Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1889-02-12
AN INSURANCE KICK.
The Companies Now Strenuously OBJ
ject to the Proposed New
VALUED POLICY INSURANCE BILL.
They Say it Will Drive Out Capital and
Raise the Premiums.
NEW FIGURES OF GENERAL INTEREST


valued policy law that has been presented
to the Legislature, passed second reading,
and comes before the sub-Insurance Com
mittee Wednesday evening. This law is
not only of interest to insurance people, but
of vital interest to commercial men and to
the public at large.
In order to get at the exact meaning, pur-
pose and effect of the proposed law, call
was made upon Mr.. w. A. McCutcheon, of
one of the large insurance companies To-
Gated on Fourth avenue. The gentleman
seemed to have the matter very we'll in
hand, from an insurance side, and, in the
course of the conversation, said:
There are laws in several States resembling
this, but they are not so broad nor so inlquitous
from general insurance standpoint. This
move proposes to make it obligatory to ex-
anime property and place value before it is
insured, and the value so placed is the face of
the loss if the property is destroyed, and no re-
course or evidence can be offered to show the
property is worth less.
The second portion of the bill says any per-
son procuring policy is deemed the agent of
the company, and this will revert against us in
several ways, because 33 per cent of the policies
where heretofore these brokers have been con-
sidered the agents of the people desiring the
policy, this law makes them the agents of the
companies
REASONS AGAINST IT.
Now our arguments against this bill are
many, and think very strong, and few facts
in regard to insurance will not be without in
terest to public that is really as greatly inter-
ested as we are.
In the first place, the percentage of losses in
the United States has been increasing every
year for the last ten years. Not only this, but
the increase in fires of unknown, or suspicious
origin increase in proportion. Now under the
existing laws it is absolutely necessary to
prove actual arson before we can even hope to
have jury hearing so 1t can easily be seen
how this proposed law puts a premium on
crime.
Suppose, for instance, a factory has been
built. and the original purpose for its erection
having been withdrawn, it is worth perhaps
not one-fifth of its former value. Still, if this
property were burned the owner would get the
1ull value, and if that isn't premium on arson
don't know what is.
No law has as yet ever been passed that pre-
vents proper valuation of goods or personal
property on the same day the fire occurred.
That is. suppose goods which have f1uctuat-
ing value were destroyed, we can value them
at the price at which they may be replaced on
This rule, you see, acts both ways, as the value
may as easily be higher as lower at the time.
With buildings, however, it will revert against
us every time, for the value of a building al
ways depreciates, and under this valued policy
law we must pay its former value, not its actual
present value.
Some years ago the valued policy law went
into effect in New Hampshire. The insurance
companies took action at once, and all foreign
companies not incorporated under the laws of
that State withdrew entirely with the conse-
quence that in one year the ratio OF losses de-
creased 70 per cent.
In Wisconsin over three years ago, a similar
law was passed, though somewhat more Just
than the Pennsylvania law. The companies
did not withdraw and the indemnity was still
to be had, with what effect?
The effect was exactly opposite to that of
New Hampshire. The fire ratio increased
of property decreased. The increase
in the per cent of suspicious or unknown cases
were so great that the Insurance Commissioner
made very strong appeal, seconded by the
Governor, to the Legislature, to have the ini-
quitious law repealed. There no easy word
for it: it is increasing the moral temptation SO
largely that it is actually placing premium on
crime.
ALL AGAINST THE COMPANIES.
Any one who has watched the laws cannot but
see how legislation has been steadily against
the insurance companies. This is strange when
it is borne in mind that the insurance loss is
the greatest of any other business in the world
Every other loss but that of insurance is that of
one man to another. thus tending to the other
mans gain. The insurance loss, however, is 3
dead loss to the country. We pay for goods
that are absolutely swept out of trade, and out
Of existence.
Just let me give you some figures to show the
business threatened by this law. In
1879 the loss by fire in the United States was
s7 703 700 or l95 per cent of the entire property
valuation. In 1856 the loss was Sl04. 924 $50, a
percentage of 81 per cent. and in 1855 it was
sl2S 000 600, with still higher per cent of the
total valuation, and were it not for insurance
there would be an absolute with |
lrawal of Just that much capital
In case legislation and the courts of justice |
as has been in the past, It is only |
question of time when insurance capital will |
be entirely withdrawn, and the effect of this |
can scarcely be calculated if these |
enormous losses fall directly upon the CON- |
nercial people and interests of the country in |
stead of being divided as they a. in infinites-
mal sums among a legion of stockholders. |
Pennsylvania is one of the great insurance |
States and even under present circumstances, |
It is a prosperous company indeed that can pay |
The interest on its invested capital. Then what |
would our situation be if circumstances are |
made to revert against us even more than they |
10 now?
In rural districts, where this present bill is |
argely supported, it is impossible for us to get |
/ man to accept our agency alone. He goes |
nto other business, and as a result his vaiua- |
ions are generally away off. These country |
districts are supporting the bill because there |
S no insurance capital, and because there are |
10 insurance interests there.
AT THE MERCY OF OTHERS.
The law will, if passed, throw us completely |
It the mercy of either intentional and fraudu- |
ent generalization, or ignorant generalization
n either case we are the sufferers, and this
aw proposes that we shall have no appeal and
hat the property was not worth the stated |
Talue, even though it might have been ten
lines overvalued. Outside of speculative
took there is no stock so generally held by
itizens as insurance stock, and our own busf-
less men, widows and women who depend en-
irely upon them for livelihood, will be ut
erly left.
In case the act does pass the companies. if
hey do not entirely withdraw, will at least
withdraw large portion of their outside capi-
al This will make it difficult to insure. and it
would be very hard to get proper values, as the
companies Will certainly place lower values, !
'esides the withdrawal of competition will
most certainly tend to increase the rates, and
hat is where our business people will be
ouched.
Insurance companies never desire to carry
ver so per cent of a risk, and while they do not |
eny that some injustice has been done. it has
'een caused by the oyer-anxiety of outside adj
listers who are too willing to make, if possible,
ONE salvage for their companies.
The insurance capital invested in Pennsyl-
ania is Sl3,0 600. with assets of more than
ouble that. Three and one-haf millions are
invested in Pittsburg and Allegheny and the
reater part OF the balance in Philadelphia. l
Tould say in conclusion that these enormous
interests cannot be touched without the gen.
raj public being equally affected.
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