The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1895-08-07
Fire Insurance in Vermont.

The annual report of the Vermont
insurance commissioners is just pub
lished.
Fire insurance companies have long
maintained that their losses incurred in
Vermont, and the expenses of doing
the business, largely exceed the ag.
gregate of premiums received. In
1894, the premiums amounted to $780,
429.77; the losses incurred were S716,-
571.27, or about ninety-four per cent
of the premiums,-leaving margin of
about six per cent on the aggregate
business for expenses, taxes and profits.
The commissioners say that thirty-hve
per cent of premium receipts is fair
average for expenses. Apparently,
then, the Vermont business is not ex-
cessively remunerative. Individual in
stances are given of losses very largely
exceeding premiums, and, in the case
of twenty of the forty-five companies
doing business in the state, the losses
exceed the premiums in varying
amounts. In one instance, the per-
centage of loss to premium was 1905,
and another company, receiving pre-
miums to the amount of So ,769, suffered
losses amounting to $4,000. So there
is threatened advance in rates in
Vermont.
In communication to the Standard,
leading insurance journal, H. M.
Mcfarland of Hyde Park, skillful and
experienced insurance agent, under
takes to show that the remedy for the
Vermont situation is not an advance in
rates. Vermont, in all the essentials
of prosperity, is good state, and ought
to be a good field for the insurance
business. Insurance agencies, he says,
have been planted here, the seed sown,
but the crop has been too largely left to
take care of itself. If, in the harvest,
there has been any grain to thresh, it
has been taken to the home granaries;
If not, the field has been threshed, in
stead, by an increase in rates. The
right way, Mr.. Mcfarland says, to deal
with the insurance question in Yer
mont is to improve the conditions
rather than to try to meet the situation
by an advance in rates, leaving under
lying evils to 60 from bad to worse. A
good risk at a low rate is better than a
bad risk at any rate. His remedy for
the existing situation is more careful
selection of risks and the prompt dis.
charge of agents who think more of
their commissions than of fidelity to
the interests of the companies they rep
resent. After the risk is taken, the
agent should inspect it from time to
time and see if its quality is maintained
and the conditions of the contract oh
served. If man will do nothing to
improve his risk, to throw safeguards
around it, charge him the higher rate;
If he improves his risk, surrounds it
with the means of safety and protec-
ton, sell him insurance at reduced
rate. A little money expended along
the lines Mr.. Mcfarland has indicated
will prove fruitful in the prevention of
large losses. He asks for concerted
action along the line ofihis suggestions,
believing the result will be better insur-
ance at lower cost. Let US cease" he
concludes, " for little to talk of ad-
vancing rates and possible withdrawal
from the state and consider the best
way to accomplish this work"
There is sense and reason in Mr..
Netherlands suggestions. The absurd
ity of charging level rate for insur-
ing all property of the same class is as
great as making level price for all
kinds of wool. Mr.. Netherlands sug-
gestions, put into practice, ought to do
away with any ground for the stock
complaint that individuals or commune
ties who provide the means of fire pro-
lection and employ businesslke Wig.
lance and caution in guarding their
property fare no better in the matter
OF rates than the careless or indifferent
or criminally negligent. The insured
paws all the expenses of conducting the
business OF insurance-salaries OF Off
cials, luxurious offices, agen.s' commits
sions, ETC., etc. 1t is barely possible
that the percentage of cost of manage
ment might be lowered by the applica-
ton at headquarters of some Of the
economic principles and maxims SO
copiously showered upon the purchasers
OF insurance. 1t is not at all clear that
an advance in rates is demanded by the
exigencies Of the insurance business in
Vermont. 1t seems quite plain that
the remedy for existing deficiencies
should be found in other directions,
and particularly in economy in admin
istration, from the source downward.