use of fusible links melting at 160° Fahr. Thus fan and engine can be automatically disconnected when fire breaks out. Lanterns have to answer for many conflagrations. In the Boston Manufacturers' Company alone, lanterns broken and upset have led to losses aggregating a quarter of a million dollars. Safe types of construction were introduced, soon after the need for them was announced. Another preventable cause of loss came from employing solitary workmen on repairs at night. In cases of fires spreading from sparks, lanterns, cinders or other source, the unaided mechanic could not well exert himself at once to give the alarm and quench the flames. Hence the enactment of a rule that at least two workmen shall execute all repairs ​necessary when mills are idle. One of the workmen must be capable of starting the fire-engine and pumps instantly. Most fires occur at night. At other times when work is suspended, and supervision apt to be relaxed, the risk of fire increases. To meet this, comes the obvious suggestion that on Sunday, Independence-Day, Thanksgiving, and Christmas, there should be increased vigilance by superintendents and watchmen.
However wisely designed a mill may be, and however vigilant its employés, it may take fire from causes practically unavoidable.
How flame may best be quenched then becomes the next important question. Apparatus for extinguishing fire, according to the Mutual underwriters, should include:
1. In all possible cases, water-pipes supplied from at least two sources, with two or more fire-pumps; or one pump and a reservoir of sufficient elevation to give an ample supply of water through its connecting pipes. 2. An adequate pipe-service with hydrants in yards, porches, in all rooms, and upon the roofs. When possible, the water should stand in the hydrants, both in the yards and in the building, from the tank or reservoir. 3. Hose and hose-pipes should be ready for use, and should be attached to the hydrants, with a drip-coupling to take off any water that may leak by the valve. 4. Automatic sprinklers in all parts of a building where there is special liability to fire, and generally in all stories above the second, however occupied, especially the uppermost. Among the appliances of recent introduction for extinguishing fire, the automatic sprinkler deserves special mention from its importance and success. It mainly consists in a plug of fusible metal attached to a water-pipe, which melts off at a moderately high temperature, say 160° Fahr., and permits the issue of a drenching spray. Were not high cost a serious objection, sprinklers might be made controllable, not by fusible alloys, but by electrical levers attached to sensitive thermometers. Any device which shortens the time during which a fire is left to itself is of importance. A fire-alarm is usually applied to the existing automatic systems. 5. Small hose attached at numerous points to the water-pipes in the rooms. 6. A full supply of water-buckets reserved for fire purposes, and always kept full.
For the efficient use of apparatus, a well-drilled fire department is required. Watchmen particularly should be thoroughly trained in the use of appliances for combating flame, and should be familiar with the positions of valves, hose, and buckets. Aid in their work is given by an excellent electric fire-alarm, which is gradually coming into use in the mills of New England. It announces instantly, in both engine ​room and office, the point at which a dangerously high temperature or fire exists.
For the protection of city blocks, a system of hydrants and pipes placed on roofs has been suggested; water at an ample pressure to be constantly available. Very solid brick division-walls, carried up a few feet above the roof, are desirable in such blocks.
It may now be in order to state the progress of the mutual system of underwriting, whose methods have been briefly presented. On January 1, 1885, the nineteen associated Factory Mutual Insurance Companies had at risk no less a sum than $375,000,000, an amount nearly twice as large as that at risk seven years before. During these seven years the cost to the insurers in the leading company, the Boston Manufacturers', had declined twenty-three per cent, as compared with the cost during the years from 1850 to 1878. In the early part of this latter period the volume of business was small, and the losses proportionally greater than they afterward became. During 1884 the net premiums paid by insurers in the Mutual companies averaged 28·28 cents per $100 insured.
A few words as to the details of effecting the mutual insurance of factories: Although the cost is currently but 28 cents per $100 per annum, the companies charge rates averaging 80 cents, the difference being returned as dividend. In addition to the payment of premium, each insurer becomes liable for an assessment five times as great as the premium. No such assessment has ever been called for in the history of the Factory Mutual Companies. No policy is granted until compliance with the companies' rules for construction, quenching apparatus, and discipline in its use, has been ascertained by an inspector. His further business is to pay frequent and unannounced visits to insured premises, to see that all is as it should be. Disobedience to rules, or culpable negligence, may be deemed sufficient cause for canceling a policy. When an ordinary mill or factory adopts the means of safety laid down by the mutual underwriters, it is computed that the outlay is saved in premiums in two years.
