The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-12-27
And Leading Companies Will
Leave the Union.
THEY WANT TO BE INDEPENDENT
The Result May Be the Downfall OF
the Insurance Union and Then
Rate War.

WATERFOWL, n. Y, Lancashire of Man.
chester, ST. Paul, Teutonia of New Or
leans and the Grard OF Philadelphia iusur-
ance companies have given notice of their
intention to withdraw from the Pacific
insurance compact.
The three companies first men toned
presented their notices a few days ago.
Yesterday G. w. Spencer, manager of the
insurance department of Balfour. Guthrie
81 Co.. which includes the Manchester,
Caledonia and the America companies.
followed their example, and Mann & Will
son. representing the Agricultural, Lanca-
shire, st. Paul. Teutonia and Girard COM
panies. also wrote out their Intention of
resigning.
So as matters stand now the Pacific In
surance Union is on the verge of a preci-
pice ready to topple over at any moment
The first company TO show its dissatis-
faction was the Northwestern National.
Some months ago its manager withdrew
from the compact. Then Arthur +. Ma
gill; manager of the PhRniX and Home
COMPANIES, took advantage of his notice OF
withdrawal, that had been standing for
two years, and resigned Deremptorily. The
New Zealand and Sun companies are in
volved In a difficulty with the union over
payment of salaries, which union rules
prohibit under certain conditions, and now
several of the leading companies have In
fact thrown down the gauntlet.
Their notification of reslgniug means
nothing more nor less than challenge to
some concerns and 1t may also mean an
insurance rate war.
The same story is told by agents of the
various companies that have given notice
of taking independent action. g. w. Spen-
rn hp ha6 pi ut ire IN
protect his company. He understood that
lone members of the union had violated
eher agreements, and now that Mr. Magill
and the Northwestern National are free to
cut rates, he wished 20 be in position 10
meet them.
"There has been friction for some time
in the union" said the Home Mutual
secretary. eve decided to give the thirty
days notice as required by The constitu-
ton, so that we might be ready to resign
should anything lake place."
"What is that 'anything?" was asked.
SWELL. cutting rates" was the conserva-
tive reply. 1.-TWO companies are out of the
compact, and they may begin shaving
rates at any time. 1t Is not likely, how
ever, they will do So"
But still you may see we are placed in
an awkward position. For should Fate
cutting begin we could not meet it and
consequently would lose business. That
is, we could do nothing honorably, being
still members OF the union. Theref fore it
became necessary to give notice of our in
tention TO withdraw, and, after thirty
days, we will be in a position 10 resign at
once should cutting begin.
This, Of course, does not signify that
we will leave the union at the end of thirty
days. Every insurance man recognizes the
importance of concurrent action. We may
remain in the union indefinitely, in fact.
until com pelled to draw out for self protec-
ton"
"PIrating has gone on to such an ex-
tent" remarked an official of one OF the
dissatisfied companies, that We bad To
take THIS move to protect ourselves. There
are members In the union, and we can lay
our fingers on them, who have violated
their obligations toward the compact or
broken faith with the other members"
I'm what mannerT
'By giving rebates they have violated
agreements to keep up rates, and in that
way broke faith with us. Now, we desir g
ness continues, and / think we will then
be found in position to make it uncom-
Portable for the men who could not stand
together. Even with fixed rates there has
been no profit IN insurance here in Cali
fOrnia. An Illustration of this Is the fact
that with few exceptions local companies
went to the WALL"
drawal will come into the union offices fast
and frequent within the next few days as
those notifications have demoraized all
feeling of security regarding unity of pur-
pose among agencies. In view of the i'm
pending crisis many insurance experts say
they foIesee ruin for the union.
A meeting of the union will be held
Friday. when extraordinary efforts will be
made To patch up the break, The agents
do not want to disband, as it is not to their
best interests. They may consider new
methods for conducting the union har-
moniously. But so long as members will
secretly give rebates on commissions to
secure business there will always remain
deep-seated sense OF wrong, under which
the compact cannot be expected to exist
Manager Hugh Craig of the New Zea-
LAND Company said: ut will be financial
suicide for the companies to throw in their
designations and break up the compact.
For Illustration, company takes in $780,
900 u premiums in 1894 at full rates, At
the end of '94 some premiums Will have
1854 days and some only one day to run.
The averake consequently is six months
That equals 100000 earned and 5000. 600
unearned premiums. Reduced one-half
this gives % per cent for premiums
of '94. Applied TO the coast business the
total is S10,0O0.OO0 for the year, and this
means return of 81. SOC, 900 to the in
sured. For next year. instead of $4,000
coo. only half the business would be dune
Ii people knew we reduced rates they
would return he premiums that represent
halt The years business. Hence the sum
of S2.500,000 would have to be paid out of
the company treasures. Ii rates were cut
in two in '95 we would have only bust
ness of S5,000000 in premiums. The low
rate would offer a bait for incendiarism,
aud the result would likely be the COM
panies would have $1,000, GOO to face, TO say
nothing of the cost of business, added to
the loss ratio. The smaller concerns
would be forced to the wall"