Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1889-02-28
rA1urp poLIoY rNsuRA xoH.
Insurance Commissioners Pratt
Snnnka ONT AgnInNt n.

Pratt, presented to the General Assembly
A bill having been introduced Into your
honorable body which will bring to your
consideration the question OF the passage
Of an act known as the Valued Policy law,
my duty as insurance commissioned obllges
me to submit such views aud information
on this subject rs It's Importance to the
people OF the state demands. Tbs Valued I
Policy law, as enacted III the States OF Ohio
aud Wisconsin, and the bill presented for
your action, is believe, substantially tue
same, and provides that Ia all cases where
any individual or Insurance company |
authorized by law TO take risks and to issue |
policies OF insurance against fire, shall in-
sure real property, and the property 80 IN.
gured shall be wholly DESTROYED, without /
criminal negligence on the part OF the In |
sured, the amount written In the policy |
shall be taken eonclusively to DO the value |
OF the property insured.
The essential principle OF insurance is |
Indemnity. To indemnify for loss is TO pay |
for what Is actually lest, and Whatever ts |
paid above that amount is wrong to the |
company and the other insurers. This law |
violates this principle by Masking the |
measure OF damages the full amount |
written In the policy, even though said
policy should be for twice the value of tbs |
property destroyed. Such Law places a |
premium on generalization on the part OF
the owner and OF over-insurRnee on the part
OF agents, instead of restricting them as
claimed is the intention of the law. Il fur
thor encourages the tendency TO over-in-
surancs and incendiarism. by ctlIsvinS the
insured from all responsibility In the mat
ter, because he may not have been crtmi-
nally connected With the destruction Of the
I property, though he may have misrepre-
sented It's value.
one Of the arguments In behalf OF ths
Valued Policy Law IL, that company
should ba obliged TO pay tie whole amount
FOR which 1t may have received premiums,
and that 10 is the business OF tie company
to know, through their agents, whether
property Is insured for more than It's value
or not; but may 1t not be answered. that
the owner knows better than either agent
or company Aud should he b. protected
in wrong doing at tue expense of the whole
insurance Interest," For We believe tae
passage of the law Will make Il much more
difficult, and more expensive to obtain IN
suraaee. These great Interests must suffer
for the supposAd bsuaht OF cases, wh'c1
could, and would, be As well protected by
the courts; whore all other trreeoncllabis
business differences arc decided.
In my opinion, nothing can give greatar
encouragement 10 infsndiatisn aud fraud.
. These views seem 10 he sustained oy the
working of the law in the states where II
has been enacted; ~ shown by tina follow.
ing tables from the ofliela! reports Of the
Insurance department of the state Of Ohio.
[Hare follow statistics OF fire insurance
losses in Ohio for 2 years before and
after the valued policy law took effect
and OF fire insurance losses ia Wisconsin
for yslrs before aud after the same
law. Summarized, these show that in
Ohio from 1880 inclusive, the seven
years prior to the Yalusd Policy law, The
ratio OF losses to premiums paid averaged
40.T5 per cent; for the seven years sue
ceeding the ratio ross to 81 43 per cent,
In Wisconsin the corresponding figures
were SIS. Al per cent and So - per cant.
The report continues referring to the
Wisconsin showing:
Here nesriy the same results are repeated
as In OHIO. The irst period OF eight yeats
elbows q ratio OF loss 10 pren.ums OF 65 "a,
the second 66,62, an increase o. II. with
this alarming feature, that the last two
years after adding the ratio Of expenses,
gave results for 1sB4--lossss 60 per cent. ex-
penses 50 So, total l02 49, or q net loss on
the business OF the entire Stats TO al the
companies OF 2.sS per cent Of premiums.
In 1885, losses IA 80, expenses IS 50, total
1lS72. a net loss Of 1912. How long can
responsible underwriting stand up under
such conditions
II we come to that which mora asarly
e1nee.rns the 9acr.a 6. .sa S.gtc - . =
tha to- a,t3 less H. aG 4cel nN
Increase rarr n tue .f5t sd d
n - a5.-t 4tJsssE r cent oI
every $iU0 insured In rne stare ducing tina
time. Here, TOO ts shown o cause ct w0ri
that has produced-grsase mortality by G Il
cents on each $l00 than that OF the who'll,
conatry. The conclusion Is inevitable tina
6 73 cents on each 900 insured is ths con
tFlnudon made by tho honest policy holder
Of Wisconsin to the grasptng cupidity o
such as have taken advantage OF bad Law
at the expense Of conscience and integrity
these table, arc here placed on reGor(
without further comment, as ver.fcatiol
Of the prediction o. intelligent under
writer's as 10 the effect of Valued Pole!
laws and the results exhibited should Gel
fsin,y ead to their unconditional repeal b
ell the states, four in Lumber, where this
now exist.
The EolIowlng ara the views oil soma G
the insurance commissioners OF othei state
OF viva. is eonmonly called the /" Values
Policy Law"
From Report ~ Pennsylvania Insurance s,
PrFinteHdeuG 1856,
YEiued Policy Laws ri rom time irnmemt
rial the contract Of insurance hes been II
garded rs one of indemnity, the ipsuri
contracting to pay tine gcfual loss s1stalne
by tbs Insured, not exceeding the sul
specified IN Tho policy. Tie Valued P1lic
Law proposes TO change tbs character
the contract, and In cases OF total Ia
to compel the companies 10 pay n
the damage sustained by the par
insured. bit the maximun sum II
which he paid premiums, soi1 Hsse pro-
erty worth 81 80 Il Ii 5uTed for & 200, ii
iusutei W0nd be entitled tn recslge lJu0
tins actual damage sustained Ii tbs evsG
Of o tota! less but Ia tho eyelt Of q patti
lose only the amount OF ga!i less. II
contract f., therefore, changed from one
pure Indemnity to contract OF mixt
nature, afforIing indemnity ony In case
partial loss, and cxaGtinS the nlaSimu
sam named IN tbs policy 10 case OF d tot
loss Gld making II to the tnrsrsst Of Il
Insured, Il be- burn a all. TO burn tho
oughly.
From TnpiF i Mifhgan Insurance Camm
s.Iusri isiS.
surely ~ law should 5e enacted Ike th
IN Wisconsin, wherein ths ns5asurs " la
ages, In cEse o. real properly Wholly !
s.toyei wl:llopt criminal iAlit on tha pt
OF the Insured, q the fuii amount writt
la tue policy suon satute 4
passed In tnat atat9 IN 1875 Slnli
bills have freqasntly besu presented
this state, anu as eF.au deleaJpa ~
Eoct sense u the legislature lae tutHi
Parry tf!94t not Oe % narNinAl faE.lH
the hntulns, bur the step ftom tas p
iured statement ii ne Yglus 81 his MI
erty 10 that Of arsan Is nt easy dee e
such 0 law docs not .aee lato account
punishment q tts party who best AZ
the EaIue Of lia own property RrA Elg
insiv nisrtptesontei II, SUI hx9s q O
sll8i pangl:y upon tAa corporation Jetl
entered iut0 eeEt-igtt V ~ sHeG 5.5tema
o. d basis supp sing them ~ BE- RTE =
+ law you'd Is peslEtiGtal g. phtil9 5a.
and III lnaentlFe g iyava,
FJrl-ti.Ja Na7aseltas5t s#r4ata Rr
So
Elgats Of Carpr atious-W 4aafu,nss
corporate power Il p9bll4r wisdom.
hshne3s Is promo 10 -alGzt.y use III pc
for It's gta'Aea-lol. Aud LIS G9E8I
usually gtsafer in asseei4tl pa thlG n