Kansas agitator. [volume] (Garnett, Kan.) 1890-1905, 1900-08-31
MORE ABOUT FIRE INSURANCE.

have made Ia cents.
This does not include the companies
that have failed, which have been
many.
trust I have made this clear to
Property Owner" AS to his queries
regarding valued policy and anti-com-
pact laws am not qualified to speak,
in fact, l would like to be enlightened
myself.
BUSINESS MAN.
The following letter gives another
mans views:
Dear Sir-Noting articles in recent
issues OF your paper relative to firs
insurance leads me answer In part al
least Property Owner" who inquiries
why capital continues in fire insurance
II the business Is Improbable.
The bulk Of the worlds commerce IL
conducted on credit, necessitating nre
insurance. The wholesale merchant
and manufacturer can and do trust
to the honesty Of their customers, put
they cannot risk the loss OF property by
the elements. Therefore, insurance Is
not a matter Of choice, but prereQul-
site, and what is known as stock In
surance Is about the only variety that
can be used as collateral. Stock In
surance requires capital, and business
men form companies more for the pur-
pose of protecting their commerce than
in the expectation Of any direct pront
out of underwriting itself. AS an IL
lustration: 1t will take from nifty to
sixty millions of dollars to handle this
years Kansas wheat crop alone. Grain
men have to borrow money for this
purpose, and the banks have to have
insurance policies as collateral to pro-
tect themselves and their customers
from possible loss by fire, lightning,
and tornado. The same is true OF the
retail merchant when he buys goods,
or the owner of a lot or farm when he
wants to borrow money with which to
build.
The sixty leading fire insurance COM
panies doing business in this country
for the ten years ending on the Slst
of December. 1898. made a net pront
out of underwriting Of 2.51 per cent.
Since then the fire insurance losses on
this business have wiped out all this
profit, and much more, yet capital does
not withdraw from the business for the
simple reason that 1t cannot as long
as the commerce of the country Is car
ried on on its present basis.
A stock fire insurance company mas
a paid-up cash capital and surplus. on
the wisdom with which Its assets are
invested depends the profit. The most
successful companies distribute but
small amount of the profits on these
investments to their stockholders, In
stead, allowing them to accumulate as
a protection to their policy holders
and this accounts for how companies
have doubled their assets, the object
being protection for their policy hold
ers in the event of conflagration or I'M
usual fire losses.
There Is probably no business In
proportion to the money invested II
which there has been as much failure
as in fire insurance. Certainly none
in which there has been more. 1t II
attributable to various causes, among
others, to conflagrations and abnorma
individual fires (such as this year, ,ant
especially to fire companies, unlike life
companies. having no combined stats
tics showing what the average loss II
series OF years has been on any
class Of property, the experience OF al
individual company being worthless
and hence having to guess at rate
the fierce competition in the business
rendering same as a rule below thu
profit line.
The best evidence that the business
of fire insurance has not been profit
able is the fact that there is less thar
one-fortieth of the American compa
MES doing business today in this coun
try that were in existence twenty-five
years ago. The capital thus invested
was either lost in the business or plac
ed in enterprises where 1t would no
be liable to be wiped out by con1agra
tons or reckless competition.
Most states have laws regulating tn
manner in which insurance companie!
are to invest their assets, and all state
have laws regulating how much rein
surance reserve each company has tt
maintain for the protection of Its pol
icy holders. All stock companies hav'
annually to furnish sworn statement
to the various insurance department.
of their financial condition, clearly ant
infinitely setting forth OF what thes'
assets consist and how invested, ant
which statements can be verified b!
examination. There Is no other busi
ness subject to such surveillance, ne
cessitating showing clearly from wha
sources its profit or loss annually hal
accrued.
Dealing in various kinds of collat
eral, especially fire insurance policies
requires my keeping posted on thii
class of business, and the foregoing u
the result of my Investigations.
BANKER.
August 18th. 1900.
Bernhardts Ideal Holiday.
r. L l. - a