The herald., 1898-05-10
OFFICE OF THE HERALD,
LOS ANGELES, May ., 1888.
wise men ne'er wall their present woes,
But presently prevent the ways to wall"
Break in Insurance Rates

The recent disruption Of compact rates
In the fire insurance business, occurring at
so great a commercial center as New York,
has excited wide attention, and specula-
tion has been rife as to the probability of
the rate war being carried to other cities
of Importance. The New York Post sums
up the situation as follows:
Property ty-owners are taking unusual in
terest In the local fire insurance situation
today. They have benefited greatly by the
: break In rates and are exchanging old poll
cies for new ones on almost ridiculous
terms. They are no longer asked to insure
30 per cent of the value of their property,
and take in most cases only such in
-demnity as will cover partial loss. This
Is a severe blow to the companies, reducing
their revenues perhaps $500 900 annually,
and was consequence most dreaded by
those predicting the rupture few weeks
ago. 1t has taken years to educate the
public concerning the so per cent clause in
policies (many still think 1t unjust). but
all has been thrown away in the strife for
business at new rates.
CONFUSION GENERAL.
The companies admit today that they
scarcely know where they stand, the con-
fusion being so general. Several have sus-.
pended local business entirely, fearing to
increase their liabilities under present con-
ditions. This prudence is justified, perhaps
. In the lessons Of the last rate war in this
city, when the surplus of many companies
diminished steadily from 1886 to 1891, and
retirements- were frequent and failures ex-
pected. Some today believe that at least
thirty small companies will not last the
year out II "open rates" prevail, although
with country business good 1t is quite pos
sible they may survive the ordeal.
A SUICIDAL POLICY
The Generalization in this city, contin-
ues the Post, threatens rate agreements
at other commercial centers, and may dis
turb business for months to come. The
local situation has been watched with in
terest by underwriters everywhere, and
business in Boston, Philadelphia, Balti-
more and Chicago, 1t is thought, will be
more or less affected. President Clark of
the Aetna Insurance company has been
quoted as saying that the action of the
companies In disbanding their tariff asso-
citation was foolish and suicidal. He hoped
none Of the Hartford companies would
5oin in the indiscriminate rate cutting, but
would proceed moderately in the effort to
get fair rates. This hope Is shared by
other insurance men, but the activity OBJ
served this afternoon at the offices Of the
companies indicates that most are willing
to cut the old rates materially and pay
high commissions In the effort to hold busi-
ness. Many rates are being cut from 50
TO rs per cent, and the business then taken
BY the companies on term contracts.
BROKERS SUFFERERS
Brokers, too are sufferers from the pres
ent condition Of affairs. Several firms re-
ceiye from $4,000 to $4,000 year in COM
missions, and have hitherto done an enor-
nous business. Their income has been cut
80 per cent or more by the dissolution of
the tariff association, and the loss of the
80 per cent clause and the reforms hoped
for are impossible now that the companies
have separated. The brokers are placing
business today where 1t will bring the most
money, and, now that the tariff association
has dissolved, several tell of deals made
with compact companies while the rules
be consulted in future before compacts are
entered into. and this seems quite prob
able, If q reorganization is attempted.
A COSTLY FIGHT
An insurance man said: 1.-THE companies
will have another tariff association to gov
ern rates in this territory, although 1t may
not come in five years. The present fight
bids fair to prove costly in the extreme
and should be watched by all interested in
the development of underwriting in the
United States. Conditions are even worse
today than when the last rate war began
for then the supply of indemnity was not
SO large and the Introduction Of sprinkled
risks gave many an opportunity to ex-
pertinent. The tariff association cost the
companies about $4,000 annually; they
will lose at least twenty times that sum
by its dissolution