The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1899-09-27
O u RAISE THE RATES
ALLEGED RESULT OF BREAKING
DOWN FIRE INSURANCE TRUST.
LocaI Agents Point Out the Benefits
of Combinations to the
Insured.

The fire insurance companies operating In
the State are much interested In the out
come OF the suit filed by NJ. b. Watson, a
bank cashier Of Portland, against the hre
insurance agencies there, charging them
with violating the antitrust law py COM
bining with the purpose of eliminating COM
petition to the injury OF their patrons. Inc
insurance companies of the State are not
talking publicly about the case because IL
is said, they fear similar suits may be hled
all over the State and the expense woufd
be embarrassing. 1t is the practice OF nre
insurance companies TO organize bureaus III
the cities and towns in which they operate
and employ In each town an inspector d
building expert, to examine buildings ana
fix the minimum rate. The companies en-
ploying the inspector are pledged not to sell
insurance under the rate Jointly liked
through the inspector.
1t is against this sort Of an organization
in Portland that suit has been filed. The
plaintiff claims the organization is Tor the
purpose Of holding up" the people. The IN
surance companies side of the case is that
the system works to the good or their
patrons because 1t greatly reduces the ex-
pense of writing insurance and thus WORKS
a reduction in rates. The companies point
out that If the practice of forming organlza-
tons and employing a joint rate hxer be
declared unlawful each company will nave
to employ its own Inspector, and the ex-
pense and the consequent insurance rates
will necessarily go up. In this city, for IN
stance, there are operating 10 fire insur-
ance companies, ana all are represented Dy
one Inspector. therefore If the ORGANIZATION
were declared an unlawful compinauon
there would be lilo inspectors instead or one.
The result, IL is averred, would be heignt-
ened rates and great confusion.
Rough Notes, an insurance puDllcdUOn Oh
this city, says of the situation:
The attempt to enJoin insurance COM
panies from making uniform rates upon the
same classes of fire hazards by a cltizen OF
Portland, Ind. would, IL successful, aHect
rates for fire insurance. 1t would De neceS-
sary to advance rates upon the removal OF
that portion OF the working machinery OF
underwriters by which minimum rates are
MADE and uniformity obtained. AT present
a single office or rating bureau empIoylng
an inspector and necessary assistants per-
forms the work of inspecting risks, ana Dy
the system of schedule rating employed
the companies paying the expenses or the
rating bureau are in honor bound not 10
write. BY maintaining local boards and
compactS they are enabled TO lessen. the ex-
pense of underwriting, as without them the
time of at least one field man for eacn COM
pan would be employed mostly In inspect
ing and making rates, whereas under the
present system but comparatively few men
engaged in surveying, map work and rate
making are required. Besides the saving OF
expense by the present system the expert
| service of the few is Of much more value
to the companies and to the public than
would be the work of rating by the many.
The difference between schedule rating APP
| piled scientifically by skilled inspectors and
the wide-open system-each company Tor
itself-has been demonstrated by the STEADY
average reduction in rates the past few
years. Under the present system the own.
ers of dangerous buildings are encouraged
TO improve them or supplant them by safe
buildings, the rate makers ever discrim-
: mating in favor Of the owners or buildings
employing the most effective means for the
prevention of fires. BY this means the pub
lie is benefited the annual fire waste being
| reduced as improvements IN building and IN
| creased fire protection lessons the hre waste
of the State. Were the companies deprived
of their present system or raung those VINO
| rate for them would be compelled to dc
much guessing. and in this they would give
their companies the benefit of the doubt
and the rates would be advanced SO tnal
uncertainties would be covered by additional
premium rates"