Savannah morning news. [volume] (Savannah) 1868-1887, 1883-08-23

The Increase of Rates by the Tariff As
sociation-The Average Clause and its
Faeet-What the FACTORS are Doing
4 Committee Of Investigation
The recent action Of the Southeastern
TarIf Association IN increasing the rates
Of fire insurance on cotton in warehouses
and on the wharves, and the objection by
the banks 10 accept as collateral security
insurance policies bearing the ObjectiOna-
be average clause on the ground that
the policy Is rendered non-negotiable by
such clause. is creating cons3dera-
bic excitement in cotton circles.
For a long time the prevailing rate Of
insurance upon cotton in hTst-class ware
houses was 1.j0 per annum. Al the
meeting in 1SS2, Of the Southeastern Iarln
Association, comprising nearly all the
insurance companies doing business IN
North and South Carolina. Georgia,
Florida and Alabama. the rate was IN
creased TO ? per cent.
There was a general dissatisfaction al
this increase. and AT the last meeting of
the Association. at Asheville- y. g. IN
july. a new rating Of Leo per annum was
ordered. with a schedule Of deficiencies
in addition 10 the regular rating. II Is
claimed by cotton factors that with this
schedule Of deficiencies the av-
erage rate. instead Of being
reduced. Is increased 10 from % to - per
cent. The reason given by the companies
for their action is that they have been
sustaining heavy losses from this class OF
risks. In addition 10 increasing the ac-
tual rate OF insurance, they also IN
sert in each policy an average clause
which. IN case Of fire. has the
effect OF equaliZing the loss between
the policy holder and the insurance COM
panY. The quantity Of cotton in ware
houses varying daily, the companies
claim that they can not insure the actual
amount which is burned in case Of ire
owing 10 this daily variance. The effect
OF the average clause. which is given be-
low. Is 70 cOuRel the assured
IN carry more insurance than i actu-
ally necessary. IN order 10 equaliZe the
loss sustained in fire. Ii a factor has
100000 worth of cotton stored and has
insurance TO the amount Of $4,000, and q
ire occurs By which there Is loss Of
81. 600. the Insurance companies. instead
% paying the fun loss Of $4,000, propose
To pay only go per cent. Of The loss or
$1,000.
The text Of the clause which Is attached
10 each policy Is a. follows;
at is hereby declared ana agreed that III
case Che property aforesaid ln all the build
ing. places or limits included ia this ln-ur-
ance shall. az the breaking out OF any nfe nI
fires, De collectively Of greater value than the
sum insured. then this company shall pay and
make good such proportion only Of the loss
or damage a. the sum Insured shall bear 10
the whole value OF the property Aforesaid "a
the time when such ire or fires shall first
'''But it il at the same time declared and
agreed. that f any specific parcel OF goods
included I'D Lac terms oI this policy. or such
place or places. within tile limits Of tin,
insurance. shall az She time OF any nre
De insured ia This or any other Office. THIS
policy shall not extend u cover the same. eA-
ceplug only "a, Ear a. relates 10 any excess ~
value beyond tbs amount Of such SPECIFIC H.
-uranle CT InsuraHtcs. and snail MOI Zee llabIc
Tor ans Jos. uuit-e thu amount % suth i''--
shall eNrrct the amount OF such -ptrlHc IN
-urance or in-Uraucc~. which said excess only
i- declared 10 Doe under ile protection ol ihi-
policy and subject 10 aFewge "a, aforesaid.
1t being NE true iutent anu mug thia1 Vi
thl~ agreement that tins company -IaI hol
be liable for any loss. unless the amount ~
such loss shall exceed tie amount OF tire
specific Insurance or assurances. ana Then
only for such excess, which sara excess shall
be subject 70 average "a aulNS.
"Other Insurance permitted without uolicr
until required.
The grounds upon which the banks OBJ
iect to advancing upon policies having
this clause vii! be readily seen. The
clause requires the assured TO carry a
heavier insurance than he would actually
recover in event Of tire, and in some in
stances possibly more than the total
worth Of the cotton.
The bank, theT2.CCe. has no evidence that
the amount Of the policy represents the
amount Of cotton. and VIII naturally re-
quire margin upon which TO make the
advance. Tie effect viii ffe about as fol-
lows: \ factor has policy for $1,000,
upon which he wishes 70 effect
"a loan Of that amount. The bank viii re-
quire margin of perhaps $1,000 or 5000
10 insure safe loan upon the policy,
which. bearing the average clause. they
are not advised whether Ii represents the
actual amount Of cotton or more. The
clause thus rends 20 embarTass the factor
i'm his business transactions.
Under the state law all insurance com
panies doing business il Georgia are re-
quired 10 make deposits Of securities
amounting to So, 000 with the Comptroller
General for the protection Of policy
holders This deposit IS Of no value to
the state. and being nominal amount Is
a slight protection to the insured.
It. however. is claimed TO have the Ell
feet OF keeping many companies from be-
ing REPRESENTED in the State, and places
the control Vi Tie business am NJ those
companies which are willing 10 make the
deposit.
Realizing that some action was adyisa-
BILE a meeting % leading cotton
factors in the city was
called. and committee appointed
10 investigate the matter and present TO
the Legislature q memorial asking for a
repeal Of the Law requiring the deposit OF
So. ESQ. with the view Of inviting other in
surance companies intG tie STATE and Gre
ating competition in the business, and
thus tending to secure better rates.
This law also prohibits foreign brokers
from placing insurance upon cotton as well
as other merchandise in Georgia, by vir-
tue of the prohibition that exists against
the coming into the State Of adjusters to
adjust Losses in cases Of fires. unless the
deposit Of sd. 000 il nrst made with the
Comptroller General By the companies
they represent.
The repeal OF the law, it is believed by
cotton factors. will tend. by inviting COM
petition, L. reduce the present high rates
Of insurance.
The insurance men will. 1t is understood.
endeavOr to maintain their position. \
meeting OF the Beard of Underwriters was
held yesterday, when the matter was
brought up for consideration, but no def
mite action Was taken