In the foregoing paragraphs a form of scientific underwriting has been briefly described, which has important bearings on the general question of insurance and the reduction of the fire-tax. New England Mutual underwriters have ample scope for their activity in the pursuit of their business, and are very cautious in pointing any morals to stock-insurance companies. Mutual underwriting is well adapted to the kind of risks it accepts. These are large mills usually isolated. They fall into comparatively few classes, for which rules for construction and fire-appliances can be readily prescribed. Each passing year finds manufacturers more and more alive to the advantages of the mutual system, the last interest which has begun to adopt it being that of the rubber-factories.
Mutual underwriting can not be directly applied to the ​miscellaneous and concentrated risks by great cities. It shows a long and honorable record without the levy of a single assessment. Yet what owner of city property, with Boston and Chicago in his memory, would care to become liable for fourteen times the net premium of a normal year?
While the direct extension of mutual underwriting has recognized limits, still its methods afford lessons of utmost value not only to owners of buildings, but to architects and builders. Stock-insurance companies usually accept risks as they find them, and base the rate of a premium on the assumed degree of combustibility. Mutual insurance has taken its chief mission to be the prevention of combustibility, by a judicious co-operation between owner, architect, and builder. It has demonstrated that this co operation accrues greatly to the owner's advantage in money saved and safety increased. The cardinal principle of mutual insurance is to minimize risk by a strict examination into the causes of fires. This rule should be carried out in every city and town of the Union, by properly appointed officers, clothed with necessary authority. It matters not how petty a blaze may be—its investigation may yield information of immense value. An unsuspected source of danger may to-day burn ten dollars' worth of property, and next month consume a million. An electric current crossing water rendered conductive by a trifling chemical admixture; fine flour-dust diffused in a mill; sparks struck by a wheel or tool of metal—these are among the hazards for which special safeguards have been devised and applied within recent years. There is nothing strange about these hazards, now that they have been pointedly brought into notice. They were simply common neglected matters, until overwhelming disaster showed the necessity of prevention. In small fires or great, investigation into causes should be thorough, that means of safety, if such exist, be ascertained and enforced. Mr. Atkinson is of opinion that fires not preventable need not cost more than one tenth of one per cent per annum of the value of property insured. All beyond that, he holds to be the price of faulty construction, inadequate appliances, and imperfect discipline in their management.
While mutual underwriters have been exploring the essential principles of sound construction, they have arrived at much as applicable to warehouse or hotel as to cotton or paper mill. They have pointed out the risk of gingerbread cornices, hollow floors, and high-pitched roofs. They justly inveigh against the common practice of setting pine Mansards on lofty structures. They give instance after instance where solid party-walls and self-closing hatchways have saved property, by holding a fire within manageable bounds, and keeping it in a horizontal area, where it can be successfully fought. They have determined the best appliances wherewith to combat flame, and how they can be best placed and used. An important principle in the construction of these appliances has been evolved as a result of their labors— ​the principle whereby, on the first bursting out of flame, automatic means of safety begin their work. Developed fully, this principle promises to be the most effective known against the incendiary, whose crimes lead, perhaps, to one third the losses by fire. A watchman usually vigilant may be unobservant or negligent at a critical moment. The melting-point of a soft alloy, or the transmission of an electric current, has a constancy which may be depended upon. Fusible links which stop a destructive air-blast, or close a door, window, or hatchway, fusible plugs which control powerful streams of water, are excellent substitutes for apparatus to be started by human agency on detection of danger.
That insurance has increased incendiarism is proved by British statistics. Between 1852 and 1866, the proportions of fires originating in Great Britain from unknown causes rose from 341/2 to 521/3 per cent. Destruction by tire takes place in a much larger proportion in property insured than uninsured. Incendiarism is of two kinds, that of an interested policy-holder, and that of a malignant criminal. While fires due to the latter may be checked or extinguished by well-planned apparatus, the losses due to the former variety of crime might be to some extent prevented by insurance companies only indemnifying for losses in part. Suppose a merchant to take out a policy by which he is to be reimbursed for three fourths the amount of a loss actually sustained, whether partial or total. Clearly, the company has a better risk than if it granted full indemnity, for now its client has a direct interest in escaping loss by exercise of skill and vigilance. Any means which makes responsibility reside with an owner has a wholesome element of justice and safety in it. Very unbusiness-like certainly is the action of some stock companies which refuse to reduce a premium rate when the insured adopts new means of safety. Such refusal would warrant the impression that any methods whereby the volume of loss by fire would be diminished, and with it the commissions and fees of canvassers and agents, have a sinister interest to oppose them.
