Savannah morning news. [volume] (Savannah) 1868-1887, 1883-08-25
Insurance Rates and the Average
Clause

1t Is to be hoped that the differences be
tween the business men of this city and
the fire insurance companies represented
in this state will be speedily and satisfac-
torily adjusted. The committee appointed
by the cotton, naval stores and rice
interests held meeting yes
terday. and forwarded to our repre-
sentatiyes in the Legislature
personal letter. asking them 70 use their
utmost eudeavOrs TO have the law repealed
which requires foreign companies, before
they can obtain a license 10 do business
in this state. to deposit with the State
Treasurer 81. OO0in bonds. The grievances
Of the business men are that the rates Of
insurance are too high. and that what is
known as the average clause, now insist
ed upon by the insurance companies,
forces them 10 take out more insurance
than the amount OF their property justi-
fies They believe that the repeal Of the
law above mentioned will invite COMPETE
ton and result in lowering the rates and
abOlishing the average clause. There
does not seem to be any good
reason why the Law should not
particular purpose. 1t i not claimed, Of
course. that the deposit affords such pro-
lection 10 the insured as is worth cOnsid-
ering. some Of the large companies have
risks in this city amounting. no
doubt. to hundreds Of thousands
Of dollars. If a great fire were to
occur the deposit Of $4,000 would
Doe an insignificant sum compared
10 their losses. The idea Of the trainers Of
the law was. perhaps, to force the com
panies desiring to do business in the state
10 show that they We're solid institutions.
Another idea probably was TO save those
holding legally adjusted claims any
trouble in collecting their judgments.
These advantages. however. do
not offset the disadvantages Of the law.
II we are rightly informed, the representa-
tiyes Of the foreign companies in this city
are not anxious 70 nave the law retained.
and a. there are only three home compa-
mics In the state il doesn't seem as il the
opposition TO its repeal could be very
strong. The law would, perhaps,
be- less Objectionable if our mer-
chants could send abroad for
their insurance. The insurance laws are
so strictly drawn. however, that move
mcnt Of that kind would be attended with
50 many difficulties as to be hardly adj
yisable.
1t i not absolutely certain. Of course,
that the repeal Of the law would result in
bringing the relief which the business in
terests seek. The increased rates and
the average clause were the work of the
Southeastern Tariff Association. Ii is
difficult 10 see how the companies. as long
As they recognize that association. can
avoid 0beying it, edits. II is stated that
the Board Of Underwriters Of this city is
not IN sympathy with the Association,
and it is also stated that the representa-
tIves Of the foreign companies yester-
day advised their respective cOmpa-
mics by mail against the increased rates
and the average clause. II the companies
return a favorable response the existing
trouble will be solved whether the Legs
Iature repeats the $2j.0oO law or not. 1t i
not improbable that the agents advised
this course in expectation Of favorable ac-
ton by the legislature. With that law
ont Of the way the probabilities are that
other companies would send agents into
the state. and ~ lively competition
would do much towards lowering rates.
The average clause is particularly Oh
noxious. The committee was assured in
a conference with the bank Presidents
yesterday that i'm making loans on pro-
perty the banks would require - per
cent. more insurance where there was an
average clause in the policy than if the
policy covering the property contained no
average clause. To pay for this additional
insurance is hardship that is difficult TO
bear patiently.