The Cecil Whig. [volume] (Elkton, Md.) 1841-current, 1869-05-01
Live Stock Insurane.
THE REASONS FOR ITS FAILURE

gagged in the business Of live stock insur-
ance, has been generally accepted as con-
elusive evidence that the experiment is a
failure. As this subject is one of interest
to farmers and all owners Of horses and
cattle, history of the experiment of these
companies may be of value.
The pioneer Company-the Hartford
Live Stock Insurance Company, of Hart
ford Conn.-was chartered by the Legisla-
ture of Connecticut in May 1866, with a
capitol of $500, 900, $1,000 of which was
paid up and deposited with the State Treas
urer to secure policy-holders. From the
start, premiums flowed in plentifully, and
the stockholders began to think that they
had found a new Ell Dorado in this hitherto
unexplored field of Insurance. In January
1867, they reported SITS, 929 of assets, out
of which ten per cent dividend was paid
stockholders.
The apparent success of the project was
so great that in May, 1867, another compa.
ny, composed mainly of shrewd and sue,
cessful insurance men, was organized in the
same city, under the name of the Etna
Live Stock Insurance Company, with $3.50
600 of paid up capital, 100000 of which
was deposited with the State Treasurer.
For while both companies did flour
ishing business the stock of the Hartford
being quoted early in 1868 at $3.50 pei
| share, and that of the Etna at $110,
In consequence, however, of rumors OF
internal mismanagment, new board OF
officers took charge of the Hartford in the
spring of 1868, when a very bad state of af.
fairs was discovered to exist, there being
some $50, 900 of losses that had never been
reported to the directors, while there stood
upon the books an immense volume of bad
risks.
A determined attempt was made to resus-
citate and save the company, but the agents
were too far demoralized, and losses of toe
constant recurrence; so that finally, in
July, 1868, when the losses exceeded the
paid-up capital by $4,000, the company
went into insolvency.
three and third per cent, and as it had a
surplus of $50, 900 as the result of years
business, and had been managed from the
start with great caution and ability, it was
hoped that it might weather the storm
But people had become frightened, policy
holders who had met with no losses object
ed to paying the increased rates, business
fell off and finally, in January, 1869, the
directors decided that the losses on the
policies already issued made the future too
unpromising to warrant continuance OF
the experiment, and orders were issued to
the agents to issue no more policies and
write no renewals-the company simply
carrying the risks in force until their expi-
ration.
In the twenty-five months of it's exist
ence, the Hartford paid in losses $40, 600
while in its sixteen months the losses of the
4Etna were 100000.
The original tariff of rates of the two
companies was about the same-namely:-
On farmers and private horses, from four
to twelve years old, five per cent; from
twelve to sixteen years, six per cent; on
store and express horses, five and half
per cent; from twelve to sixteen years, six
and half per cent; livery stock, from six
to sixteen years, six and half per cent;
truck-teams and dray-horses in cities, seven
per cent; car-horses, eight per cent; colts,
stations, and breed mares, six per cent;
trotting-horses, six to ten per cent; oxen
and cows, five per cent. Agents were
ordered to insure but two-thirds of the real
value, and to refer all risks for over $500
on any one animal to the home office. The
insurance was against death only, but a
theft risk would be granted for an addition
of two and one-quarter to two and three
quarter per cent. Inland transportation
risks We're taken at one-half to three per
cent. Warned ly its first sad experience
ON sheep, lnenagcrie stock, etc, the Hart
ford soon refused to ensure on any other
animals ti:an those above enumerated, and
the Ktna preserved this policy from the
start.
Risks oil canal-l orses were early found
to be Improbable and were cancelled;
street-car horses were next thrown out, and
after the failure of the Hartford, the Etna
raised its rates to six and seven per cent on
private driving horses, eight and nine ON
horses used for business purposes, six and
seven on horned cattle, and ordered appli-
cations on any other classes to be referred
to the home office. After little expert
ence, $1,000 was the largest amount written
by the company, though the Etna once
lost $4,000 on stallion lost by fire in New
York. Agents were constantly urged to
write less valuation.
Yet, with all care, it has been found
impossible for company to insure live
stock throughout the country at rates that
people will pay, which will at the same
time make the business profitable. The
assigned reason for this is that the t'moral
hazard " is too great, and close investiga-
ton into the affairs of these companies has
led the writer to the conclusion that this is
IioS'
Opportunities for fraud upon the COM
panies abound. There is difficulty in secur-
ing honest and capable agents who at the
same time know anything of horse-fesh.-
Other difficulties lie in knowing how the
animals are cared for, the scarcity Of yeter
mary surgeons, aad most of all, the ignor-
ance of few, and the bare-faced lying Of
very many of those who get their stock
ensured, and in the ease with which
an animal can be destroyed without suspi-
cion of the owners guilt. Repeatedly the
companies were astonished at the losses,
but an investigation rarely ever could bring
home fraud.
The subject of live stock insurance has
attracted much attention in England, and
many companies have been organized there
within the past forty years, and some we'll
known names appear in their list of direc-
tors. These companies have met with
varying success, several having been
swamped, while those that have succeeded
best have been those that have confined
their business to small territory und mainly