The cost of insurance is chiefly due of course to losses; about one half as great, however, are the expenses of the business. Let us turn once again to mutual underwriting for instruction. That system, being uncompetitive, requires neither advertisement nor solicitation. Its expenses are one tenth those of stock insurance. The mutual companies are simply the agents of their policy-holders to provide means of collecting the sums paid for indemnity and the small charges of the business. Stock companies founded, say, in New York, Hartford, or Philadelphia, have agencies throughout the country, actively competing against one another for' business. Small cities have often as many as twenty insurance agencies, maintained at high expense in proportion to the volume of transactions. Economy here could be effected by a single local company without agencies, doing as much local ​business as it could, and reinsuring a large percentage of its risks in the offices of other cities. By a uniform method of classification, and a uniform responsibility, each of the nineteen New England Mutual Companies reinsures in the other associated concerns. The acceptance of risks is local, their distribution is general. Were pioneer stock companies to adopt this plan, their success would oblige other companies to imitate them. Expert underwriters would be required to plan the details of a scheme applying to miscellaneous risks some principles of mutual insurance. These would comprise:
1. The identification of the interests of owners and insurers by
basing rates of premium upon the actual hazard, allowance being
made for all precautions against fire, and approved methods of quenching
it. By issuing policies to cover somewhat less than the total of
a loss, at a lower rate than when full indemnity is assured.
2. By combination of the advantages of a local underwriting with
the benefits of well-distributed risks. Companies doing a local business
are not subject to the expenses and inefficiency of great companies
with agents widely scattered and difficult of control. Reinsurance
on a well-considered method will give local companies stability
in cases of large fires—this, while the interests of local insurers will
always be large enough to make them anxious to have as few and as
small fires as possible.
In a large city, where several local companies might occupy the field, each could select its risks from among all quarters of the city. By whatever means attained, one thing is clear, that the business public, pressed by the narrowing margin of profit, will avail itself of the cheapest safe insurance to be had. The reduction of cost must spring from making the prevention of fire the cardinal rule of insurance. At present the main rule is simply to accept risks as they are, and assess immense losses—largely preventable—on the public. In Great Britain, premiums average one quarter those charged in America, and the business is profitable. Why can not America reach this economy, by adopting British care in construction?
Apart from the Manufacturers' Companies, mutual underwriting has not obtained much foothold in the Union. In New York State, in 1883, the assets of the mutual companies were but one per cent in amount of those of the stock concerns. These latter, with large reserves ready at the call of disaster, enjoy a public confidence withheld from the comparatively weak mutual associations, scattered here and there throughout the country. When capitalists, however, become local underwriters on a large scale, we may expect insurance to have a preventive efficiency, such as we find among the New England mills. Just here a quotation from the New York State Insurance Commissioner's last report may be in order:
"During 1883, stock companies doing business in the State lost percentages of premiums received as follows: Those organized in the ​State, 45·83 per cent; those organized in other States, 64·06 per cent; and foreign companies, 66·03 per cent. The ratios of expenses parallel these proportions. So much for the saving power of direct interest and control.
The prevalence of wood in American building, arising from its cheapness, has had its effect in promoting combustibility. We are accustomed to hear frequent lamentations of the destruction of our forests. That destruction will bear at least one benefit in its train—a lessened use of wood in building. In European cities, where brick, tiles, and cement largely take its place in construction, fires are infrequent, and not specially devastating. There fire departments may be found in a simplicity which argues an enviable feeling of general security. As lumber grows scarcer from year to year, and money cheaper, we may expect a decreasing combustibility in American buildings. Immunity from loss is bought at its lowest price when a structure is designed and erected with intelligence and liberality; these qualities will have more scope as capital grows more abundant.
In developing sound principles of insurance the mutual underwriters of New England have done notable work. Their inquiries have been marked by a thoroughly scientific method, which has in its range generously included collateral investigations of immense economic value. In the strict line of their researches, while applying justice, economy, and ingenuity to the solution of their problems, they have taught lessons that must produce world-wide good. Their conscientious work, when understood and applied, will inevitably lower the fire-tax, save life, and abate one of the chief horrors of our civilization.