Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1873-01-22
Stock Insurance ia Vermont.
RurLASp, Jan. 90, 1873.

losses paid will not amount ~ I ,OOOper year,
while during this period immense sums have
been paid By our tOwnsmen TO insurance com
panies. Aud now, in face Of our very credita-
bic record, our stock insurance agents are pos
lively directed 10 raise their rates on property
insured In this vicinity, thirty per cent. Here
is consistency and justice with vengeance.
Now, as il is well established fact that in.
surance rates are based upon the law Of aver
age, the above statement shows a lack Of expe-
rience in It's author as an underwater Meth
er can the record Of small inland town be
relied upon as a criterion. lie claims that the |
average losses for twenty years have not ez-
ceeded $1,000 per year, and advances this a.
an argument against an increase OF rates. Not
long since st. Albaus, Mddebury and Bristol
claimed this same immunity. Yet in the short
space Of twelve months, nearly one hundred
thousand dollars of insurance capital wasswept
away in these three towns alone. How long
does your correspondent think it will take the
companies to realize in premiums the amount
paid for these losses?
The experience Of all the companies in the
United States for the past thirteen years proves
that it requires Gfty-ninc cents Of every dollar
to pay tie losses and The taxes, expenses,
commissions, adjusting, &C., demand thirty
one cents more, leaving only ten cents Of each
dollar as the margin for profits. This is sub
jecs to deduction for extra losses, state fees,
&C.. which reduces the amount to about five
cents, showing that company with capita
of $500 600, and doing business of 100000
per anuum, has the wonderful profit Of four
per cent. rs the result Of an extensive and
hazardous business Neither does this make
any provision Tor extraordinary fires like
Chicago and Boston, where the surplus Of
yelrs, aud in many cases the entire capitol, is
swept away
10 bring this matter down 10 plain bust
ness transaction 1t costs, as experience shows,
a certain per cent to insure various classes Of
property, and companies must have rates high
enough 50 that their receipts will average this
per cent if they expect to continue business.
How long would your correspondent reposc
confidence in business man if he were 10 sell
goods for seyenty-fye cents, that cost him one
dollar2 Yet he asks insurance companies to give
perfect indemnity at a rate Of one per cent.
when experience shows that the average cost
Of the same is one and one-half per cent, and
then complains if the company find themselves
unable to pay one hundred cents on dollar
when losses occur. Your correspondent may
claim that the principal losses are in the large
cities, and that the country risks should not
contribute to these. How is it IN our own
State? By reference to the Secy Of State $ last
report, find that the total Fire premiums ior
the year were $275 sol, and the losses were
| SOL, 355 The lowest estimate allowed for
reinsurance on unexpred risks is forty pei
cent, requiring $40, 236. Therefore we have
Losses, S20l 1855.
! Reinsurance, llO,236.
Total, $3ll,59l
Total receipts, S275,59l.
Showing a loss to the companies Of $4,000 or
the years business in this State. To this mus
be added the expense of adjusting, taxes, fees
&c, which would swell the amount to a
least $50 900.
Under these circumstances are the cJmpanie
no, right in demanding an increase in rates
and is not such claim fair and just, if the!
wish to continue business without additions
loss? All the companies wish is rate higl
enough to pay the losses and expenses, anC
give their stockholders fair interest on tn
money invested and trust the business mel
of Vermont will pay willingly an advanced rat
when they understand the facts in the case
Your correspondents article conveys the i'm
preston that insurance companies have mad
a vast amount Of money here, and that tb
present advance in rates is an extortion, whe
the truth is, they are only calling for rates hig
enough to save themselves from bankruptcy.
Respectfully Yours,
NJ. j. FRANcIsco.
We have a suggestion or two to make in rel
erence to the foregoing promising that we were
indebted for the facts which we published las
week to no correspondent whatever, but mad
, them upon our own responsibility. Mr.. Fran
cisco says that it requires only 90 cents o
every dollar we pay for insurance to pay Tia
losses. If this is true, we would suggest lit
, affairs Of these companies. The thrtyone pc
cent. paid for " taxes, expenses, commissions
adjusting etc. =" seems to us simply exorbi,ani
. Does any one suppose that a like amount q
the money paid for insurance in the companie
E of Vermont, is expended on these incidental el
! penses? The figures which Mr.. Francisc
( quotes concerning the business of stock con
( panies in Vermont, show net gain to thos
= companies for their business here during III
. past year, of over STi 900. The premiums pal
d on policies issued in 1870, and not expiring Ut
. til during 1871, and on which probably poi
. ton of the losses were sustained, will offset til
d, item for reinsurance The estimate then for r,
B., insurance has no more place in the table whic
he furnishes than the estimate Of the cost
the Montpelier K Black River Railroad, and
Il about as pertinent.
What we stated last week was to the eife'
that stock insurance companies had realized
Q net profit out of their business in Montpelier
Q during the past twenty wears, of over one hu,
. dred and firtv thousand dollars. Ito saw pothip
y If INTEREST," and dorin0 that time had maid le
v ,h.n twentv thon.ond dollars in Losses. and '
p rr,,,s,od ,bsn ond n-otes, now AGAINST roisir
Is ,ho ratss he-o ,b;r,y nor cent as /, nndsrsto,
=. 30 he their Intention We .v nothino
W ~ 1900 -