New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-05-22
FIRE INSURANCE SAYINGS.

Recently, in these columns we called atten
| ton to the interest which the public well
as the underwriters have in the adoption of
the State Surplus law, as q basis for fire in
surance management. We feel satisfied that
the more fully the merits of this law are dis
cussed, the better they will be appreciated.
We publish to-day two letters from the most
prominent and able opponents of the law. If
the presentation of the other side of the ar
gument shall induce our readers to examine the
subject for themselves, these letters will be of
service. it is the misfortune of all insurance
business-both life and fire-that the general
public has only crude and vague notions about
it. An evidence of this is in the annual crops
of absurd insurance bills that spring up in all
our State Legislatures, and that must have
their roots in substratum of popular ignorance.
People who do not make insurance their bust
ness seldom inquire about its principles or its
practice: if the companies which have is
sued their policies bear q good reputation,
that is all they seek to know. A great many
persons, however, had this feeling of security
or indifference sadly shaken at the time of the
Chicago and Boston fires. If it is worth
while to look into this matter at all. the time
for doing so is before, not after, another great
| fire.
The assets of the insurance companies con-
stitute the security of the insuiing public.
Whatever tends to the increase of such assets,
! is for the advantage of that pubic. An in
crease takes place naturally if one or more of
the following three contingencies does not in
terferc: extraOrdin. ry fires, bad management,
large dividends to stockholders The first of
these three is almost wholly beyond legislative
control; the second is partly, and the third is
quite within it. The first must be pro-
vded against simply as a contingency. AS
to the second, it may here be stated that the
worst msmangement on the part of the officers
of companies is very rarely so destructive of
assets as is that which concerns usually suffer
when they drop into the clutches of receiver.
If the foregoing propositions are correct it fol-
lows that law which provides specifically for
the contingency of great fire, prevents com
panies from falling into receivers hands, and
curbs their dividends to stockholders, is for the
advantage of the insuring public. The Oppo-
nents of such law, to be successful, must
prove that it nflicts some injury on the pub
lie which is greater than these advantages.
Now the declared object of the State Sur
plus law is to provide against q ruinous con-
Migration. One Of our correspondents seems
in doubt as to the greatness OF the risk in this
city in what is known as the "dry goods dis
"trict" Why quarrel with facts The twenty
blocks between Broadway and West Broad
way. Chambers and Canal-sts. contain q
value in buildings and goods of not less than
ST. so, 600, 900; more probably $200,OO0,O 900.
This interest il very fully insured. 1t is known
that several of the larger companies have less
than the sum of their capitals at risk in this
district; it follows that other companies have
much more than their capitals there exposed.
This condition of affairs was reached years
AGO. The Surplus law is only one year old.
When companies go under its provisions, it
reouires funds to be set aside which otherwise
might and probably would be divided among
stockholders. This process continues through
series of years till much larger
surplus is laid aside than is re-
qured by any other law. In the
interim the surplus cannot be used to swell
capital-a process which would enable COM
pany to take larger separate risks. 1t affords
the means Of clearing the wreck when the
great fire occurs, and settling the claims for
loss by it, forthwith; at such time not only
are delays dangerous to the interest of the
burnt out policy -hOlder, they are almost fatal.
1t keeps up the insurance of those who are not
touched by the great fire, who will probably
outnumber those who are, by 200 to 1. BY
providing the means of keeping companies out
of receivers hands, it absolutely saves large
amounts of money otherwise lost to the COM
munity.
| We respectfully submit that it is not fair to
compare the best that q company might do I'M
| der other laws with what it must do under the
Surplus law. The object sought is to compel
the accumulation of assets. If other laws do
not do this, and the Surplus law does, the lat
ter is the law the public as well as the I'M
derwriters should prefer. To discuss hypo-
thetical cases brought forward by our CORE
spondents might exhaust the patience of our
readers, but would not affect the principles in
volved. The argument that q law which gives
to companies new lease of life after great
fire will tend to make them reckless, might
be met by one of at least equal strength, that
it would render them prudent, since patronage
after the great fire would depend upon the
evidence of good management before it. But
the argument that it makes q man or COM
pany reckless to provide him or it with the
means of continuing business after calamity,