The New York herald., 1869-03-22
FIRE INSURANCE.

Oh LOSSES During the Last Ten years
Decrease Of Observation-Disclosures Methods
of Doing Business and Recommendations
Of Uniformity i'm Rates OF Premium-Thc
Evils 0f Insurance Brokerase-Orsanixed
Opposition to the Brokers-Excessive Taxa
tion Of the Receipts OF Companies-Buslness
In 1868.
The difference between life and nre insurance In
their fundamental principles and practical working
s SO distinct that the same criticism win not apply
10 both, and yet there are many evils involving i'm
mense sums Of money connected with the business
| OF 1re insurance In this city Of which the public
ought to be informed and which loudly call for
additional legislation. That fire insurance Is great
public necessity is no longer disputed or doubted
No merchant who expects to get credit on his stock
OF goods can do without 1t; no owner of house or
real estate dealer who has buildings to rent unless
like Ast0r and few other millonnaires, he can az
ford to do his own insurance, thinks himself safe
without this protection. The time has passed when
people had to be persuaded and urged to insure their
property; the boot is The other leg. The greatest
evi, perhaps connected with the business is that
| they are anxious to get more insurance than they
are justly entitled to- and the only questions they will
raise concerning the soundness VI the companies
| and the rates OF premium.
MAGNITUDE OF THE BUSINESS.
The statistics for the year ending December 81,
1858, which have just been published, show that
there are now in operation 104 ire insurance COM
\ paries chartered by the State OF New York. with
capital stock amounting TO nearly $29,0000 000 and
ffty-onc companies from other States, representing
capital of over $50, 100000 all doing business in
| this State. They give employment to hundreds Of
officers, clerks, adjusters brokers, &c. The offices
or the fire insurance companies monopoiize large
part OF Broadway, between Wall street and the City
Park and some Of the side streets being filled up
the merchants out Of the best part OF Broadway and
| their onices command high rents. Their advertise
| ments fill the insurance papers; their agents are
scattered all over the United States. and the fire.
| quent attempts to defraud them are Q fruitful
| source OF litigation.
CAPITAL STOCK AND DIVIDENDS.
| Some OF these companies commenced their or
ganizaton thirty forty and In case sixty
years ago. but as their success depends entirely
upon the prudence and capacity OF their officers,
the Oldest companies are not always the most
cessful nor have the largest stock and assets. In
life insurance a capital stock Is only needed to give
a mpany initial start ana enable 1t to sustain
itself for the first two three years. after that it
CT no more than is pilot ship after she Is
fairly out upon the Atlantic Ocean; but fire insurance
companies are so nabe to heavy and sweeping losses
that as general rule the larger unimpaired capital
q company has the safer it Is to insure in.
In Massachusetts ard r--ne other States there
many purely mutual companies which take a sma
part OF their premiums In cash and the rest notes.
which are liable to be assessed in case OF exraord
nary losses, aud although the plan often works well
In the rural DISTRICTS where the fires small and
the buildings are Isolated. yet even these companies
sometimes collapse, especially when panic arises
among policy holders, In consequence OF assess
ments beng made upon their notes, which results IN
sudden winding up OF their affairs. This great
danger erectually prevents their operation large
cities, where extensive fires apt W prevail. The
experience OF the last few years has shown that the
bushes OF fire insurance in this city Is attended with
more than ordinary hazard, and haa on the whole.
ns ploreu an ,. one. oy ny .nose companies
omy and caution can realize sufficient dividends TO
pay the stockholders for making the investment.
The whole amount OF stock and surplus Is liable to
be swept away by great confagratlons. happened
TO many companies In the years 1885, lS45 and 1868.
For this reason 1t is claimed by the expert
enced underwriters OF this city that dividend OF
twelve or fourteen per cent the of fire in
in order to secure the stockholders and pay them
! for the risk which they assume. This rate
years. "a According to the New YORK INSURANCE. ss e
reports from 1859 to 1867 inclusive the average dyl.
deras reased na 6y rne new i3rs state companies
$3.50, s62 $3.50, 6.76, $40, showing almost uniform
decrease and averaging only e.4o. During this
same time the premiums Increased from 50, zg9 63s
TO 81, 1888, and the losses S2,6Sl,9s6 to
$i4,423,l22, and the percentage OF losses to pre-
By the imitation OF the currency and
InJuuciOus COmpetltIOu among tne companies.
THIS fearful increase Of losses has not
been sustained BY additional rates Of premium,
as Is shown by the decreasing dividends on
the stock; on the contrary the rates from 1858 to
1857 were constantly decreasing until the ablest
underwriters OF this city clearly saw that the only
alternatives which the present condition OF the busl-
ness presented were reform or financial ruin. The
causes OF this increasing unprontableness OF fire in
surance during the past ten years well deserves
full examination, and 1t viii be seen tnat there are
many nagrant abuses In the present method OF con-
Quoting the business, OF which the public ought to
IL In In ha
OF many millions OF dollars. One OF the great evils
which the company nave to contend with Is
OVER INSURANCE.
II is very easy ana q very common thing for a
to get his goods buildings insured for consid-
statute law In this state prevent It, In such cases
the temptation to incendarism is very great There
morality viii allow them to take advantage OF their
insurance policies, and by design or wfu careless
contrve to have their property burned up when
they In pressing need Of ready money and although
the owner receives only the actual loss proved yet
1t is estimated by experienced Insurance men that
one-han of the claims for loss are more or less
fraudulent, and for want OF sufficient proof TO the
contrary, the companies have TO pay far more than
the amount OF the property destroyed The absence
OF any law to punish person making a false
statement respecting the amount OF his property
destroyed tends 70 encourage this practice Many
poration or government, and there IL great need
Of our Legislature making some provision against
dy and It would at least one-haf OF the flres
which take place. II law passed and properly
enloICcu preventing any iusufance companies
ing more than theequarters OF the losses sustained
by fire, thus making the owner Of the property an
insurer TO the amount OF one-fourth Such law Is
now pending in the Legislature OF Michigan, with
fair prospect Of being passed. and such law ought
70 oe 10 nsss T woaa an exception In favor q
lions OF property and materially lessen the rates OF
premiums.
HAsTy ADJUSTMENT OF LOSSES
The old fashioned rule Of requiring sixty days to
intervene between the date OF q nre and the pay
LOSSES In order 10 give time for the discovery
OF fraud, Is seldom observed In most companies In
q lew instances IL IL found to cause some neon
yenence TO the party Insured, and In the case OF
property insured by several companies most OF them
are desrous OF having reputation for prompt deal-
ing, and Tor fear OF losing business they settle up
without making any Inquiry whether there sufl-
Gent grounds OF frand t0 warrant them in resisting
the claim. III this cautious delay could be strictly
adhered 10 1t would do much towards lessenlng tho
number of fires and AFFORD greater opportunity TO con-
test fraudulent claims but the absence OF any statute