The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1900-01-06
INSURANCE PROFITS.
The Ledgers of Many Fire Companies
Fail to Show Any Gains.
Editor Of the INDIANAPOLIS Journal:

To the Editor Of the Indianapolis Journal:
In your issue of the 4th inst. alluding to
the indiscriminate onslaught made by some
people against foreign insurance companies
doing business in this State you say that
some Of the statements made concerning
their alleged profits are very erroneous.
being based on the companys statement Of
premiums received and losses paid without
allowing for operating expenses" AS an
insurance man L hear a great deal about
excessive rates and large profits. "hcn the
matter is properly presented 4 think people
will change their views, especially the bus
mess man, who must not only figure upon
the profit accruing from his products,
wares and merchandise, but also upon the
operating expenses required to secure MS
profits. If you will allow me 1 will try to
give figures to show that the insurance
business is not all profit to the companies.
In a small book issued by the Continental
Insurance Company, which is reliable the
following language occurs: THE total cap
ital of all the fire insurance companies.
domestic and foreign, reporting to the New
1898 was less than $50, 100000 (SS9, u6.9Sl).
while the amount of premiums held by
them for their insurance in force was $l02,-
100000 whereas the losses paid for the
single year named were ST. 7S1 ,249. sum.
1T will be observed, which was nearly sew
en-eights of the total capital of al the
companies engaged i'm the business.
Long experience has shown that the OPP
Grating expenses of insurance companies
line up pretty well with other lines of bus
mess, viz, 35 per cent. Of the gross income.
The record of the New York insurance de-
partment shows that for the year 1873 the
loss paid by all the companies was 7l,.S7,-
2i7. Now add to this sum IS per cent of
the premiums received for operating eX-
penses, viz, $36005, 22S, and you have total
of expenditures of nearly $685. 00. 900, (sl07,-
7S6,475), showing deficit or loss to the
companies in the aggregate of nearly
s. 100000, (si914.S9D. The insurance bust
ness, like any other, requires certain in
come to assure success, and when this in
come fails somebody will get hurt. Not
all the companies lost i'm 1885, but enough
of them did lose to make the 100000
deficit. The income and expenditures for
1899 have not been computed further than
the estimate of losses alone-about $780,
600, 600. That some of the companies have
lest heavily there Is no doubt To enable
insurance companies to maintain their cap
ital as a protection to policy holders the
rate of premium must be sufficient to pay
losses and operating expenses. The higher
the taxes against the companies are made
the higher the rate of premium must be,
and the people pay it. The merchant bases
the selling price on his wares upon the es-
t;mated operating expenses. including
taxes. so do the insurance companies. The
reader III observant, will see that insur-
ance ledgers. like those of other business,
have two columns. one showing the income
and the other the expenditures. ard I'm
many the net profit item is looked for in
vain. JOHN c. EILER.
Muncie. Ind Jan. s.