The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-02-08
THE CRIME OF ARSON.
Proposed Legislation for Fire
Insurance Companies.
what the Proposed Three-Fourths Law Means
Ar,on Calculated on in Premium Rates
The Percentage of crime-opinions
Of Underwriters and Merchants as
TO the Proposed Liquidation.

u~aaant system or IRE insurance, especially the
system Of full over insurance now in vogue, and
which in the view OF the petitioners leads directly
20 the alarmingy frequent crime OF arson. The
chief feature OF this petition is suggestion that the
Legislature shall pass law to prevent the recovery
under any policy Of insurance OF sum greater than
three -fourths the loss sustained, ana to compel
insurance companies thus to limit their Liabilities.
representative Of the HERALD has. during the
last few days. called upon presidents OF insurance
companies secretaries thereof insurance agents,
brokers and prominent members OF the Board OF
Underwriters in reference to this petition and the
ssooined interesting and important Information
has been elected in these interviews.
ARSON AS AN ITEM OF MERCANTILE CALCULATION.
It's conceded on all hands. by insurance bro
kers the Board OF Underwriters, presidents OF in
surapce companies and lawyers versed In in
surance matters, that large percentage-tn facS
under the circumstances, considering That arson
Ia q crime OF the first magnitude, startling large
percentace-ef the fires for which the Insurance
companies have to pay are OF lnoendlary origin.
OF course any definite and absolute percentage Is
NOT to be arrived at; but one authority In insur-
ance matters estimates IL at seven Per cent and
,~o otners equally well posted, place 1t as high as
ten per cent of the total number OF fires
Acting on these estimates the insurance COM
panies secure themselves by charging rates from
ten to twenty per cent higher than II there was no
such crime as arson. And acting on the idea that
the chances OF arson are an Item OF calculation
lust as any other chances, the insurance compa-
MES 10 not, as rule trouble themselves to go too
deeply the details OF the causes and origin Of
Q are, but often pay the premium without any
dem ~, even where the officials OF the company
have little real doubt that the nre Of incendI-
aYy origin. But then SUCH fact Is very difficult
absolutely TO prove 1t costs time, trouble and
IN a
meanwhile lost so the companies unless the
case Is olunderngly fagrant keep their suspicious
TO themselves and pay, solacing themselves with
the reflection tina. in the long run the extra rates
they receive lnIne-tenths OF which are paid by
honest lnsurers) will compensate them Tor their
occasional and criminal loss.
TIE EccESTRICITIEs OF ARSON.
u has been found by experience that the great
majority Of incendlary dres are under 5000 A
large IRE In % cases out OF 100 may be said to be
accidental Csrelessness may De involved in it,
but not arson. This fact is accounted lOr-frst
from the comparative variety Of large as compared
With small properties; second, from the generally
and necessarily high mercantile character OF par.
mes controlling large interests; and third, from
the greater care exercised In the examination
made by the insurance companies IN all cases
where large risks are involved.
But q very large proportion OF the smaller fires
especially where the amounts insured are divided
In small sums among number OF companIes-are
directly rraceaole to incendiarism, and one com
pAny in this city has become 80 impressed with
this fact that II is more particular in its prepara
tory examination ID cases OF small than OF large
Ilsks
1t has also been found, contrary to preconceived
IDEAS, that incendIary fires are proportionauy
more common in rural districts than IN large
cities. his fact has been accounted for on the
theory that the business done in city is more
elastic In It's nature tnan the same trade in the
country, Tor II the latter is once depressed it
covers more slowly, the loss on the stock insured
Is more sensbly iet, and the temptation fire the
STOCK ana get the cash for II Is more cogent. Be-
sides, there are more people, co-tenants and
ne&hDors, interested III putting out city IRE and
In punlshlng incendlarism, to say nothing Of the
tact that the Fire Department OF our cities Is much
superior, OF course, 10 Its rural equivalent
Personal or professional reputation for high
character, however, seems not to be any positive
guarantee against the crtme OF arson Ior cases
have been known in which manufacturers OF high
standing have been more than suspected OF incen-
diarism wnen it suited them to handle the cash of
the Insurance companies In point OF fact, moth
nag can more clearly or more cogently illustrate
the generalization which pervades our present
system OF nre insurance than the TACT that all men
familiar with the workings OF the system snrug
their shoulders and wink significantly when a hint
is made at arson. They Will tell you, of course,
that 1t is great evil great crime, and all that
sort OF thing; but the moral or the legal aspect OF
arson is not Tor them to consider They simply
look at 1t in It's mercantile light calculate closely
upon The percentage OF Its probability and charge
bCCOIuiuRy.
INDIRECT ARSON
Is also regarded IN insurance circles quite an
everyday occurrence ''hlgh toned" merchant
or leading" manufacturer has a factory or a
store Of goods fully insured; he wants money bad.
~; ne cannot sell MS goods or render his factory
prontape; ne Will not fire his premises nor Will
ne allow them 10 oe fired; but he Will allow them
70 be neglected. He Will permit his clerks or EN-.
ployes 10 be careless in the use OF matches and of
llghts-he will wink at danger; and suddenly his
STOCK or his factory is burned up. he claims the
insurance money and he gets II, although the IN
q CAR has mt
been exercised in the premises. But then
II TT. will Re.I not DO to contest the mat
the loss. in fact the companies Would
rather pay every now and then an unjust and
rates winch they charge The great mass OF those
VINO would never be guilty OF a crime. Now all
tuis crime, ana It's consequent demoraiZ At. and
injustice, arises In ire insurance as In almost all
Other departments OF business IRON overtradng,
anu Is direct sequence 10 the way IN which the
e,he "a nle insurance are conducted. The COM
.peuuon between the rival companies Is SO intense
a.i as one agent expressed 1t, "tne companies
then ""'
THE INSURANCE BROKERS
are themselves in part directly responsible for this
stare OF AFFAIRS The great majority OF the IRE in
'suiance business Of the country is transacted by
commission averaging fifteen per cent This
seems to be huge percentage, but the insurance
brokers claim that the amounts insured are qener-
ally small, and that, after all this fifteen per cent
commission barely enables them to live. Many OF
the companies take OFF ten per cent discount 10 the
tnsuring party II they deal with them directly aud
@atisfactoruy, while many companies themse Ives
act as agents or brokers for other companies
taking certain amount OF every risk themselves
and then placing the remainder, on commission
among other companies. The representatives OF
mat the insurance brokers are nuisances;
that they detract from the profits
which would otherwise be made by the
companies; that every man, whose in terest it is to
insure, would insure directly with the companies,
were there no brokers In existence. ana that
having fallen into the habit o! depending upon
brokers. the companies do not exercise their own
care and Judgment In respect to the risks offered
70 them. on the other hand the brokers assert,
confidently, :hat thousands OF men are now talked
nito, or "prokered" into, insurance where other
wise there would be scarcely hundreds. They also
CiAm tnat, beng themselves to a certain extent
Ye,sonany responsible for the character OF the
Iasas . .hey brlng INTO company, they exercise
sdea'ei Vlslance than the companies would be able
" W themselves. The only certain TACT seems TO
oe ,nat brokers' form an important, the most i'm
feature OF the present system OF fire tnsur
ahce, ana that ~ rs conceded on all sides, |
~ wousu pe utterly impossible 10 get rid OF them
esen u ~ were at all advisable. Another and most
cOxent TACT Ia proved beyO a