Omaha daily bee., 1894-02-22
VALUED POLICY AND CO. INSURANCE.

| VALUED POLICY AND CO-INSCRANCE,
few days ago The Bee contained an
editorial commenting upon the rights and
wrongs of insurance companies and their
policy holders. Exception is taken to our
comments by Mr.. Robert L. Reynolds, state
agent for a New England insurance COM
pany. Mr.. Reynolds encloses with his
letter Of exceptions a very lengthy docu-
ment, from which he makes the following
deduction concerning the valued policy law
and the insurance companies profit:
From these articles" declares Mr.
Reynolds, you will see that the intention
of the so per cent clause is quite different
from the idea conveyed in your editorial,
and that as a matter of fact insurance men
do not dislike the valued policy law. but
for the reason that it makes a wager con-
tract which increases losses that in turn
make necessary an increased rate of
premium, and the attendant labor and un-
pleasantness.
you will also permit mo to suggest that
the figures of income in Iowa for 1890, 1891
and 1892, as given in your editorial, do not
foot $11796, ,21292; instead they foot $11,'
495, ,21292.
This large income was not obtained
without expense in the shape of taxes, COM
missions, auditors fees and management ex-
pense, and If we place them at the minimum
of So per cent of income we find that the
outgo has been S9,079, ,S3O.3S, and that the
profit of $6,7S9 7O71l, as your editorial puts
it. is but 81, ,il5 SS259 for three years upon
an invested capital of over $3.50 900 ,000."
study of the documents submitted by.
Mr.. Reynolds does not bear out the con-
struction which he seeks to put upon them.
The one presumably bearing on the valued
policy law and company profits is an argu-
ment based on the assumption that when
policy Is written the company has made
contract to pay to the assured so much
money as may be named on the face of the
policy, and must, therefore, make provl-
sons for its payment. This is not true,
for the company only agrees to pay the
money, or such percentage of it as may be
stipulated, In case the property covered by
the policy is wholly or partially destroyed
by fire. In this light every policy becomes
wager contract" For instance the
company undertakes, on payment of 20
cents, to return to the assured 800 in case
the property covered by the policy is totally
destroyed. There Is no mutualty about
this, If fires come so rapidly as to wipe
out an insurance company's assets, the pol
icy holders who have paid their premiums
and have not suffered loss have no re-
course or protection beyond law suits. And
Mr.. Reynolds will hardly contend that no
insurance company exceeds it's available as
sets in assuming risks on property.
In the other article enclosed by Mr.
Reynolds vice president OF an eastern in
surance company gives his explanation of
the so per cent clause and its object. lie
sets forth at length that it is intended TO
require one to carry II fair amount of in
surance." In its working the so per cent
clause operates this way If your property
is worth 81 600, so per cent of which is $500
and you insure It for $500, in case of loss
your Insurance stands to your loss in the
ratio Of to s. That Is. II your loss is
$500 you viii get your $500 but If your loss
is $500 you viii only get 1912. iye-elghts of