The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-06-15
THE FIRE INSURANCE WAR
The Dissolved Compact Was
Not an Unmixed Evil
After All.
COMPARISON OF LOSS RATIOS S.
What roperty-OWners May Expect.
The Good Work That is Done
by the Patrol.

The fire insurance managers of this coast
having crippled the California goose that
laid the golden eggs are in a quardary.
They built up and maintained for eleven
years at a large cost the largest and strong
est compact association in the world, and
then, through the bad faith of some of
their mem ers, tore it to pieces. The in
terests involved are so large that property
owners may we'll question seriously the
course of the companies and carefully re-
view their past action as some index of the
future.
In 1884 what is known as the compact"
system was inaugurated on the Pacific
Coast, its field of operations being the
States of Oregon and Washington. The
insurance managers thought it best "to
try it on" at first in an inferior territory,
so far as volume of business was con-
cerned, reasoning that if the experiment
proved failure some other plan might be
adopted in California which furnishes the
bulk of the premiums.
Portland was made the headquarters
and Alfred Stillman was chosen as man.
ager to essay the thankless task of con-
vincing the benighted Webfeet that their
rates needed elevating. Mr.. Stillman. who
is q brother of the famous railroad lawyer
OF New York, developed an ability in this
new line of work that was satisfactory to
the companies, and soon pefected a system
of special ratings in Portland and other
towns in Oregon and Washington that
met the approval of his employers and
earned for him the dislike of the unhappy
owners of insurable property in those
States.
The press and public were bitterly OPP
posed to the new system and fought 1t SO
no means one of roses. Portland was put
under system of schedule rating by which
all deficiencies in the construction of build
ings were charged for, the result in many
cases being an advance over the rates that
had previously been charged. Numerous
improvements, such as iron shutters on
exposed openings, wire nettings on sky
lights, the removal of defective fiues, ETC.,
were forced on property-owners through
the manipulation of the rates, and as re-
suit the fire losses were largely decreased,
and in two cases at least large confagra-
tons in Portland were prevented.
Encouraged by the success of the in
itial venture, the companies extended the
limits of the compact association and or
ganized what was known as the Pacific In
surance Union, which comprised in its ter
ritory California, Oregon, Washington,
Idaho, Montana, Utah, Nevada and
Alaska. The general office was estab-
nSneQ at Eodn frdIClSCO, WIN Drdncn
offices at Portland, Salt Lake City and Los
Angeles. All of the principal towns were
specially rated at great labor and expense,
the work in San Francisco being on an
elaborate scale. The experience of East
ern compact systems was utilized; many
ideas evolved from the fertile brains of the
managers were put into practice with
varying results; the constitution of the
Union was amended and reamended to
meet the different problems as they arose,
and finally the machine was completed
and became thing OF life.
1t must be conceded that they builded
better than they knew, for despite the fact
that the compact was an autocracy that
ruled with an iron hand and whose work
ings were often unequal, it held together
for much longer time than expected.
The good that it did may be summarized
as follows: 1t gave stability to the business,
effected improvements in buildings, fire
departments and water supply; esta blished
uniform rates of commission, discouraged
rebating and reformed faulty forms of
policies, and in that way facilitated the
speedy adjustment of honest claims, An
other important work effected was the
establishment of an inspection bureau in
this City, which has done remarkable ser
vice in the interests of property-owners at
the expense of the companies.
Last year the surveyors OF the inspection
bureau inspected 1881 buildings in this
City and effected 1857 Improvements in
the way OF removing stovepipes, repairing
defective fiues, abolishing dangerous lights,
netting skylights, trapping elevators, re-
moving oily waste and rubbish, and gen
orally effectlng the Improvements suggest
ed by a system Of careful inspection. The
percentage of fires from causes preventable
by inspection has been so largely reduced
since the bureau was started in 1885 that it
is evident these inspections have saved
millions of dollars to property-owners and
to the insurance companies.
In 1885 the preventable fires in San Fran
cisco were % per cent of the whole num-
Der. The percentages have been annually
reduced as follows:
In 1886 preventable fires were % per
cent; in 1887, 81 per cent; in 1888, Is per
cent; in 1889, IL per cent; in 1890, 10 per
cent; in 1891, per cent; in 1892, per
cent; in 1893, 7.9 per cent; in 1894, 7.3 per
cent.
The working force of the inspection
bureau included the chief inspector, six
inspectors and one clerk
The Fire Patrol is another organization
maintained by the companies that has
been of incalculable benefit to the prom
erty-owners. While there are others" it
is generally acknowledged that this fire
patrol system is unequaled in the points of
effectiveness and rapid service.
The defects of the compact were too
great concentration OF power in the man.
ager, unequal ratings and inequitable en-
forcement of penalties.
For several years past it was claimed
that various offices did their full share
toward disrupting the association by in
sisting on employing salaried agents, and
by quietly securing business in favored
localities by paying higher rate of COM
mission for it than authorized by the COM
pact. Other companies, it is said, met this
competition by paying excessive commits
sion at certain points rather than see their
hard-earned business cut from their books.
Those managers who scrupulously kept
both the letter and spirit of their obliga-
tons, saw their gilt-edged risks, their
favored dwellings, churches and school
houses slipping away from them month
by month, while the gentlemen who cap
tured them. it is alleged, attended board
meetings with smiling faces, and cheer
fully voted aye to all constitutional amend
ments designed TO strap up the compact.
until it became as invulnerable as
burglar proof safe.
1t became apparent that some radical
action must be taken if their official heads
were to remain on their shoulders, for
home offices expect good results instead of
complaints and excuses. Then came the
disruption. The Northwestern National