Omaha daily bee., 1894-04-02
Views Of an Omaha Business Man on 9
Point Of importance.
DO LLoYOS OR WUTUALS INDEMNIFY
Differences between the stock Company
Protection and that Shared by the
Assured g. tnterinsurance Com
trasted with Co-Insurance.

upon all matters Of commercial ana financial
importance. The city OF Omaha has come
10 occupy a position sixteenth in rank as a
financial center in the United States, and one
Of it's main features, in a commercial way,
is the jobbing business transacted here. A
motter Of paramount interest to the mer-
chant carrying a large stock OF goods, or to
the property owner, is that Of protection
against FIRE. A large part Of the assets OF a
merchant, or OF a commercial corporation,
are usually invested in merchandise, which
might be subject to be swept away In a SIM
gle hGnr by a calamitous fire, and a good
business man would no more think Of going
over right without insurance than Of leaving
his store without locking the doors.
Ind, unity against loss by fire may be said
to he CT two kinds:
First-That furnished by old line or stock
insurance companies who issue policies OF
insurance over the signatures of their OIL
GERS and through local agents located in
various trading points. These local agents
receive from 10 to % per cent OF the entire
premiums charged as a commission, which
is deducted before the company receives
any part Of such premiums.
Second-"Lloyds," mutual or individual
underwriters whose plan may be explained
later on.
The Bee columns have been open to some
discussion of insurance, as from the stand
point of the old line or stock companies,
who have not hesitated to pour their walls
OF wrath upon the heads Of merchants who
have to do with, or who are accepting any
indemnity of the so-called "Lloyds," or
mutual" companies. The attention of the
writer has also been brought to a circular
letter OF Mr.. Eugene Moore, state auditor
and Insurance commissioner of Nebraska,
calling attention to these mutual or
Lloyd companies doing business in the
state, stating in a very painstaking way the
fact that parties accepting these policies do
so entirely at their own hazard and without
ability to enforce their presumed contracts
under the laws of this state. They
uloyds or mutuals) are illegally within the
state, and they can have no other motive
than thus encourage, by their cladestine
f~oraging, to get all with as little risk to
themselves as possible. contraband schemes
that promise all in the name of insurance,
but furnish no indemnity etc.
The commissioner also cautions insurers
against being "~victimiZed," and goes on to
say that parties transacting business in Ne
braska must be protected and encouraged
against the bushwhacklng concerns that
neither contribute honesty of purpose nor
Indemnity to their patrons"
ON II OTHER HAND.
This all bears the ear marks, il you please,
either of the local agent himself or of the
manager Of the old line company, and was,
no doubt, preferred by some agent or COM
pany whose business has been seriously in
fringed upon by some one or more of the
Lloyd" or mutual concerns. 1t may be
n matter of Information to the insurance
commissioner, as well as the local stock
company agent, to know that Lloyd" in
surance has been in force in various parts
of Europe for more than 200 years, and that
&c was, in fact, the original method of in,
%surance, and for decades before the organi-
cation of stock companies was the only
indemnity furnished.
1t may also be a matter of information to
E-g1nN ufhnt n-A fL--z sI z-I- -.-
insurance companies, and | will endeavor to
explain: Twenty, or fifty, or perhaps 200
go into what may be called an
inter-insurance contract, employing a man.
ager, or attorney, to whom the proper au-
thority Is given to bind or obligate them for
a limited amount, say 5000 or $500 each on
the risk or plant of each of the other sub
ecribers to the contract, putting up a guar
antee fund of s1,0O or So, 900, as may be
agreed on, in cash, to cover possible losses.
One of the largest and oldest of these con-
Germs now has 200 members, each of whom
fnsures all the others, so that a $40, 900 policy
on any one risk entails an obligation in case
of a fire a total loss of but $25 on each sub
scriber; a $1,000, 600 policy makes each sub
scriber liable for $500. These individual, or
mutual, contracts for insurance consist, as a
rule, OF the leading firms and heavy property
owners In the various cities, and in most
cases are parties whose bank credit Is almost
unlimited The association referred to above
consists of about 200 members, ten of whom
are among the leading jobbers of Omaha,
has been in business for thirteen years;
writes insurance at local board rates, and
has. since its organization, written about
VI BOO, 900 of premiums; sustained losses land
paid them promptly in nearly every case
within ten days of the date Of the fre),
amounting to perhaps half this amount, the
balance, less a nominal expense feature for
conducting the business, being returned to
the policy holder.
The scope of these organizations is quite
limited. In the first place, as noted above,
only individuals or firms OF the highest
standing can become members;
only the very best class OF physical hazard
business Is solicited, and that not outside Of
the larger cities with thorough and efficient
lire nghting service. In other words, the
very best class Of business. the paying bust
ness, II you please, is gradually eliminating
itself from the old line companies, thus de-
preciating their revenue without so much
depreciating their liability to loss, and going |
into the hands of the mutual of 'Lloyds," or |
inter-insurance concerns.
WHY 1T is NECESSARY.
Perhaps it may be well to rehearse some
reasons Tor the original organization and
building up of these concerns:
First-The difficulty of large insurers in
a sufficient amount of good insur- |
pnce. The 1898 Spectator Official Index pub
fishes the returns for l76 American insur- |
Rnce companies besides some foreign COM |
Sht AShAN VI VI NntEt L |
such as a discriminating business man would |
not care to have represented among his |
The balance will not assume a
risk on any ordinary hazard in excess of
say $500 900; but what is the merchant or |
company to do for indemnity who carries |
a stock of $500, 600 to 81. 900, 900 for additional |
to cover his stock? The most
thing in the world might be for him
to propose to one or 100 Of his neighbors to
with them for say 500 to $500
each, and thus is made up these individual
Underwriters.
Second-The profits OF the insurance bust
ness; A great hue and cry has been raised
by old line insurance people, particularly |
during the last few months, OF the unfavor-
able results Of last years business. Let |
ms call the attention OF these insurance
people to banks, trust companies, mercantile
and firms, and to their business
FOR '93, and allow me to say that the con-
Germ among all these making a satisfactory
on the investment from the business |
of '93 is a rare exception to the rule. Last
year was the year of the panic (which we
are glad to say only occurs in this country
once in perhaps two decades). Railroad
companies have defaulted their interest;
property investments have become unpro-
d%uctlye; the mercantile hazard Of the in
surance business has greatly increased, and
Il would be u great wonder, indeed, il in
surance companies had in the aggregate
been able TO keep even during SO. What
are the facts with reference To the Insurance. |