The herald., 1898-03-16

general subject of the financial bearing Of
Insurance trusts upon the people Of Califor-
MIA and neighboring states. According to
the Examiner, he says about as follows:
'.The only hope of relief which the peo-
pie of this state have from the oppressive
charges for fire insurance under which they
have so long suffered lies in the demolition
of the so-called board of underwriters or
compact. Statistics prepared by insurance
men show cOnclusively that In years when
no compact has been In existence rates
have been comparatively low, but as soon
as a compact is formed rates jump to an
extravagant figure. Much has been pub
lished on this subject, but it is not nec-
essary to go outside of the ranks of the
underwriters of San Francisco to secure
absolute evidence of the fact.
what the existing insurance trust IL
costing the people of San Francisco, the
state of California and the states of the
Pacific coast may be Approximately ascer-
tanned from a study OF what it's predecessor
the Pacific Insurance Union, cost them
This study has been made and it's con-
clusions are presented by an insurance
statistician and writer, whose authority
and accuracy no insurance interest Will
question. In Paper on Statistics, read
before the Fire Underwriters Association
OF the Pacific, and printed in the Pacific
Underwater on February 25, 1898, w. II
LAWFUL 6otS tAltilSiNtiy ltito hs W SS sth'
tables to show how much the insurance
companies had gained in the way OF pre-
MUM rates during the life of the former
trust. and frankly deplores that they lost
from its discontinuancc.
''The Pacific Insurance Union was an or
ganization of the companies doing business
in this state and region under the control
of the same Alfred Stilman, who manages
the present organization, and who figures
as the official author of the remarkable
circular claiming that tho companies are
now doing business under the arm of the
United States circuit court in defiance of
the laws of the state of California and of
their legally constituted administrator.
That old combination or trust was organ
lied in 1884 and fell to pieces in 1894.
''In his table of California Business
From 1871 to 1897, Expert Lowden shows a
steady increase in the average premium
rate for the ten years of the existence of
that trust. The year before the trust the
average rate was $780, During the next
eight years it steadily rose to $176 In 1891
and 1892 and to $l.75 and $1.6S for the next
two years. In the next year, after the
breaking down of the trust the rate was
$1.31. In 1896 the ratio had fallen to s1.1S.
The average for the ten years of the trust,
as given by Lowden. Is $1.f0. The average
ratio of losses paid to premiums exacteo!
for the whole period covered by this table
was 40 per cent. In total figures, during
that period California people paid $l17,92i.- :
090 and received back si7, ,199 1906 the differ
ence, or S002i 1894 representing the profits
paid to the companies on their business
here from 1871 to 1897. including the years
both before and after the ten years under
the Pacific Insurance Union, whose ex-
tinction the insurance writer who furnishes
these figures bitterly iaments.
expert Lowden, deploring the termina-
Ht.~.x 90 y Il L.
ance interests, says: The Pacific Insurance
Union was established in 1884, and the rate
columns for the next ten years attest the
value of that organization to the under
writing interests of the Pacific coast
''He further says various estimates have
been made of the amount lost to the COM
panios in the past two years by the dis
ruption of the Pacific Insurance Union, but
all that have seen are based on the actual
reduction in the premium income. 1t is
quite an easy matter to figure that the
premiums in 1895 were 81 900 less than
in 1894 and that 1896 showed still further
reduction of ss90,000 1t is equally easy to
ascertain that the entire coast figures show
fallinss on in 1895 of 81 .S65 600 and in 1896
of $2,S00,0N from the figures of 1894, with
no material reduction in the amount writ
ten. but this does not tell all the truth
If we desire to estimate correctly the loss
caused byl the break, we must take into
consdera tilon the increased liabilities as
sumed Daring the term, ascertain the
amount ost by this increase, and add the
result t., the actual loss in premiums. Let
us do little figuring.
9Th 6n Mr.. Lowden, taking $170 'as the
averdge rate obtained on California busi-
ne during the compact periodicals own
yTufds-and calculating upon the increase
OF liability for the two years 1895 and 1885,
reaches this result:
Loss IN California premiums .... "a 9t2 203
Loss in premiums outside state.... 1,464, ,341
Iotai ......................... IS ,406 $50
The companies Mr.. Lowden continues,
have suffered to this extent in the past
two years. In other words, that is this
great insurance authority's own estimate
of what the gain in two years is to the peo-
pie of this coast from the destruction of an
insurance trust.
Coming to San Franciscos relations to
the Fire Insurance trust, Mr.. Lowden, by
another table shows that the people of this
city in the period from 1875 to 1896 have
Pald In premiums. mS...................$43 $43 933 3339
Received on losses. 12 725, ,665
Fronts to companies. ............$3 .$31 POI, ,674
"By the same system of tables he shows
that on California business outside of San
Francisco insured persons have
fdlu IN premiums. .$63 Sal Bis
Received on losses. ses................. 81 .O43, ,104
Profits to companies. ........ 1892 49S 2H
Concerning the desirableness of San
Francisco business from the insurers point
of view. Mr.. Lowden says: The average
loss ratio on city business for twenty-five
years was 800 per cent and on California
business outside of the city 4S.S per cent.
These facts strengthen the conclusion
reached nine years ago when presented
Similar figures up to that date. namely
That San Francisco rates have been ex-
cessive In comparison with the rest of the
state. and 1t is safe to conclude that unless
this condition is changed when reorganiza-
tion Is effected we may expect repetition
of our troubles arising from excessive COM
petition for the desirable business"
so you see," said Commissioner Clunie,
that whenever there is any sort of an
insurance trust in existence the people suf-
Ter whiie the companies fatten, while when
ever an insurance trust is terminated the
people who are their customers have the
beneflt OF reasonable rates.
Il would add" said the commissioner in
concluding the interview, "that our last
legislature passed law authorizing the
formation by insurers in the counties of the
state, excluding the big cities. of county
mutual insurance companies These co,,ntv
organizations have proved great success
throughout the coast wherever thew have
been tried. Two have been organized hv
the farmers of California, one in Sonomo
county and one in San Luis Obispo county -
Interpretations