Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1873-02-12
Insurance In Vermont.

NCSSfS. IdfOfS ALLOW me 10 ueSpass u
little upon your space in order to suggest a
few ideas regarding your criticisms Of my letter,
published in your paper of the ped inst.
You state that the companies made a net
gain in this State of $4,000. Net gain is the
amount left after all losses, expenses, &C. are
provided for. The total receipts we're $275,-
SOL LOSSES $eOl 1855, leaving $7i 1886 which
you claim az net gain. IL this is so where do
license fees, agents commissions, expenses Of
adjusting losses, examining risks, and other
incidental expenses come from, saying moth
ing about reinsurance
| 1t is law in Massachusetts and New York
that companies shall reserve fifty per cent of
the premiums for reinsurance, and If they can
not at all times reinsure their risks, and meet
other liabilities, they must at once suspend
business Now what is this reinsurance which
you state has no place in the table Suppose
a company issues ia January 500 policies with
a premium Of $50 each, they would receive
( 600. After carrying these policies one
month they stop business or cancel the poll
cies what must they do they must pay back
to the insured eleven twoliths Of the premium,
as they have only earned one-twelfth Of the
same. II this same ratio Is continued for one
year the amount required to reinsure will be
fifty per cent or, mother words, on an average
the Co.'S. have only completed one-half Of their
contracts, and The law requires that they shall
at all times be able to puy back to the insured
all Of the unearned premiums if they fail to
gu their contract. This reserve Of fifty per
cent. is based upon the ground that companies
write the same amount each month. In my
estimate referred to only allowed forty per
cent. for reinsurance.
1t is a fact beyond contradiction that the
companies placed mlre business upon their
books during the last three months Of the year
than was written during the entire nine
months before, so that the actual amount re
quired u reinsure would be at least three
flurihs Of the entire premium instead Of forty
per cent, because they had only earned one
fourth Of the premium, and the balance be-
longs to the insured until the company have
earned it by carrying the risk for the year.
As | said in my last, small town cannot be
taken as a basis for an average it must in
clude at least an entire state. Previous to the
great fire Boston could show record Of profita-
bic insurance that would dwarf Montpelier
into nothingness, bat where is the balance now?
and the premiums for the last halfcentury
have been swallowed dp and millions besides.
Montpelier is liable 10 a sweeping FIRE, and
how far would the premiums paid in your
town for the last quarter Of a century 20 to-
Z wards paying the losses if fire should sweep
: through the main street Of your village, as 1t
has done in scores of others during the past
ten years.
, /, is notorious fact that rates in Vernon,
Z have not been high enough to pay the losses and
expenses, and many companies have withdrawn
from the State because every year the loss bal
Gnce against them was steadily Increasing 49,
} The country losses by fire for two days last
week were over half million dollars. One.
fourth Of this loss occurred in Vermont, and
500 600 Of it in village not ten miles from
! your place, which has heretofore proved profit
, able place for Insurance companies, and who's,
citizens claimed that they had paid the compa
MES thousands Of dollars more than the losses
Where is the balance now j. not Montpelier
e. 49,. =. ,la..,I.
, -. a.,;,,or, - ,ho -. ~ -. :
- ,l,, .bonld b. ,aa,,, - ~ =. -
o-a,so tbo amonn, ,oon;,od hr - L.. -
~, pa,dor, mo TO- -
h,, ,bo srhioo, l. ore or s;,o7 ;,r.o...u',. !,
a., - 49,. - J-o.n,..,
-,
y" - rHANoisoo'
Mr.. Francisco still persists in his misappli
D cation Of the principle Of reinsurance, as re
quired by the insurance departments Of Massa
h chusctts and New York, 70 the point we orig
+ nally made in regard to rates in this vicinity
We claimed that the rates oaid in Vernon
+ were Sufficient to meet the losses and expense
> Of the Companies, and protested against an,
n advance Of rates and referred to the last re
e port of our Insurance Commissioners to prov
y the correctness Of our claim, Mr.. f. introoduc
ed the it EN- ofren.urauce to make it appear tina
the rates were not sufficient, and claimed tina
i they ought to be raised Let as ask ais.
l. - what il this re Insurance which we state ha